Order routing is a crucial aspect of effective omnichannel retail operations.Customer expectations are at an all-time high, and even minor delays can lead to dissatisfaction and lost loyalty. As retailers face increasing pressure to meet these demands, effective order routing has become critical in ensuring smooth, reliable operations.
Therefore, when choosing an Order Routing System for omnichannel operations, retailers must carefully evaluate key factors to ensure the solution meets their complex fulfillment needs.
In this blog, we will discuss the top considerations that retailers should keep in mind when choosing order-routing software for omnichannel fulfillment.
Setting the Foundation for Effective Order Routing
When it comes to managing omnichannel retail operations, the stakes are high. How do you ensure that your customers receive their orders on time without overburdening specific locations or running into stock issues? What happens when orders come from multiple sales channels, and inventory is spread across warehouses, stores, and third-party fulfillment centers? These are the challenges every retailer faces, but the right order routing system can solve them if it’s chosen wisely.
To handle the challenges of omnichannel fulfillment, it’s essential to choose an Order Routing System that not only fits your current needs but also anticipates future growth. Below are the seven most important factors retailers should consider when making this crucial decision.
1. Does the Order Routing System Consider Order Priority?
Order prioritisation is a critical challenge for retailers, especially when managing a mix of standard orders alongside expedited deliveries like same-day or next-day shipping. Without an effective order routing engine in place, urgent orders or those from loyal, high-value customers can easily slip through the cracks, leading to delays and dissatisfaction. Failing to fulfill these high-priority orders can tarnish a brand's reputation and impact long-term customer loyalty.
An order routing engine should be able to recognise and prioritise time-sensitive or high-value orders. By incorporating order priority into the routing process, retailers can ensure that urgent requests are addressed promptly and efficiently.
Fig 1: Set Order Prioritization Rules
This capability not only helps meet strict delivery deadlines but also boosts overall fulfillment efficiency, allowing retailers to maintain their brand’s reputation and deliver a superior customer experience.
2. Does the Order Routing System Consider Each Store’s Fulfillment Capacity?
Retailers operate a variety of stores, each with its capacity for handling online orders. Smaller locations with limited staff and storage might struggle to fulfill a large number of orders, while other locations may have more resources but still need to manage a balance between in-store and online demand.
For this reason, an order routing engine must take into account each fulfillment location's capacity before allocating orders.
For example, a store might set a limit of 50 online orders per day, ensuring it doesn't take on more than it can handle. If a location is fully staffed and stocked, it might choose to remove the limit entirely and accept unlimited orders. Conversely, if a store is facing a busy period with limited staff or stock, it could temporarily set the limit to zero, directing orders to other locations that are better equipped to fulfill them.
Fig 2: Setting Max Order Limit
Without these order limits, stores could become overwhelmed by more orders than they can manage, leading to delays or cancellations. At the same time, other stores with more capacity might remain underused, resulting in inefficiencies.
However, during high-demand periods, the order routing engine should allow limits to be bypassed, enabling stores to fulfill orders without being restricted by a preset cap. This ensures that more and more orders can be fulfilled as quickly as possible during these busy times.
Fig 3: Turning Off Facility Order Limit Check
3. Does the Order Routing System Consider Min Quantities Available at a Fulfillment Location?
Retailers who rely heavily on store inventory to fulfill online orders face unique challenges. Fluctuating inventory levels, whether due to ongoing in-store sales or sudden demand spikes, can quickly deplete stock, leading to fulfillment issues, delays, and stockouts, all of which ultimately impact customer satisfaction.
To address these challenges, the Order Routing System should include the capability to apply “brokering safety stock”. But what does this term mean? Brokering safety stock sets the minimum quantity of an item that must be in stock at a fulfillment location for an order to be allocated there.
For example, if a customer places an order and the brokering safety stock is set at 10, only locations with more than 10 units available will be considered for fulfilling the order.
Fig 4: Brokering Safety Stock
This ensures that orders are routed to locations with sufficient buffer stock to handle demand, reducing the risk of stockouts and improving overall order fulfillment reliability.
4. Does the Order Routing System Allow Fallback Locations?
Having fallback locations is essential for ensuring smooth order fulfillment, especially when primary locations face stock shortages. As the name suggests, fallback locations serve as a last resort in the fulfillment workflow, stepping in when other locations can’t fulfill an order.
For example, consider a retailer with five fulfillment locations: a central warehouse, and stores in Brooklyn, Times Square, Broadway, and Malibu. The first four locations handle both online and in-store orders, while the Malibu store is a fallback location that primarily caters to in-store customers due to high foot traffic.
Inventory at the fallback locations should be hidden from online sales, allowing these locations to focus on in-store sales while being available for online fulfillment only when necessary. This provides an extra layer of support to ensure orders are fulfilled without delay, even when main locations cannot fulfill an order.
Now imagine a customer orders a “Charm Bracelet,” but none of the primary locations have the item in stock. Instead of canceling the order or causing delays, the routing engine should allocate the order to the Malibu store, even though its inventory isn’t visible online or used for online fulfillment. This allows the retailer to complete the sale and ship the order, preventing lost sales.
Fallback options allow retailers to adapt to inventory challenges and meet customer expectations consistently.
Fig 5: Fallback Locations
5. Does the Order Routing System Allow Selective Order Splitting?
Retailers often face challenges when fulfilling multi-item orders when not all items are available at a single fulfillment location. In such cases, splitting the order and shipping items from different locations can help speed up delivery times and reduce the risk of leaving orders unfulfilled.
However, order splitting isn't always ideal for every situation. For example, products like kits and gift sets are intended to be shipped together, and splitting them could negatively impact the customer experience. Also, splitting low-value orders could drastically reduce retailer’s profit margins.
An effective order routing engine should be capable of selective order splitting, allowing retailers to prioritise urgent orders, such as those requiring same-day delivery, while avoiding splitting for less time-sensitive, lower-value orders, and bundled orders. This selective approach ensures that orders are split only when they add value, helping to strike a balance between speed and efficiency.
Fig 6: Order Splitting
Ultimately, splitting orders based on delivery urgency and product type enables retailers to optimize their fulfillment processes without sacrificing service quality or incurring avoidable expenses.
6. Does the Order Routing System Reattempts Fulfilling Unfillable Orders?
In some rare scenarios, an order may become unfillable due to insufficient inventory, even at fallback locations. Rather than canceling these orders outright, an effective routing engine should temporarily hold them in a dedicated location, such as “Unfillable Parking,” and reattempt inventory allocation. This allows for a systematic re-evaluation of available stock without prematurely canceling the order.
Fig 7: Routing Unfillable Orders
Additionally, the option to set an auto-cancellation date helps determine how many days the routing engine should continue to retry inventory allocation for these unfillable orders.
Fig 8: Set Auto-cancel Days
But what happens if the auto-cancellation date is set for seven days, yet the anticipated inventory won’t arrive until the ninth day? In such cases, these orders require special handling. They should be moved to another location, such as “Unfillable Hold Parking,” where they can be stored until the inventory arrives. On the day of arrival, the routing engine can reroute these orders and allocate them to the most suitable fulfillment locations.
This strategic handling of unfillable orders provides flexibility in the fulfillment process, enabling retailers to fulfill unfillable orders as soon as stock becomes available and significantly improving the overall customer experience.
7. Does the Order Routing System Handle Order Rejections?
Order rejections occur when a store is unable to fulfill an order for reasons such as stock shortages, damaged items, or misplaced inventory. For example, if an order is allocated to a store but the associate discovers the item is damaged when attempting to fulfill it, the store will reject the order.
If the order routing engine doesn’t account for these rejections properly, it could continue sending new orders for the same item to that store, even though it’s unable to fulfill them. Meanwhile, other stores that could fulfill the order may be overlooked, leading to delays.
To avoid this, inventory at the store that the rejected order should be automatically adjusted, ensuring that rejected orders are rerouted to the next best fulfillment location as well as new orders of the same item are allocated to other locations where the item is available.
Fig 9: Routing Rejected Orders
By effectively managing order rejections, retailers can maintain accurate inventory levels and streamline the fulfillment process, ultimately improving the overall customer experience.
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Choosing the right Order Routing System is a critical decision for any retailer looking to streamline omnichannel operations and meet rising customer expectations. By carefully evaluating key factors like order prioritisation, fulfillment capacity, order splitting fallback locations, and the ability to handle unfillable and rejected orders, retailers can ensure that their chosen solution aligns with both their current and future needs.
HotWax Commerce Order Management System (OMS), with its highly configurable order routing engine, offers a comprehensive solution for retailers. It addresses all the critical points mentioned above, from prioritising urgent orders to managing selective order splitting and handling rejections. With the ability to adapt to evolving inventory and fulfillment challenges, HotWax Commerce empowers retailers to deliver a seamless customer experience and maintain a strong brand reputation, making it the ideal choice for managing omnichannel order routing needs.
Contact an expert today to see how HotWax Commerce can help you with the right order routing strategy for your omnichannel needs.