Shopify Order Routing vs HotWax Order Routing

In omnichannel retail, mastering order routing is critical for determining the optimal fulfillment location for each order. Order routing is not merely about selecting a warehouse or store to dispatch online orders; it involves a strategic decision-making process that prioritizes orders based on factors such as shipping methods, inventory availability, and overall fulfillment strategies. Effective order routing can significantly boost customer satisfaction by ensuring timely deliveries and can also enhance operational efficiency by optimizing inventory allocation.

Order routing is essentially the backbone of fulfilling customer expectations in an environment where quick turnarounds and accuracy are key. Whether dealing with same-day delivery demands or standard shipping orders, the ability to route orders intelligently can be the difference between a satisfied customer and a lost sale.

With Shopify's recent update introducing new smart order routing, there's been some confusion within the community about how Shopify's smart order routing differs from that of HotWax Commerce's configurable order routing. In this blog, we will compare Shopify order routing with HotWax Commerce's, examining various use cases where Shopify order routing falls short.

HotWax Commerce’s Configurable Order Routing

HotWax Commerce recognizes the critical importance of order routing and has developed a highly sophisticated order routing engine, designed to adapt to diverse retail needs. Retailers can manage configurations directly through a dedicated Order Routing App, providing full control over routing strategies. Here, order routing is organized into three segments: Runs, Routings, and Rules.

Fig. 1: HotWax Commerce’s Configurable Order Routing Workflow

• Runs: In HotWax Commerce, a "Run" is the highest level of organization in brokering rules.

  It acts as a schedule or a window during which a specific set of rules will be applied to incoming orders. Retailers can set up multiple runs throughout the day, tailoring the routing to align with different operational needs or peak shopping times.

• Routings: Within each run, there are multiple "Routings," each representing a distinct pathway that orders can take based on predefined conditions.

  These routings are the heart of the order fulfillment process, allowing retailers to configure the journey of fulfilling an order. For example, an order with a same-day delivery requirement might be routed through a different pathway than a standard delivery order, ensuring that priority is given to urgent requests.

• Rules: The most granular level of this process involves "Rules." These are the specific criteria that determine how inventory is allocated during order routing.
  
  Rules dictate the checks and balances for inventory across various locations, ensuring that each order is fulfilled in the most efficient manner possible. For example, a rule might specify that inventory should be allocated from the closest location to the customer, or that orders should be split across multiple locations.

Each scheduled brokering run can have multiple routings that manage different batches of orders, and each routing can have distinct recursive inventory allocation rules.

Shopify’s Smart Order Routing

On the other side of the spectrum, Shopify offers a more simplified Smart Order Routing. While it does provide a degree of automation, it lacks the depth and configurability that omnichannel retailers require. Shopify allows retailers to choose from four prioritization rules out of the box: ship from the closest location, stay within the destination market, minimize split fulfillment, and use ranked locations. Retailers can then configure these rules in sequence of priority.

• Ship from the closest location: Pick locations closest to the delivery address.

• Stay within the destination market: When available, choose locations in the same country or market as the delivery address.

• Minimize split fulfillments: Check if any locations can fulfill the entire order without splitting.

• Use ranked locations: Prioritize locations based on group ranking.

Fig. 2: Shopify's Smart Order Routing Workflow

At first glance, this seems straightforward, but the rigidity of Shopify order routing can create challenges for retailers.

I. Unlike HotWax Commerce, Shopify's real-time routing doesn’t support scheduling. Orders are routed as soon as they are placed, regardless of the operational status or capacity of the fulfillment locations, potentially leading to misallocations or delays.

II. Shopify's routing engine does not support the ability to hold and analyze orders before allocating them. This First In, First Out (FIFO) approach means each order is routed in real-time as they come in. This can result in inefficiencies, particularly when dealing with orders that have different priorities or special requirements.

III. Shopify’s smart order routing allows for only a fixed set of inventory allocation rules to be applied across all orders. For example, if a retailer sets a rule to prevent order splitting, they cannot subsequently create a rule that permits splitting if inventory becomes unavailable. This one-size-fits-all approach can limit a retailer’s ability to respond dynamically to changing inventory levels or customer demands.

Setting the Stage for a Comparison

With an understanding of how order routing operates in HotWax Commerce and Shopify, we can now dive into a comparison of these features through practical use cases. This will help illustrate why HotWax Commerce’s configurable order routing is ideal for optimizing fulfillment and ultimately driving customer satisfaction.

Key Differences in HotWax Commerce and Shopify Order Routing

I. HotWax Commerce’s Multiple Scheduled Brokering Runs vs Shopify’s Immediate Order Routing

Different fulfillment locations, such as stores and warehouses, operate on varying schedules.

While the idea of leveraging store inventory for online orders is appealing, the reality is that stores often have specific operational constraints.

For example, many retailers find that fulfilling orders from stores becomes increasingly difficult later in the day due to higher in-store customer traffic and other operational pressures.

The solution lies in scheduling multiple brokering runs. The ability to schedule routing lets retailers run routing based on different operational needs. Let’s understand with the help of an example:

Use Case: Route Orders to Stores Until Noon but Not in the Evening

Consider a retailer who wants to fulfill online orders from store locations only until a certain time, say 2 pm, due to the increased workload in the afternoon and evening.

After this cutoff time, the retailer would prefer to route orders to warehouses, which operate around the clock and are better equipped to handle the additional workload during the later hours.

By scheduling brokering runs based on these specific operational needs, retailers can ensure that online orders are fulfilled efficiently without overloading store staff or disrupting in-store operations.

Shopify’s Immediate Order Routing

On the other hand, Shopify’s immediate routing logic presents a more rigid approach.

Shopify routes orders as soon as they are placed, with no option to schedule routing runs or apply different routing rules based on the type of order or the operational schedule of the fulfillment locations. This immediate routing can lead to significant challenges for retailers.

What can go wrong?

If orders are continuously sent to stores throughout the day, store staff may find themselves overwhelmed, trying to balance the demands of both in-store customers and online order fulfillment. This can result in delayed fulfillment of online orders and a diminished shopping experience for in-store customers. Either way, the outcome is less than ideal for retailers.

Understanding How HotWax Commerce’s Multiple Scheduled Brokering Runs Helps

HotWax Commerce offers multiple scheduled brokering runs.

Retailers using HotWax Commerce can define specific times at which they want brokering runs to take place, ensuring that orders are allocated in alignment with the operational capabilities and priorities of each fulfillment location.

In the scenario discussed above, if a retailer prefers to route orders to stores only before 2 pm, they can schedule a brokering run at 12 pm to handle batches of orders placed before 2 PM. This ensures that store locations have ample time to complete all order fulfillment tasks before the afternoon rush.

Fig. 3:  HotWax Commerce's Scheduled Brokering Run

HotWax Commerce's flexibility allows retailers to configure their brokering runs to meet various fulfillment strategies. Some retailers might opt for time-bound runs, scheduling brokering at specific times of the day, such as morning, afternoon, and evening. Others may prefer more frequent runs, such as every 15 minutes, to provide continuous and optimized order routing based on real-time conditions.

This level of configuration enables retailers to maximize their fulfillment efficiency, reducing delays and enhancing the overall customer experience.

How Else Can HotWax Commerce’s Multiple Scheduled Brokering Runs Help You?

As discussed initially, scheduled brokering runs in HotWax Commerce represent how routing rules are applied to incoming orders at specific times or under special circumstances. Retailers can set up different brokering runs to adapt to varying demands, seasonal peaks, or geographic regions:

1. Holiday Season Runs: During the holiday season, like Black Friday sale when order volumes spike, retailers can configure a specific run at higher frequencies, such as every 15 or 30 minutes. This ensures that orders are fulfilled in near real-time, ensuring customer satisfaction even during the busiest shopping periods.

2. Geographical Runs: Retailers can create separate brokering runs for each country, considering factors like local warehouses, regional preferences, and delivery speed.

II. HotWax Commerce’s Batch Order Routing vs Shopify’s Continuous Order Routing

One common scenario that retailers often ask about is how to efficiently manage order fulfillment, especially when dealing with orders that have different delivery priorities.

The solution lies in batch order routing. This method allows retailers to re-prioritize orders and group them, applying specific inventory allocation rules to optimize fulfillment. As orders are downloaded from Shopify, they are analyzed and grouped based on their priority before routing begins. Let’s understand this with the help of an example:

Use Case: Prioritized Routing for Same-Day Delivery Orders

Consider a retailer carrying 10 units of the "Celine Tee" at their Times Square store. Throughout the day, four orders are placed for this specific product:

1. 1. A standard delivery order for 5 units.

   2. Another standard delivery order for 3 units.

   3. A third standard delivery order for 1 unit.

   4. A same-day delivery order for 1 unit.

If there are standard orders and same-day delivery orders different order batches will be created. Routing is then done for each batch individually, with each batch potentially having different inventory allocation rules. This way, the batch of same-day delivery orders can be routed first to ensure they are prioritized for inventory allocation, followed by the standard delivery orders.

Shopify’s Continuous Order Routing

As discussed initially, Shopify's continuous order routing allocates inventory in real time as each order is placed. While this approach might seem efficient, it lacks the flexibility to prioritize high-urgency orders, such as same-day deliveries.

What can go wrong?

Fig. 4:  Shopify's Continuous Order Routing

1. 1. Misallocation of Inventory: In the example of the "Celine Tee," where the Times Square store has only 10 units, Shopify's continuous routing allocates the three standard delivery orders first because they were placed earlier. This depletes the inventory, leaving little to no stock for the same-day delivery order. As a result, the urgent order, which should have been prioritized, might not be fulfilled. This leaves little or no stock for the same-day delivery order, which is supposed to be prioritized.

   2. Risk of Inventory Discrepancy: Inventory discrepancies such as lost or damaged items can further complicate fulfillment. When a store associate starts preparing the same-day delivery order, they might find the product is unavailable. The same-day delivery is then delayed or fails entirely, leaving the customer disappointed and leading to potential reputational damage for the retailer.

Understanding How HotWax Commerce’s Batch Order Routing Helps

HotWax Commerce offers a more flexible and strategic approach with batch order routing. This method allows retailers to create distinct routing workflows for different batches of orders, such as same-day delivery, next-day delivery, standard delivery, unfillable orders, and pre-orders. Retailers can configure these routings in a specific sequence that aligns with their fulfillment priorities and business objectives.

Fig. 5:  HotWax Commerce's Batch Order Routing

In the example above, the batch of same-day orders is routed first, ensuring that the same-day delivery order is fulfilled before standard orders are processed. This sequential routing guarantees that inventory is allocated based on the urgency and priority of the orders.

If, by the time the standard orders are routed to the Times Square store, the inventory is depleted, damaged, or lost, the store can reject the order. HotWax Commerce then automatically re-routes the order, checking other locations for available inventory. If no inventory is found, the order is moved to an “Unfillable Orders” queue until additional stock becomes available from an upcoming purchase order.

This approach ensures a win-win scenario:

1. 1. The batch order routing guarantees that the same-day delivery is handled first, avoiding delays.

   2. Standard orders are re-routed or temporarily placed on hold until additional stock is available, allowing retailers to manage their inventory without missing delivery expectations.

How Else Can HotWax Commerce’s Batch Order Routing Help You?

As discussed initially, in HotWax Commerce routings represent a distinct pathway that orders can take based on predefined conditions. This gives retailers the flexibility to define workflows for various scenarios:

1. Unfillable Orders: Prioritized routing of orders that couldn’t be fulfilled in previous attempts.

2. Pre-Orders/Backorders: Ensure that pre-ordered items follow a specific routing once stock is available.

3. Orders from Multiple Channels: Differentiate routing for orders from various channels like Amazon, Instagram, or Facebook, ensuring channel-specific requirements are met.

4. International Orders: Set up unique routing for cross-border orders that consider international shipping constraints.

   For example, a retailer can set up a routing specifically for Amazon orders that prioritizes warehouse inventory to avoid penalties for late fulfillment. Similarly, international orders can be routed through locations optimized for global shipping.

III. HotWax Commerce’s Multi-Retry Inventory Allocation Rules vs Shopify’s Fixed Inventory Allocation Rules

It's common for retailers to face situations where not all orders can be fulfilled due to inventory constraints. As multiple orders are routed throughout the day, some secure inventory, while others may not. This discrepancy often arises due to the rigid routing rules in place—such as limiting routing only to warehouses, or not allowing order splitting, setting max order limits, which can leave certain orders unfulfilled if inventory is not available elsewhere.

While it's important for retailers to adhere to established inventory allocation rules, there are times when flexibility is crucial to address exceptional cases.

This scenario raises a critical question: How can retailers ensure the best possible fulfillment solution for every order?

The answer lies in implementing multi-retry inventory allocation, a method where each batch of orders is retried using multiple criteria until the most optimal routing solution is identified. Let’s understand this with the help of an example:

Use Case: Allow Splitting if Inventory Is Nowhere To Be Found

Consider a retailer receiving a high-priority order containing multiple items. However, these items are not available in a single location. If the initial rule disallows order splitting, the order could potentially remain unfulfilled. However, a multi-retry approach would accommodate the rules to allow splitting in this scenario, ensuring the order is still fulfilled on time. This ensures every possible effort is made to fulfill the order, even if it requires relaxing certain rules, like splitting the order.

Use Case: Override Store Order Limits for Urgent Fulfillment

Retailers often impose order limits at their stores while allowing warehouses to fulfill orders throughout the day. Stores, which also serve walk-in customers, may limit the number of orders they fulfill. However, if a same-day delivery order is received and the only available stock is at a store that has hit its order limit, the multi-retry rule can prioritize fulfilling that order. Instead of placing the order on hold or risking a delayed fulfillment, retailers can allow the allocation, ensuring the customer receives their order on time.

Shopify’s Fixed Inventory Allocation Rules

By contrast, Shopify’s smart order routing applies fixed inventory allocation rules for all orders, also it doesn’t allow retailers to set a max order limit at their locations. For example, if a rule states that splitting is not allowed, Shopify cannot then create an exception that permits splitting if the inventory is unavailable. This lack of flexibility can lead to inefficiencies.

What can go wrong?

For example, if a same-day delivery order with multiple items cannot be fulfilled from a single location due to restricted order splitting, Shopify's routing logic cannot retry with different rules. This could result in the order missing its delivery deadline, leading to customer dissatisfaction.

This rigid approach highlights the limitations of a routing logic that does not support recursive rules, underscoring the need for a more configurable and intelligent order routing solution.

Understanding How HotWax Commerce’s Multi-Retry Inventory Allocation Rules Helps

HotWax Commerce offers a more advanced solution with its multi-retry inventory allocation rules. Unlike Shopify's real-time routing, which applies the same set of rules to all orders, HotWax Commerce allows retailers to apply multiple recursive inventory allocation rules tailored to different batches of orders.

Retailers can create various inventory allocation rules for a batch of orders, retrying allocation with different criteria if the initial attempt does not secure the inventory.

Fig. 6:  HotWax Commerce's Multi-Retry Inventory Allocation Rules

For example, inventory allocations rules for same day delivery orders can be:.

1. 1. Check warehouse locations within 100 miles of proximity without splitting the order, if inventory not found move orders to the next rule.

   2. Check stores that have not hit the order limit and warehouse locations within100 miles of proximity without splitting the order, if inventory not found move orders to the next rule.

   3. Check all store and warehouse locations, allow order splitting, if inventory not found move orders to the next rule.

   4. Move unfillable orders to unfillable parking.

This approach allows retailers to break the rules in exceptional cases, such as allowing order splitting or exceeding a location’s maximum order limit when necessary.

How Else Can HotWax Commerce’s Multi-Retry Inventory Allocation Rules Help You?

As discussed initially, in HotWax Commerce, inventory allocation rules are the specific criteria that determine how inventory is allocated during order routing.

1. Same-Day Delivery Orders: Set up rules that prioritize proximity to the customer and allocate inventory from the nearest store or warehouse.

2. Unfillable Orders: Apply rules that attempt multiple retries across different locations.

3. Splitting Orders: Configure rules to allow or prevent order splitting depending on delivery urgency or cost considerations.

4. Inventory Levels: Adjust allocation based on available stock, ensuring high-demand items are reserved for priority orders.

Additional Order Routing Cases Supported in HotWax Commerce

Below are some additional order routing cases that HotWax Commerce supports:

• Multiple Brands, Different Brokering Runs: For retailers managing multiple brands, HotWax Commerce allows the creation of separate brokering runs for each brand. This means that inventory allocation and routing rules can be specifically tailored to each brand's requirements, ensuring that every brand operates optimally within the retailer's broader ecosystem.

• Multiple Country Routing: HotWax Commerce supports routing scenarios for retailers operating in multiple countries. For example, one of our customers sells in both the USA and Canada, with stores and warehouses only located in Canada. They have configured their routing so that all orders from the USA are allocated exclusively to Canadian warehouses, while orders from Canada are allocated to both stores and warehouses. This ensures that inventory is managed efficiently across borders while catering to the specific logistical needs of each country.

• Order Splitting by Shipment Value Threshold: HotWax Commerce also allows retailers to set shipment value thresholds for splitting order items into multiple shipments. If the combined value of the order items exceeds the set threshold, they will be allocated to multiple fulfillment locations if the items are not available at a single location. Conversely, if the order value is below the threshold, the order will not be split and will only be fulfilled once all items are available at a single location.

  This approach helps retailers avoid potentially expensive shipment costs by ensuring that orders are split only when they meet a predefined financial value. This is particularly beneficial when managing a diverse range of products with varying prices, allowing for more cost-effective and efficient fulfillment.

• Brokering Safety Stock: For retailers who rely heavily on store inventory, which fluctuates due to continuous in-store sales, HotWax Commerce provides a brokering safety stock feature. This feature defines the minimum stock level required for an order to be brokered to a facility. For example, if the brokering safety stock is set to 15, only locations with more than 15 units of a product will be considered for allocation. This ensures that orders are routed to locations where there is enough buffer stock to handle the demand, reducing the risk of stockouts and improving overall order fulfillment reliability.

• Order Limits: Retailers can set order limits for specific locations, which is particularly useful for stores that may only fulfill a certain number of online orders each day due to increased workload. By setting these limits, retailers can ensure that their locations are not overwhelmed and that inventory allocation remains efficient and manageable.

• Custom Inventory Allocation Rules: Some retailers have specific priorities for checking inventory allocation locations that go beyond standard rules like proximity, inventory balance, or order limits. HotWax Commerce enables retailers to define a custom sequence for inventory checks, ensuring that order routing aligns with their operational priorities.

Basic Similarities in HotWax Commerce and Shopify Order Routing

Both HotWax Commerce and Shopify order routing offer Multiple Inventory Allocation Rules and the ability to set a Custom Inventory Allocation Rules Sequence. However, these similarities are superficial when considering the broader capabilities of each platform.

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When comparing the order routing capabilities of HotWax Commerce and Shopify, it becomes clear that HotWax Commerce offers a more flexible approach.

Whether it's scheduling order routing, prioritizing urgent orders, or retrying inventory allocation, HotWax Commerce Order Routing engine gives retailers a more flexible solution compared to Shopify order routing. Shopify's basic order routing may be sufficient for smaller operations but can present challenges for retailers with more complex needs.

Contact an expert today to see how HotWax Commerce can help you optimize your order routing strategies.