Shopify omnichannel order management

What is Shopify Order Management System?

by Divesh Dutta |


In 2023, customers increasingly anticipate near-instantaneous deliveries. The escalating demand for same-day and next-day delivery services, fueled by large-scale retailers, has elevated speedy shipping from a luxury to an expectation, crucial for securing sales. What is Shopify Order Management System (OMS), and how can it help meet these expectations?

Rising Demand for Rapid Delivery Services and the Role of an OMS

According to a recent study, "the global same-day delivery market was valued at $5.78 billion in 2019, and is projected to reach $20.36 billion by 2027, registering a CAGR of 21.1%." This implies that retailers across industries will need to keep pace with escalating demand to retain their customers and foster growth in the coming years. Notably, "41% of consumers are willing to pay a charge for same-day delivery while nearly a quarter (24%) of shoppers said they would pay more to receive packages within a one or two-hour window of their choosing."

Despite this, providing these expedited same-day and next-day delivery services isn't a minor expense. So how are retailers to fulfill this burgeoning demand without sacrificing their revenue? The answer lies in a robust and efficient Order Management System.

A proficient OMS enables retailers to leverage their existing store network to provide faster fulfillment, thereby retaining satisfied customers and inspiring them to return for more purchases. First, let’s take a closer look at Shopify Order Management System.

What is Shopify Order Management System?

Shopify Order Management System functions as a unified platform that integrates smoothly with Shopify, offering a more efficient method of capturing sales orders, managing store inventory, designating inventory from optimal locations to sales orders, and enabling same-day or next-day delivery via solutions such as Buy Online Pick Up In Store (BOPIS) and Ship from Store. By consolidating orders from both eCommerce and physical stores, the Shopify OMS streamlines inventory allocation from the best locations, facilitating prompt delivery for customers. Furthermore, the Shopify Order Management System delivers robust reporting capabilities, providing valuable insights into a retailer's business performance.

As a link between the POS and eCommerce, Shopify Order Management System plays a critical role in timely order fulfillment and customer satisfaction enhancement. Retailers leveraging Shopify Order Management System can integrate their inventory from store and enhance product availability, thus preventing lost sales and offering faster fulfillment through their store networks.

Shopify Order Management System answers the problems that many omnichannel retailers face with Shopify’s native Order Management System. Let’s take a closer look at these common issues retailers encounter:

Shortcomings of Shopify’s Native Order Management System Features

  • Revenue Loss Due to Inadequate Inventory Management

Shopify integrated the Stocky app to furnish inventory management capabilities to its retailers. However, numerous retailers express concerns over delayed software updates and a perceived lack of support from Shopify's customer success team for issues within the Stocky app. Suboptimal inventory management often leads Shopify retailers to encounter inventory inconsistencies, fulfillment delays, missed sales, escalated fulfillment costs, and overall revenue loss.

  • Sales Loss Due to Absence of Real-Time Inventory Visibility

Shopify does not provide real-time “Available-to-Promise” (ATP) inventory visibility across both online and offline channels, potentially causing retailers to oversell or undersell their inventory.

  • Fulfillment Delays Due to Static Order Routing

While Shopify manages inventory across numerous locations, it cannot dynamically route online orders to the nearest fulfillment center and then to the customer's location. Consequently, customers often face excessive delivery costs and prolonged delivery timelines.

  • Reduced Conversion Due to Limited Store Inventory Visibility on Product Detail Page (PDP)

Shopify provides native features for managing the PDP, such as uploading high-resolution images, detailed descriptions, and customer reviews. However, it does not support API integrations for features like displaying in-store availability, providing estimated delivery times for same-day deliveries, facilitating pre-orders and back-orders, and listing store availability, all of which can significantly boost conversion rates.

However, there are solutions designed to supplement these shortcomings: third-party Order Management Systems that seamlessly integrate into retailers’ workflows to enhance their capabilities.

Let’s dive deeper into how Shopify Order Management Systems support retailers in their business needs.

Benefits of third-party Shopify Order Management System

  • Inventory Synchronization Across All the Storage Locations

The Shopify Order Management System's primary role is to unify inventory data from diverse sources into a single accessible pool for retailers. This is no small feat, considering inventory data is scattered across various systems like Enterprise Resource Planning (ERP), Point of Sale (POS), Warehouse Management System (WMS), and eCommerce platforms. Unlike these systems, the Shopify OMS acts as the "master of inventory availability," synchronizing real-time inventory data across all locations. This crucial function helps retailers avoid overselling or underselling due to rapid changes in inventory levels caused by sales or inventory receiving. By integrating with multiple systems, tracking inventory changes in real-time, and consistently updating the Shopify eCom with accurate inventory data, the Shopify OMS maintains a clear and reliable view of inventory availability across all channels.

  • Calculate Available to Promise and Sync to Shopify

Shopify Order Management System calculates the actual ATP inventory, factoring in rules like Safety Stock and Thresholds. Moreover, sometimes inventory may be unavailable to fulfill because orders are already received for the inventory or the location is currently unavailable to fulfill orders due to unexpected reasons. In such cases, Shopify OMS excludes such inventory from the Quantity-on-Hand and pushes ATP inventory to prevent overselling and avoid order rejections, thus allowing retailers to gain improved control over inventory and order management.

Additionally, Shopify OMS is responsible for syncing near real-time and accurate inventory to Shopify while ensuring Shopify’s API limits are not exceeded. This inventory synchronization can be achieved through GraphQL files, which update accurate sellable inventory in bulk on Shopify. When updating inventory in Shopify, the OMS should ensure that inventory of only those products—which have undergone recent inventory changes—are updated to optimize the system performance.

  • Improved PDP Experience

The Product Detail Page (PDP) is a critical point in the online shopping journey where buying decisions are made. Aside from basic features like high-quality images, detailed descriptions, reviews, and fast-loading pages, contemporary retail brands need to exceed these minimum requirements to drive conversions. While Shopify offers apps to enhance the PDP, using several apps can potentially overload the system and degrade user experience.

Shopify Order Management System revolutionizes the PDP, transforming it into a powerful tool that showcases the product availability and delivery specifics. It emphasizes fast delivery and convenience, preventing overselling. Features such as displaying in-store availability, accurate same-day delivery ETAs, pre-order and back-order options, store pickup lists, and zone-based shipping collectively enhance the eCommerce shopping experience.

  • Order Capturing and Dynamic Routing

Shopify Order Management System leverages order brokerage logic to direct online orders to the most suitable fulfillment center. This strategy enables same or next-day deliveries while minimizing delivery costs. Shopify Order Management System offers customizable brokering rules. For instance, if a store has stock available and can fulfill the order within the promised date, it is prioritized. If that store cannot meet the promised date, the order is redirected to a different store that can. In scenarios where several stores can fulfill the order on time, it is directed to the one with the most stock. These customizable rules help retailers offer quick deliveries without hurting their bottom line.

  • Store Fulfillment

Shopify Order Management System is designed to simplify the responsibilities of store associates in the omnichannel retail space. This user-friendly platform comes with essential features that streamline the pick-pack-ship process. It provides store associates with timely notifications of new orders, clear visibility of pending orders, and the ability to log inventory discrepancies. Store managers can create and assign picklists, generate labels through 3PL integration and rate shopping, and track the status of order fulfillment. This way, the system ensures a smooth order completion process and adapts seamlessly to the fast-paced omnichannel environment.

  • Reporting and Analytics

Shopify retailers require comprehensive reporting and analytics to track their omnichannel strategy's performance and improve their order management. While Shopify offers standard business performance reports, additional reports are essential for measuring omnichannel initiatives. Shopify OMS generates crucial reports such as demand and sales, order fulfillment, pre-order performance, and return reports. These reports enable retailers to understand their processes, identify inefficiencies, and drive business growth by addressing negative trends or gaps effectively.

Taking the Shopify Order Management System a Step Further

Shopify Order Management System offers a transformative solution for retailers grappling with the evolving demands of the modern consumer. By answering the shortcomings of Shopify’s native features through utilizing robust third-party OMS designed for omnichannel operations, businesses can enhance their operations, delivering improved customer experiences and driving sustainable growth. The future of retail hinges on the capability to adapt and innovate, and Shopify Order Management System represents a pivotal step in this journey.

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