If you are an accounting professional serving retail clients, you understand the challenges they’re facing as they compete in an increasingly connected world. And, during peak selling seasons, pressure intensifies to process orders faster while keeping inventory levels in line with customer demands. One of the biggest challenges online retailers face is in bridging the gap between their online eCommerce store and their back office operations where they process orders and manage inventory.
In today's competitive multichannel environment, retailers have orders coming in from a variety of sales channels; e.g. their web store, Amazon, eBay, and phone, to name a few. Problems can arise when they don’t have visibility into multiple sales channels from a single point of control. Their eCommerce platform will give them information about orders coming in through their webstore shopping cart. But orders coming in through Amazon or eBay, don’t flow through that platform. Reconciliation of orders and inventory management become manual efforts. If inventory on an item is not managed from a central source, they run into the danger of selling the same item twice through different sales channels.
Multichannel order management systems do more than automate order entry and processing from a variety of sales channels—they also provide shopping cart integration, selling tools, Payment Card Industry (PCI) compliance, fraud protection, inventory management, payment integration, customer management and order fulfillment capabilities. Retailers need to ensure that orders from all channels are automatically captured and centrally staged. Visibility into this process provides the controls they need to eliminate multiple data entry errors that can occur while seamlessly integrating business operations into a single, efficient workflow from shopping to shipping.
Inventory: When is enough, enough?
Having up-to-date inventory is a crucial element of success for retailers that face price pressure from major discounters. Retailers benefit from keeping close tabs on every item in their inventory — understanding what items have sold in each department, by category, by season, style, size, color or any other variable. Knowing when to reorder and restock those fast-moving items is just as important as knowing when to discount or drop items that don't sell. Keeping up with demands of consumers is not an easy task, and inventory tracking needs to be simplified, streamlined and automated.
With an automated inventory system, retailers are better equipped to flexibly source inventory and handle complex supplier and multi-supplier fulfillment requirements to better meet customers' demands. Integrating purchasing and inventory management processes enables specialty retailers to establish optimum inventory levels for each item stocked and helps make sure that purchases are made well enough in advance to keep inventory levels where they need to be.
This provides greater inventory control and helps avoid out-of-stock situations. Whether shipping direct or drop shipping from a warehouse or fulfillment center, cross channel inventory and purchasing control are essential across all platforms, including third party eCommerce options.
In addition to physical inventory items, orders can involve items for which no physical inventory exists, such as personalization or other forms of unique customization. An order management system enables retailers to manage the flow of items to better control response time, manage inventory allocation and create a quick and seamless process for order fulfillment so they will have the right products, at the right time, ready to ship to meet customers' expectations.
As its inventory grows, a retailer may find that it needs or wants to have multiple warehouses that will get products into customers' hands as quickly as possible. Automating inventory tracking across multiple warehouses and integrating this with an order management system helps to stage and transfer items between and within retail locations, or online warehouse locations, for more rapid order fulfillment and higher levels of customer satisfaction.
An order management system will also simplify the process of collecting, managing and linking customer information – which can lead to greater customer loyalty in the long run. Retailers can use their systems to generate target customer lists and develop campaigns and offers to select classes of customers, for example, those who have not ordered in the past six months, or those who have ordered one product but none of the coordinating items. This enables retailers to create and maintain personal relationships with customers and communicate relevant promotions at times when they are most likely to buy.
The Front Office Meets the Back Office
Once shoppers have selected their items, orders must be processed and shipped. Multichannel retailers may have specific demands as far as shipping methods and order processing are concerned. At minimum, they need to be able to capture and stage orders automatically for all sales channels so that there are no delays in shipment – especially during holiday and gift-giving seasons. Having a multichannel order management system allows retailers to automatically download new orders from all sources, publish product information and keep inventory synchronized.
Retailers also need to be able to process multiple and mixed payment methods including credit cards, PayPal, store credit, gift certificates, coupons and other discounts that may be applicable. Being able to automatically queue orders for processing based on available inventory, being able to track the orders by stage – from picking and packing to delivery – and being able to keep shoppers informed every step of the way is one way to differentiate service after an order is placed.
Doing all of this effectively requires full and complete information automatically available from each link in the process - from inventory planning, purchasing and warehousing, to shopping and shipping. Distribution networks and logistics take on increased importance for the retail business, along with the ability to integrate inventory from multiple suppliers and locations across all channels to know what is in stock and ready for shipment.
An order management system that fully integrates with an accounting system and provides true, real-time inventory movement with sales by client allows retailers to respond quickly to changing market demands, enabling them to take the guesswork out of merchandising and planning for future marketing activities.
Fred Lizza, CEO for Dydacomp, is experienced in bringing new technologies to market, driving rapid growth, building sustainable value propositions and competitive advantage. He was previously CEO of Optiant, where he drove the company's positive momentum toward industry leadership, and profitability. He was also president and CEO of Avotus Corporation, a software-based telecom expense management provider. Fred received a BS in Accounting at Boston College and an MBA in Marketing at Harvard Business School.