For many businesses—especially high-growth merchants—the act of managing and fulfilling orders across multiple sales channels and fulfillment locations is tricky. Between order placement and delivery lies an ocean of challenges like inventory visibility, order profiles, and returns.
One solution to solve these problems? An order management system (OMS) that tracks stock levels across warehouses, combines order data across multiple sales channels, streamlines fulfillment, ships orders fast, manages returns and exchanges, and centralizes reporting.
In this guide, we’ll cover a wide range of details, from which tasks an OMS should handle to the benefits of having a centralized dashboard. And we’ll help you evaluate the type of OMS your business needs.
What is an order management system?
An order management system (OMS) is a digital tool used ito track sales, orders, inventory, and fulfillment. It streamlines the order lifecycle, from receipt of order to delivery, ensuring accuracy and efficiency. It includes processes like order entry, resource allocation, and monitoring order status.
For example, Shopify, a leading ecommerce platform, offers a built-in OMS as part of its service. With Shopify’s system, ecommerce businesses can process multichannel orders—including in-store purchases, online store sales, and other marketplaces—and manage them all from a single platform.
Order management system features
An OMS is a comprehensive solution to streamline end-to-end fulfillment, from order entry to delivery. Some systems, like Shopify’s, also provide distributed order management to coordinate fulfillment across multiple warehouses and locations.
Top features include:
- Order management dashboard: Acentralized hub for order oversight. Filter, sort, search, tag, and add notes to orders. Track delivery status, enabling easy follow-up on failed or delayed deliveries. Easily view and organize all orders in one customizable interface by delivery destination, fulfillment status, product SKUs, and more for better visibility and prioritization.
- Smart order routing: Prioritizes and allocates orders to optimal fulfillment locations using various criteria. Works with your facilities or third-party logistics providers to fulfill orders more efficiently.
- Automations: Use Shopify Flow to automate and streamline fulfillment, inventory, and returns processes. Reduce manual intervention, minimize errors, and save time by automating repetitive tasks.
- Bulk operations: Create, buy, and print multiple shipping labels, packing slips, and forms in one place. Perform bulk actions for fulfillment, requests, and cancellations to speed up processing.
- Order-editing capability: Modify any order before shipping to improve the customer experience and reduce errors. Provides flexibility in managing requests and corrections without disrupting fulfillment.
- Draft order creation: Generate orders and invoices from anywhere, email to customers for online or in-person payment. Supports various sales scenarios with enhanced flexibility in order creation.
- Unified inventory control: Synchronizes stock levels across your locations and sales channels to prevent overstocking or shortages.
- Real-time order analytics: Access instant insights on all orders—placed, open, fulfilled, delivered, and returned. Use real-time data for informed decision-making and to identify areas for improvement.
- Third-party logistics integration: Integrate with leading 3PL partners and systems using hundreds of off-the-shelf apps built and maintained by trusted system and integration partners.
- ERP integration: Links with back-office systems to provide comprehensive financial and operational oversight.
- Customize with APIs: Use fulfillment APIs that give you the flexibility to build custom workflows to model and automate unique and complex fulfillment flows.
What does an OMS do?
An OMS tracks inventory levels by channel, automates the order fulfillment process, handles reverse logistics, manages customer information, and merges order and financial data. In short, it ensures the customer gets what they ordered, and lets both you and the customer know when the order has arrived.
Track inventory levels by channel
The beauty of modern-day business is that brands can reach customers through a variety of channels. Customers can purchase items in-store through point-of-sale (POS) software, self-serve through a brand’s direct-to-consumer ecommerce store, in online marketplaces or social media channels, or even combine online and offline activity with delivery options like buy online, pick up in-store (BOPIS).
An OMS helps retailers manage and synchronize inventory across the multiple locations they’re fulfilling items from, whether from a physical retail store, or a fulfillment center or warehouse. It’s a tool designed to help ecommerce brands that plan to invest in their inventory management process over the next two years.
With an OMS, you can:
- Update inventory levels across all retail stores and fulfillment locations
- Transfer inventory between retail stores and fulfillment locations
- Automatically be notified when SKUs are low in stock and restock accordingly
- Understand which SKUs sell best by region or sales channel
OMS solutions like Shopify offer multilocation inventory management, allowing businesses to track stock across up to 1,000 warehouses, fulfillment centers, and stores. These systems also enable you to create purchase orders for suppliers and transfer inventory between locations, while providing a comprehensive view of stock levels and movement.
Automate the order fulfillment process
A modern OMS treats the supply chain as an interconnected ecosystem, allowing merchants to automate their internal processes from order to fulfillment.
To push orders through the processing, picking, and shipping process in as little time possible, ecommerce merchants can rely on an OMS to:
- Accept payments regardless of shipping destination or order currency
- Route orders through to the best fulfillment location, including merchant-managed warehouses, retail locations, or 3PL
- Automatically print shipping labels and packing slips if you’re fulfilling orders in-house
- Track order fulfillment and delivery status with connected shipping providers
A good OMS should route orders to the best location, not only in terms of a customer’s proximity to your warehouse, but also for prioritizing orders within the same destination market, minimizing split fulfillments, or ranking priority locations.
Handle reverse logistics
Your OMS can help you avoid upsetting your customers and provide a fuss-free returns experience for everyone involved. It might also support self-serve returns in your online store, enabling customers to initiate returns whenever it’s most convenient for them, without the hassle of contacting a representative over the phone or email.
It can automatically print return labels in case a customer needs to send items back. The return address will differ based on the customer’s location, letting you receive and process refunds in as little time as possible. Customers can also check the status of their return with online tracking.
Not only that, but customer service teams get immediate information on any product a customer has shipped for return. All customers get the same level of service regardless of what they purchased, and how or where they bought it.
Manage customer information
An OMS can act as a customer relationship management (CRM) platform, allowing merchants to access all information they have on a customer, including previous orders, lifetime value, and their location.
With the insights into customer data they gain from an OMS, merchants have the ability to hyper-personalize any marketing messages they send to customers when trying to secure another sale.
For example, an ecommerce brand can pull data from their OMS to create the following customer segments:
- Customers located in Europe
- High-value customers with an AOV of more than $50
- People who’ve bought one item and not yet returned to the website
The brand then develops a distinct marketing strategy for each customer segment. Those located in Europe won’t get the same marketing emails as your US audience. Expensive items are recommended to customers with a high AOV—those who are more likely to buy. Bestsellers are put front and center in your emails to one-time customers.
Email personalization that acknowledges what was previously purchased and is value-added has been proven to yield 10% to 15% higher conversion rates—and it’s made easy with customer reports automatically generated with an OMS.
Merge order and financial data
It’s all well and good to see all your order data in one central location. But an essential part of running an ecommerce business is judging whether you’re actually turning a profit—and if so, where and how, so you can zone in on making more.
Most OMSs have the ability to integrate with other back-office functions—particularly your finance software. The platform can pull information from your accounting software to merge inventory and sales data. You’ll be able to gain insight into accounts payable and receivable, as well as automate the production of invoices and purchase orders, , with no manual data entry required.
The best order management software
Whether you’re searching for your first OMS or looking to replace your existing one, here are four great options to consider.
Shopify
Shopify is an all-in-one ecommerce platform for scaling brands. Our platform comes with a built-in order management system, with which you can process orders in-store, from your online store, or from other sales channels and marketplaces.
You can also track, manage, and fulfill orders from one central dashboard. Shopify will also automatically route orders to the best fulfillment location based on order-routing rules set by the merchant.
Shopify’s OMS also offers:
- Integration with top carriers like USPS, UPS, and DHL
- Discounted shipping rates (up to 88% savings compared to retail rates)
- Real-time inventory updates across all sales channels
- Support for local delivery and in-store pickup options
- Ability to manage up to 1,000 fulfillment locations
- Returns and exchange management solutions
One success story is Snarky Tea, a business that transformed its fulfillment operations using Shopify’s built-in OMS.
Snarky Tea, founded by Jenni-Lyn Williams, grew from a small business into a direct-to-consumer company with hundreds of products. With rapid growth and publicity from Vogue, the Oscars, and Shark Tank, the company faced challenges managing inventory, fulfillment, and shipping efficiently.
By integrating Shopify’s order management solution, Snarky Tea achieved:
- $25,000 monthly savings on shipping through discounted rates
- Accurate inventory tracking across production facilities and fulfillment centers
- Seamless order fulfillment using automated label printing and USPS manifests for pickups
- Fewer errors during batch printing, improving customer satisfaction
- 360 hours saved annually by reducing manual tasks and avoiding multisystem checks
Jenni-Lyn describes Shopify’s OMS as a game changer, saying, “The more I can do within Shopify’s ecosystem, the better. It saves us from unnecessary headaches and helps us stay organized.”
Tired of having to choose between scalability and control?
ShipHero
ShipHero is another order management solution for growing ecommerce brands. Built in the cloud, this platform is designed to help businesses more easily manage their inventory, streamline fulfillment processes, cut down on errors, and boost their overall operational efficiency.
It’s also known for its user-friendly interface, which allows ecommerce businesses of any size to easily customize workflows to their unique needs. Plus, ShipHero offers a robust suite of tools for managing multiple sales channels, optimizing order routing, and automating tasks—freeing up time and resources for businesses to spend on other projects.
ChannelApe IOMS
ChannelApe IOMS is a powerful platform for strategic inventory operations, helping businesses unite their sales, fulfillment, finance, and customer service. It’s touted as a company’s “mission control for operations,” and offers a streamlined approach with helpful dashboards to consolidate metrics in real time for a comprehensive look at how a business is performing.
Specifically, ChannelApe can help businesses get better visibility into their supply chain, which can help them scale operations and reduce mistakes. Plus, companies can tap into advanced tools for inventory and order management, including rules governing holds, routing, edits, fraud, and more.
Manhattan Associates
Manhattan Associates is a supply chain and omnichannel commerce software provider. They offer solutions that help businesses get the most out of their supply chain operations, inventory management, and order fulfillment processes.
Manhattan Associates is especially keen on the idea of unified commerce, and their cloud-based solutions are geared toward helping businesses succeed across several areas of commerce: workforce retention, cloud technology transformation, fulfillment through storefronts, transportation and distribution, profitable fulfillment, and inventory forecasting. They are known for their expertise in supply chain technology, and they are able to provide tailored solutions to meet a business’s specific needs.
The benefits of a good OMS
A good OMS offers several key advantages:
- Improve order accuracy: Automates order processing, reducing human errors that can lead to shipping mistakes and costly returns
- Pick, pack, and ship faster: Identifies the best fulfillment center with available inventory, streamlining the process for quicker delivery times
- Reduce shipping costs: Integrates with top carriers globally, offering prenegotiated discounted rates and simplifying label printing
- Centralize channel management: Consolidates orders from all channels into one dashboard, minimizing missed or duplicate orders and improving customer service response times
- Meet customer expectations: Provides built-in tracking pages for order updates, enhancing transparency and reducing negative reviews that result from poor communication
- Prevent stockouts and forecast inventory: Offers comprehensive data on sales trends and popular products, enabling accurate inventory forecasting to avoid overstocking or stockouts
