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Latest Issue: Nov/Dec 17

Order Management Systems in 2018

Any growing online brand, seeing order volumes climb from tens to hundreds to thousands per day, will at some stage encounter a few challenges in getting the orders out of the door. Nothing can ruin a customer’s experience more than sending the wrong items or mishandling an exchange, and having an order management capability you can rely on is a vital ingredient of success.

Unless you outsource your back-office to a fulfilment house, most merchants implement a dedicated order management system. There’s a familiar list of alternatives to choose from including Orderwise, Khaos Control, MNP, Sanderson and Maginus, who have advertised in these pages for many years. An OMS can consolidate orders from a variety of channels including websites, mail/phone, marketplaces like Amazon and eBay, and in-store POS, and support those channels with a consistent view of products and stock. They provide a whole host of functions to manage customer orders such as back order control, payment processing, drop shipping, pick/pack/ship and other warehouse management functions. They also handle related business areas such as purchasing, customer service, returns/refunds and even in-store POS. This broad swathe of functionality puts the OMS right at the heart of a direct commerce business, so selection and implementation is no trivial task. We don’t have space in this article to cover each vendor, but we will look at the important trends affecting the sector.

1. Cloud

Everyone’s talking “Cloud” these days and it’s hard to deny that browser based User Interfaces are the way of the future. With responsively-designed screens you can access anywhere, on any sized device, and no need for on-site servers, cloud-based applications make traditional windows-forms look rather dated. Several of the vendors mentioned above are replacing Windows forms with browser based pages, just as 20 years ago Windows forms replaced character based green screens. But it’s no easy job, given the vast array of functionality involved. Arguably, the UI and where the server sits isn’t as important as the functionality, but the tide of cloud computing is not turning, and vendors who do not address the challenge may struggle for new customers in the longer term.

Khaos Control is one vendor which made an early start, and now offers an entry level system at £50/user/month which covers all the key functional areas. It also offers an attractive hybrid of Cloud and on-premise computing, which eases the transition for existing users wishing to migrate to the Cloud. A couple of other vendors have announcements planned later this year for new Cloud-focused versions.

The interest in Cloud is enabling some new entrants. Netsuite has been building cloud ERP software for many years and now has a few customers in UK direct commerce. On first glance the functionality seems appealing, and it’s interesting to have an ecommerce module which uses exactly the same database as the rest of the suite, without any syncing or transferring of data from A to B. However, at this stage we haven’t reviewed Netsuite in detail, and from personal experience, it can be a 2 year job to make a generic ERP into a suitable solution for Direct Commerce. Despite this note of caution, we feel that Netsuite is certainly one to watch.

What was Dynamics AX, the flagship ERP from Microsoft, now has the less-then-snappy title of “Microsoft Dynamics 365 for Finance and Operations, Enterprise Edition”. It’s been refactored for the Cloud and has advanced warehouse & built-for-purpose B2C order management functions in standard solution. But it is far from cheap and some projects take years. 

2. Ecommerce Centric IT

Rather than synchronising orders, stock, customer data, pricing and promotions between an ecommerce platform and a traditional back-office order management system, some adopt a simpler approach which is ecommerce centric rather than back-office centric. What this means in practice is absorbing half the functionality of an OMS into the ecommerce front-end, and adding a dedicated warehouse management system for everything else, apart from the accounts.

A few years ago, the only companies using this approach had in-house ecommerce developers. Everything they built was in the ecommerce platform, so when they needed extra back-office functions, the path of least resistance was simply to build them in just the same way.

Today, a similar approach is gaining ground, with ecommerce vendors like Magento, Demandware and Hybris all offering commercial order management products which work hand in glove with their ecommerce platforms. Magento’s OMS isn’t an entry-level system, but for smaller users wanting something simpler, its community of extension developers provide point solutions to tackle every aspect of the traditional OMS footprint.

If there’s one major downside to this approach, it would be skills. Processing orders may appear simple, but the devil’s in the detail, and most ecommerce platforms are implemented by agencies who focus on front-end customer experience rather than back-end order fulfilment. 

3. Nimbler Warehouse Management Systems

Whilst an OMS normally includes competent warehouse management functions, larger operations often turn to a specialised Warehouse Management System when order volumes reach several thousand per day. Traditional WMS solutions were expensive and sometimes complex, focussing on timing of goods movements and real time efficiency.

However, a new breed of WMS has begun to appear, which is built for the world of Cloud, and Ecommerce Centric IT.

ProSKU and Peoplevox are good examples. They provide cloud-based WMS solutions for a few thousand pounds setup and modest monthly fees. Peoplevox have done fairly well in the last couple of years. They say that the complexity of a traditional OMS is a key factor in demand for their WMS. Amongst other things, our industry has many seasonal businesses, with short windows for systems implementation between trading peaks. A focused WMS project will often fit the bill, instead of a more complex and time-consuming OMS or ERP implementation. 

4. Carrier Manifesting Systems

In the States, there’s always been a competitive software landscape in shipping and carrier manifesting. These systems download rates automatically from multiple parcel carriers, work out the best way to ship each parcel, create labels and provide tracking on carrier systems. In the UK, the equivalent solutions have been largely absent until recently, which resulted in OMS vendors providing their own integrations with the most popular carrier services. That works, it’s a pain for OMS vendors whose core business isn’t really carrier integration, and often results in surprisingly high costs if you want to switch carrier down the line.

Metapack was the first UK shipping solution, but for many years there were hardly any competitors. Now there’s half-a-dozen others to choose from, with price points to suit all budgets, and we’ll be looking at the topic in a future article.

Taking all this together, we seem to be moving towards an interconnected landscape of cloud-based apps. But traditional approaches and established vendors will predominate for some time, especially for anyone who operates at scale. Buyers evaluate offerings not just in terms of functionality, but also scalability, reliability, flexibility, vendor track record and the robustness of their business. New trends all add to the options available, but none of them make the buyer’s decisions any easier!

About the author:

Harry Manley worked in the software side of Direct Commerce for 20 years, first for Maginus then for Omnica. Now he writes on the subject and is available for consultancy, via his company Allanson Consulting Ltd, www.allanson-consulting.com