Order Management Software Saves Time, Reduces Errors
“It was the best of times, it was the worst of times.”
When Charles Dickens opened his classic A Tale of Two Cities with those words he was thinking only about the French Revolution. But his words strike equally apropos in the entrepreneurial revolution of the 21st century.
It is the best of times for energetic ecommerce entrepreneurs as they mine the global marketplace—there is plenty of business out there to be had. But success can bring on the worst of times if the ecommerce merchant finds himself overwhelmed by hundreds or thousands of orders zipping in from every corner of the world, each one needing to be fulfilled ASAP. More than one online businessman opened up shop dreaming of his web-based store creating an avalanche of business, only to have that avalanche bury the company and its fulfillment infrastructure.
While the science of order management (“OM”) has been around as long as there has been mail order, it has become super critical in the highly competitive world of Internet commerce, where vendors may only get one chance to impress a customer with on-time delivery of their products, great customer care, and accurate billing. The time to worry about handling those orders and the tasks that go with them is not when they start coming in, but before you offer the product for sale.
Fortunately, the typical growing ecommerce business doesn’t have to invent an order management system. As with many other aspects of the ecommerce business there are software tools available to help automate the task. You still have to have the fulfillment team in place—billing, packing, shipping, receiving—but management of that team and business pipeline is greatly enhanced by order management software.
What Does Order Management Software Do?
First of all order management is not, as some will try to tell you, an accounting software function. But OM software will do for your shipping what something like QuickBooks did for your shoe box full of receipts and cancelled checks. It gets you organized and relieves you of repetitive tasks, allows you to manage and maintain a customer database, and makes it possible to accurately track every order and shipment from its receipt to its delivery.
If it does nothing else, OM software provides organization to a series of tasks that are interdependent. That series of tasks includes receiving orders, billing, shipping label creation, shipment pickup scheduling, accounting, inventory control and others. These tasks introduce, in the ecommerce business, a difficulty factor and a plethora of details that can sink even the most determined entrepreneur. The decision to streamline those tasks is related to the pain threshold of the business owner and to the need to improve the bottom line. That pain threshold is usually about six pieces of shipping each day.
Jeremy Turner is a veteran of the order management wars. He runs Happyballs.com, selling car antenna toppers.
“We purchased OM software just over a year ago and would never go back to “the old days”. We’ve been in business for over five years and this last year has been all about automation!” he says. Turner says of his Stone Edge Order Manager package, “It automated everything. We used to print the order from the shopping cart using our email program, pack the product, pull up our Stamps.com program, type the customer’s address, weigh the product, write down the tracking number, email the customer, then mail the product. That’s all automated now.”
Turner says, “Now we click one button and it prints a packing list and once we pack the product, we click one button and it prints the shipping label with indicia, stores the tracking number, emails the customer, and weighs the product. It stores all of the customer’s data so it makes it very simple to see what customers have ordered in the past and it allows us to place reorders with just a click of a button.
The initial setup may take some time and the up-front cost may seem a bit steep (depending on your situation), but in the long run it is a cost-effective exercise. Wes Clayton of Interapptive, Inc. developer of ShipWorks, a popular OM package says that anyone who ships more than a few packages a day—a few being half dozen or more—benefits greatly from OM software.
Soft Things First
There are two primary ways to apply OM software to your company. One is by buying a software package and installing it on your system and the other is by leasing the use of the software and data space from an application service provider (“ASP”) online. When you buy the software package it works on your computer system and you have all the programming and data in house. Conversely, in the ASP method all of the data and software resides on a distant server. Aside from the obvious, there are other differences.
“The biggest advantage to the ASP model is that you can access the system from anywhere. The downside is that you will pay per-transaction charges, which can get pretty expensive, and you don’t really own your data,” says Barney Stone, the founder and CEO of Stone Edge Technologies. Stone Edge sells a desktop OM system.
“It doesn’t happen often, but it has happened. ASP companies come and go and merchants end up losing all of their data,” says Stone.
Adds George Wei, President of Sonic Cube, developer of a system called MerchantCompanion2, “The ASP model requires an Internet connection. If a merchant loses that connection, he may not be able to take phone orders, check inventory or perform other routine tasks.”
ASP software allows, sometimes, for a smaller startup cost, reducing initial outlay. However, the storage charges and per-transaction fees can mount up quickly in a serious growth cycle. Desktop and small system software typically runs from $300 for the light versions of some packages to as much as $2,000 for feature-rich versions. Mail Order Manager (M.O.M) is Dydacomp’s entry solution and the M.O.M. SOHO system starts at $995 for a one-user, one-company license. Add-on features may include more computer workstations, multiple company capabilities and other optional features that could run the installation to $2,500.
OM software is most often a stand-alone software or service, but may also come as part of a store front or shopping cart service such as Nexternal, which has an order management module built in. Pete Hitesman, owner of RelentlessImprovement.com (see Website Profile in this issue) was experiencing offthe- chart growth and went with Nexternal because they have the OM module. “Automating was the only way we could keep up with our fulfillment needs,” says Hitesman.
Most of the small business OM packages will run on simple XP Pro or Windows 2000 platforms (a few can run on Win 98). You will need plenty of storage for your database files. To run the typical system trouble free, it would be best to have a minimum of 256 Megs of memory and a 1-Gigahertz processor or better. Some of the programs interface with Microsoft Access as a database while others use MySQL (some use either). We are not aware of any pre-packaged OM systems that run on Mac.
For the small 1 to 10 – person business all of the packages will do the work without tweaking. Some of the packages available on the market now include:
You will see the big players like Microsoft and IBM offer OM software as part of their business systems, but unless you’re in the $10 million annual sales range the cost is prohibitive and the system overkill.
The State Of The Art
Virtually every package on the market is a work in progress. As good as some of them are, the ecommerce business is evolving so quickly that the demand for new features and functions in any given software drives ongoing research and development.
Robert Coon is President of Dydacomp Development Corp., developer of the popular Mail Order Manager (M.O.M.) software package. With 10,000 users at this point, Coon says his company is constantly at work on new features requested by online shoppers or users looking for just the right outof- the-box software.
“The market is constantly evolving and with it so is Mail Order Manager. Feedback from our large customer base is a huge advantage, allowing us to quickly identify emerging trends and incorporate those features that will allow M.O.M. merchants to take advantage of new channels and trends.”
George Wei, with MerchantCompanion2, says his OM package manages not only orders, but also daily operational tasks.
“We tried to make our software complete in the sense that merchants would run just a single piece of software to cover their daily operational environment. Our package reduces human errors and improves efficiency overall.”
Where To Start
When trying to decide which OM software to choose there are some critical points to consider. Barney Stone suggests that you match your management software to your sales channels. “The channels can be one or more shopping carts, phone orders, mail order, Amazon, eBay, Shop.com, and even walk-in traffic. So the first thing you want to do is find software that will bring all of that together. You don’t want to have, for example, inventory management in a bunch of different systems. So you want to find something that will be compatible with all of them or as many as possible.”
Some of the simpler items to look for include printing of packing slips, mailing labels and a working interface with the shippers you use.
“This is a big one,” says Stone, a programmer who now specializes in ecommerce order management software development. “UPS, USPS,FedEx, whoever you are using, you want to make sure it is going to be easy to get those labels printed and the shipper alerted to the need for a pickup at your shop.”
George Wei cautions, “Some OM systems require that you own a valid Microsoft Access license. This costs an additional $299 if you don’t already own it.” Other features to look for might be expandability, inventory control and order import.
Most of the OM software vendors will provide a downloadable free trail version of their product, which, in some cases is a fully operational version that expires in a certain number of days. Those who don’t provide downloadable demos usually have interactive demos on their websites.