Omni-Channel OMS: Despite Countless Claims to the Contrary, It’s About Time to Put the Customer First

Order management is (finally) getting the recognition it deserves as the critical centerpiece of successful omni-channel experiences, and as such, I think it’s time to make an honest assessment and ask ourselves one simple question: have we been duped into believing that most retail technology vendors have made it a priority to put the customer first throughout the omni-channel shopping journey?

If you have been duped, don’t feel bad. You aren’t the only one to believe the hype. I have been duped, too. But I will be fooled no more.

I have spent the past several months working with dozens of retailers and multiple analysts in an effort to investigate the true state of order management in retail today, and the results of that investigation opened my eyes to the disappointing truth:

The majority of retailers have invested millions into processes and technologies that are primarily focused on improving the efficiency and profitability of the order management lifecycle, with much less regard for the quality of the customer experience.

The majority of retailers have invested millions into processes and technologies that are primarily focused on improving the efficiency and profitability of the order management lifecycle, with much less regard for the quality of the customer experience.

Without question, order management has become a hot topic across the industry. Smart retailers of every size and in every category have come to understand that order management is indeed the lifeblood of sustained omni-channel success.

So Much Supply Chain…

Accordingly, many have been investing in their order management processes. Which is intuitively a good thing, right? In theory, yes, investing in these critical processes is certainly a good idea. But they have been going at it backwards. Too many have invested in processes and technology that seek to optimize inventory productivity. A quick scan of the literature from most of the largest OMS technology providers (that coincidentally have also been the recipients of a good portion of OMS technology investments in recent years), very clearly establishes their priorities:

  • Orchestrate the Flow of Orders from Anywhere in Your Network”
  • Cross-channel Order Orchestration Platform for Today’s Dynamic Supply Networks”
  • Order orchestration through a centralized inventory, order promising and fulfillment hub”
  • “Manage multiple fulfillment constraints such as fulfillment outages, capacity constraints and inventory protection”
  • “Manage retail/replenishment order fulfillment through purpose-built strategies”

I could go on and on, as there’s plenty more where they came from. But I think you get the picture. These solution providers (and the brands that have invested in their solutions) have clearly placed their bets on optimizing inventory as the key to omni-channel success.

One would expect, then, that the industry would be flush with profits throughout the order management lifecycle, right? Unfortunately, my research indicates otherwise…

So Few Profits, So Many Disappointed Shoppers

In October of last year, Aptos commissioned a study by EKN Research to investigate exactly how much order management is costing retailers. The survey results were, in my opinion, shocking. Despite significant efforts by many retailers to optimize profits throughout the order lifecycle, the EKN research found that retailers spend, on average, 18% of online sales getting orders into the hands of shoppers. That 18% is in addition to the cost of goods, the cost of marketing, the cost to maintain and manage the web site. At about the same time, PwC published their annual CEO survey, which found that 80% of retail CEO’s surveyed had no idea how much managing the order lifecycle is costing them.

The EKN research found that retailers spend, on average, 18% of online sales getting orders into the hands of shoppers.

To compound (and magnify) the problem, while most have attempted – and clearly largely failed – to figure out how to better manage profits, the customer experience has suffered.

To see exactly how well retailers are optimizing the omni-channel order lifecycle experience, Aptos commissioned a second study, this time with Retail Systems Research. And the results were equally disappointing:

  • Only 12% indicate that their omni-channel operations are differentiating, while 16% indicate their operations are inefficient or inconsistent, at best.
  • Only 54% of retailers said they had fully implemented tracking when fulfillment happens in a different location than demand.
  • Just 52% provide internal inventory visibility across sales channels.
  • Barely half (51%) offered online shoppers visibility to in-store inventory.
  • Somewhat shockingly, only 48% of retailers track customer satisfaction with store fulfillment processes.
  • Most surprisingly, only 48% had the ability to take, edit or view orders across multiple channels.

I had the opportunity to discuss these findings and their implications with study authors Nikki Baird and Paula Rosenblum during a webinar we recently hosted with Internet Retailer. It was a great discussion, full of between-the-lines insights and opinions from two extremely sharp analysts. If interested, you can  click here to view the full webinar on demand and to hear all of their comments. Otherwise, read on for more highlights related to my frustration with the current state of order management in retail today.

As Paula and Nikki discussed, these struggles immediately beg several questions, including the question among the most important to every successful CEO: how many shopping journeys, in the midst of all these barely competent experiences, end in disappointment?

Changing Gears

Clearly, inventory can no longer be the priority. While we certainly must do everything we can to manage costs and streamline our supply networks, if the experience isn’t our priority throughout the order management lifecycle, then we are just giving lip service to putting the customer first, and in the long run, profits won’t matter if we continue to disappoint so many shoppers.

It seems clear that putting profits ahead of experiences has not won enough shoppers  (nor, ironically,  has it necessarily resulted in profitability), and that a course correction is now required for any organization hoping to remain agile enough to keep pace with shifting customer demands.

At Aptos, our vision for omni-channel OMS centers on an entirely new approach. We believe that sustainable success can only be achieved through order management processes that anticipate, adapt and align to shifting customer expectations, rather than supply-centric processes that anticipate and align network inventory resources in order to optimize profitability.

We believe that our Singular Commerce platform uniquely positions us to help our retail clients put the customer first. Our platform holistically connects our order management solution to our point of sale and customer relationship management solutions to create interconnected experiences that empower shoppers with personalized and integrated choices that are rich with the flexibility they expect. Consequently, our interconnected and integrated platform gives our retail clients every possible chance of converting and keeping more customers.

It’s time for technology companies to stop forcing retailers to make false choices between optimizing experiences and maximizing profits. I believe there really is no choice: the customer must come first, period. Once you decide to focus first on the customer, then you can develop strategies and deploy processes and implement technologies that optimize profits within the context of what is best for the customer.  For the sake of shoppers everywhere, I hope you agree.

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1 Comment

  • comment-avatar
    Zach August 8, 2016 (4:35 pm)

    The argument could be made that centering the product around inventory availability (where it is and how soon it could get to them, the way they want to receive it) is what enables the customer experience. I see your point though. Having designed OMS systems the last 10 years I can tell you, historically systems are built to sell product, but there needs to be a shift in systems to center around the client. I know the RSR team has a strong viewpoint on this, and their research backs it up. Great observations Dave, and the webinar was great investment in time. Thanks for facilitating!