Welcome to Chapter 10 of our order management guide. This chapter will explain multichannel and omnichannel order management and how they work differently in handling orders for one sales channel.
Are you confused? Maybe this is too advanced or too basic for you? If so, head back to the order management homepage.
What’s the Difference between Multichannel and Omnichannel Order Management?
An e-commerce business is considered ‘multichannel’ when it has more than one sales channel.
A sales channel could be a brick-and-mortar store, an e-commerce marketplace, your website, or even social media, among many other examples.
Even if your business is entirely online and sells on two marketplaces (for example, Amazon and eBay), it can also be considered multichannel because both marketplaces are separate sales channels.
Omnichannel is very similar to multichannel; people can sometimes use the terms interchangeably. However, arguably, omnichannel e-commerce is the next step for many businesses.
In multichannel e-commerce, information is siloed, and channels are disconnected. It can be considered ‘product-focused.’
In a multichannel model, if a customer purchases from you on Amazon and then purchases from your website (through a shopping cart like WooCommerce) a week later, you would not know they are a return customer.
In terms of order management, they could be a completely different customer because they purchased from a different channel.
Meanwhile, in an omnichannel business, information is shared across channels, so if a returning customer purchases from another one of your sales channels, you can connect this information.
Because of this, omnichannel e-commerce can be called ‘customer-focused.’
Omnichannel selling can increase customer satisfaction because it makes it easier for return customers to repurchase from a seller.
Omnichannel selling is particularly helpful when customers come into issues with orders. For example, if a customer purchases through a marketplace and has a problem with a product, they may contact you directly through your website.
To be a true omnichannel seller, you must use an OMS (Order Management System) otherwise you cannot connect customers across different sales channels.
To do this, though, e-commerce sellers need some information to connect with customers across channels, such as their email addresses. If the customer gives an email address to the merchant, this can even be done offline in a physical store.
However, it is important to note that some marketplaces require you to delete customer information. This makes it much more difficult to gain omnichannel customers from marketplaces because if they purchase from your website, they won’t be able to connect them.
Managing orders across multiple sales channels can be challenging as you may have different workflows for each channel.
We also cover multichannel inventory management in our inventory management guide. You can find that here: Chapter 8. What Is Multichannel Inventory Management?
What Are the Challenges of Multichannel and Omnichannel Order Management?
While the overall benefits of multichannel and omnichannel selling outweigh the challenges, you must be mindful of them to prevent them from becoming problematic.
Multichannel and omnichannel selling is the way forward in e-commerce to remain competitive and get an edge over your rivals. You could be missing out on sales on other platforms.
1. Order Management Becomes More Complex
When you start selling through more than one sales channel, your sales will increase as you reach more customers.
However, while this is a challenge itself, it’s not just the increased volume of sales that’s tricky to deal with. Each channel will have its own ways of working.
You may use different shipping carriers and fulfillment methods for different channels and need to complete different requirements and follow different workflows to send out orders.
On a more complex level, you may even have different warehouses for some of your channels.
2. Increased Chance of Overselling
As mentioned in the previous point, you will handle more orders when you sell on multiple channels, which can increase your chances of overselling products.
Because of this, you may need to rush orders to customers and order from suppliers more often to ensure you can fulfill your orders.
In addition, you may use alternative fulfillment methods, such as dropshipping and cross-docking, to deliver oversold orders to customers, which can add to the complexity of your orders.
Furthermore, you need to communicate more with customers if the product is unavailable or will take longer than expected to reach them. This can frustrate customers, and you may have to handle more complaints.
To mitigate these challenges, you must have an OMS that updates in real time to reduce the chances of overselling.
3. Reporting and Data Consolidation
Not only will you have orders coming in from different angles, but you will also have different data coming in from different channels in different ways.
Because of this, it becomes harder to learn from your performance because the channels you are selling on may collect or measure data differently.
They may also categorize things differently or deliver different data in different ways (daily, hourly, etc.).
This means it can be harder to get a complete view of your performance and how much you are selling, and it makes it more difficult to know where you can improve your performance or where problems may be occurring.
4. You Can Miss Things If You Don’t Have an OMS
If you’re selling on multiple channels and not using an OMS—which we explained is a terrible idea—you may be handling orders from one channel and not notice an order has come in from another.
An OMS centralizes all these orders in one place so they are always visible. You don’t need to keep switching between channels to check if there are any new orders.
This way, you never miss an order; nothing flies under the radar, and there is no chance that an order will not be dealt with.
5. Inventory Management
Order management and inventory management are inextricably linked. If your inventory is messy, it will affect your order management.
If you don’t have an OMS automatically updating your inventory, you must manually update inventory across your sales channels.
You will need to do this every time you make a sale and every time you receive new inventory from your suppliers.
Inventory can go out of sync, creating problems like overselling, as mentioned above. This leads to more order complexity, which is time-consuming and frustrating for customers.
How Does Multichannel and Omnichannel Order Management Work?
Transitioning from a single sales channel to multichannel can be hard to get used to at first and may even feel intimidating.
You need a reliable OMS that meets your needs and integrates all sales channels you utilize. Aside from marketplaces, a good OMS should also integrate with:
- Any shopping carts integrated to your websites.
- It should also integrate with your POS system if selling at a physical store.
- Enable manually entered orders from wholesalers.
All channels should be integrated with your OMS, or it will not work to your advantage—you will not have a centralized data point.
It can be difficult to integrate all these channels as they may have different requirements. Some channels can get very technical, and you may need custom configurations to get the channels you need.
Once you have all your channels in one place, you should be able to view your orders from one dashboard and manage them accordingly, no matter where they came from.
Key Points From Chapter 10
Remember these key points from Chapter 10.
- Multichannel order management is when your business sells through more than one sales channel.
- Omnichannel is when you sell on multiple channels, and customer information is shared between them.
- Transitioning to a multichannel or omnichannel business has its challenges. It can make order management and inventory management more complex.
- To effectively handle multichannel and omnichannel orders, you should use an OMS to centralize all your orders, inventory information, data, and reporting.
Chapter 11 will cover goals, KPIs, and metrics in order management.