As someone who runs an e-commerce business, the last thing you want is for your customers to be dissatisfied.
Whether it’s a delayed shipment due to low inventory or a confused customer that never received an order confirmation, issues can arise due to poor e-commerce order management.
On the other hand, you can leverage e-commerce order management systems to help streamline the online ordering process, allowing you to spend more time growing your business and less time manually monitoring every order.
Follow this introductory guide to learn more about how e-commerce order management works, its challenges, its importance, and the systems you can use to help improve your e-commerce order processes.
How e-commerce order management works
To put it simply, e-commerce order management is the process of tracking an online order from its initial purchase to its final delivery to the customer. Throughout this process, data is collected at each stage of the order fulfillment process, providing beneficial information for your business and customers.
E-commerce order management may include everything from printing shipping labels to accepting customer payments. While the exact e-commerce process can vary from business to business, most e-commerce businesses follow a process similar to this:
- The customer places an order.
- The business enters the order into its system.
- The customer receives an order confirmation notification.
- The business passes the order along to its fulfillment location.
- An employee picks and packages the order.
- The business ships the order to the customer.
- The business informs the customer of the shipment.
- The order arrives.
In addition to their order, customers may also receive specific contact information or instructions to follow if they are unsatisfied with their order. The fulfillment process can also include an option for customers to leave a review—a helpful feature, as feedback can help attract other customers and help you improve your customer experience.
Challenges of e-commerce order management
As with anything, e-commerce order management can come with challenges. From struggling to keep up with changing inventory levels to locating a lost package, keeping an eye on all of your orders can be a difficult task.
On top of that, order management affects each stage of your e-commerce business, from purchase to delivery. Because of this, the difference between good and bad order management can lead to either a positive or negative experience for your customer.
In the past, e-commerce order management could be an especially tedious process, from manually emailing each customer to updating spreadsheets after every order. Fortunately, e-commerce order management systems (OMS), aka e-commerce order management software, exist that can help you streamline e-commerce order management and automate business processes.
But even with these systems, your business may still run into adoption challenges, including:
- Difficulty of choice: Whenever you’re looking to make a decision for your business, you’ll want to feel confident that you’re making the right decision. Because of this, some people may struggle to decide which OMS to go with.
- Cost: Order management systems can vary in price, with some offering free plans to others costing hundreds of dollars per month.
- Implementation difficulties: For some business owners, implementing a new system may seem difficult. To help reduce difficulties, do your research and ensure that the OMS can integrate with the e-commerce platform and other order management tools you already use.
With these minor challenges in mind, let’s move on to the importance of efficient e-commerce order management and its powerful benefits for your business and customers.
Importance of e-commerce order management systems
Now that you understand what e-commerce order management is, you may wonder what e-commerce order management software can do for you and your customers. The use of an OMS can provide many benefits, including:
- Increased efficiency in fulfillment times: By utilizing an e-commerce OMS, you can help minimize delays in e-commerce order processing and use integrated e-commerce shipping services to help automate tasks and eliminate human error that can occur when you do everything manually. That way, your customer can receive their order faster with a reduced risk of delivery issues.
- Ensure inventory level accuracy: Many OMS also include or integrate with inventory management software, allowing you to tap into real-time inventory data. By getting a bird’s-eye view of your inventory across sales channels, you can get an accurate measurement of your inventory without having to worry about manually keeping track of it yourself.
- Improved customer experience: Because order management software for e-commerce can lead to quicker order fulfillment times, it can help you get your products to your customers even sooner. Many OMS also offer the ability to provide your customers with live shipping updates and tracking features, keeping them informed every step of the way.
- Central place to manage returns: With an e-commerce OMS, you’ll have a central place to facilitate and manage returns, from issuing return shipping labels to tracking the products as they return to your warehouse. This will make things easier for you and your customers, as they will get their problems resolved much more quickly.
- Provides a holistic view of operations across all channels: One of the biggest benefits of using an order management system for e-commerce is that it can integrate across a variety of company systems, including multi-channel inventory management software, customer service departments, accounting systems, and more. In addition, OMS can help you monitor all of your sales channels at once, whether it’s your website, social media, or other online marketplaces.
- Centralized reporting and analytics: E-commerce order management software can also provide a place for you to access centralized reporting and analytics that you can use to make decisions and monitor the performance of your business. Whether it’s live inventory data or real-time sales information from all of your sales channels, an OMS can provide you with actionable insights and consolidated data that you can use to help improve your business’s performance.
- Increased scalability: Unlike outdated methods like manual entry, e-commerce order management software can easily handle more orders as your business grows. That way, you can continue to grow your business without fear that you’ll be unable to keep up with the growing demand and number of e-commerce orders.
From automating timely tasks to reducing the risk of human error, implementing e-commerce order management software is a solid way to upgrade your e-commerce business’s online order process.
Key features of efficient e-commerce order management software
With an understanding of the benefits OMS can bring to your business, you might be ready to dive right in. But not all e-commerce order management software is created equal. To make sure you’re choosing one of the top order management systems, you’ll want to consider one with the following key features:
Supports multiple sales channels
Whether you sell your products on Amazon, Shopify, eBay, or elsewhere, choosing an e-commerce order management software that supports multiple sales channels is a surefire way to simplify your e-commerce order management.
From providing real-time tracking of new orders across sales channels, including fulfillment statuses, refunds, returns, and shipping history, you’ll be able to easily check the status of all of your orders, no matter the sales channel.
By selecting an OMS with integration capabilities that match your current e-commerce sales channels or marketplace use, you can spend less time worrying about back-end operations and more time reaching new customers.
Automation capabilities
As a self-employed individual, you know how valuable your time can be. Whether it’s sending order confirmation emails or manually performing an inventory analysis, these tasks can cut into your everyday life. Fortunately, an efficient OMS can help you automate these tasks.
Real-time analytics
An online order management system can also help you track valuable analytics all in one place. Whether it’s tracking products, cost of goods, or analyzing profitability trends from all of your sales channels, you’ll have easy access to a big-picture view of the performance of your business.
With access to this critical real-time data, you can use it to make better-informed decisions for you and your business. On top of that, these real-time analytics can help prevent issues from human error, such as overstocking or a stockout.
Customer management capabilities
Another benefit of e-commerce order management software is the ability to manage important customer information. From order history to geographic location, an OMS can provide you with personalized information that you can use to inform your digital marketing for e-commerce strategy.
Integration capabilities
In addition to supporting multiple sales channels and integrating with e-commerce platforms, some OMS seamlessly integrate across other important company infrastructures such as customer service departments, inventory management systems, and accounting software. Some OMS even have an app store, allowing you to see all of the possible integrations and third-party connections the e-commerce order management system supports.
For example, integrating an OMS with accounting software gives you easy access to all of your financial reporting, where every transaction is accurately recorded and reported. Additionally, you can use accounting software to get a holistic view of your cash flow, allowing you to make informed business decisions without leaving your OMS.
On top of that, integrating an OMS with accounting software can help streamline your accounting process and take away the heavy lifting of manually recording journal entries or individual transactions.
By selecting e-commerce order management software compatible with the tools you already use, you’ll no longer have to hop between tools to get the information you’re looking for.
This article originally appeared on the QuickBooks Resource Center and was syndicated by MediaFeed.org.
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Jessica A. in Texas says, “I’m a long-time listener and huge fan of your podcast! My husband and I are in our early 30s and have set ourselves up well financially. We have about $60,000 in cash sitting in a 0.4% ‘high-yield’ savings account. We think it could be doing more for us, but we’re not sure where to begin.
Our only debt is our mortgage and we pay extra toward the principal each month. We have a 12-month emergency fund, max out our workplace retirement accounts, and both max out our opens in a new windowRoth IRAs every year. We’re not eligible for HSAs but contribute to a 529 savings plan for our infant.
Is there some way to invest our extra money that would earn a higher return? Should we open up a brokerage account, and if so, what types of investments should we buy? We’re not well-versed in non-tax advantaged accounts and would appreciate any resources you recommend for becoming more educated investors.”
Thanks so much for your great question, Jessica! You get a virtual high-five for accomplishing so much in your financial life at such a young age. You’re in an enviable position and are certainly asking the right questions.
Once you’ve covered the basics with funding your emergency savings and investing regularly, and you still have money left over, you have excellent options for growing it. In this post, we’ll cover what to do when your income increases or you receive a cash windfall and end up with extra money.
When you’re fortunate enough to have extra money to invest, I recommend first taking a holistic view of your financial life and reviewing your goals. Before making significant money decisions, it’s wise to consider what you genuinely want to accomplish.
For instance, should you create more security by increasing certain insurance coverages, open a college savings plan for your kids, buy a home, or start a business? Only you know the answers.
In addition, as your life changes, you may need more or less savings in the bank, updated emergency documents, or a new estate plan. As your income increases, the trick to building wealth is resisting “lifestyle creep” or spending more. If you earn more and maintain or decrease your expenses, you’ll reach any financial goal you dream about much faster.
Here are seven wise ways to make your extra money grow.
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I always recommend maxing out tax-advantaged accounts first and then putting money into taxable accounts. So, Jessica and her husband are smart to max out their Roth IRAs every year. It’s especially wise when you’re also contributing to a workplace retirement plan, such as a 401(k) or 403(b). Unlike with a traditional IRA, there’s no restriction on the tax break for participating in both retirement accounts when you earn over an annual limit. I’ll explain more in a moment.
So, no matter how much you contribute to a retirement plan at work, you can always max out an IRA in the same year. For 2022, you can contribute up to $6,000, or up to $7,000 if you’re over age 50.
However, there are annual income limits to qualify for a Roth IRA that don’t apply to a traditional IRA. Also, note that while your Roth IRA contributions aren’t tax-deductible, they give you tax-free income when you take distributions after age 59½.
For 2022, if you file taxes as a single, you’re ineligible for a Roth IRA when your modified adjusted gross income (MAGI) reaches $144,000. If you’re married and file taxes jointly, neither of you can contribute to a Roth IRA when your household MAGI reaches $214,000.
If your income is below these annual limits, you can fully fund a Roth IRA and a workplace retirement plan in the same year, giving you terrific tax benefits to enjoy now and in the future.
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Jessica didn’t mention if she or her husband have other income sources, such as earnings from self-employment. When you have business income, there are more tax-advantaged ways to save for retirement, in addition to an IRA, even if you already max out a workplace retirement plan.
One of my favorite self-employed retirement accounts is a Simplified Employee Pension plan, known as a opens in a new windowSEP-IRA. It allows you to make tax-deductible contributions up to 20% of your net self-employment income. For 2022, your total contribution can be up to $61,000; however, you can’t contribute more to a SEP-IRA than you earn.
I have a SEP-IRA because it’s an easy account to open and maintain. It’s an excellent option for anyone who has a day job and makes full or part-time money on the side.
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My next favorite tax-advantaged account to put your extra money is an opens in a new windowHSA. However, you must be enrolled in an HSA-eligible, high-deductible health plan to qualify. You can purchase health insurance through a group plan at work or as an individual.
Jessica mentioned that she isn’t qualified for an HSA, which might be because she’s insuring an infant. When you have kids or chronic illnesses that require frequent doctor visits and medical care, you typically save money with a health plan that requires a lower deductible.
If you do have an HSA, they offer more tax benefits than retirement accounts. There are no restrictions on your income, contributions are tax-deductible, investment growth is tax-deferred, and distributions are entirely tax-free when you use them to pay qualified healthcare costs. There’s a wide variety of qualified expenses, including medical, dental, vision, chiropractic, acupuncture, prescriptions, and many over-the-counter medicines and products.
For 2022, you or anyone else (such as a family member or your employer) can contribute up to $3,650 when you have a self-only health plan or $7,300 for a family plan. Plus, if you’re over age 55, you can contribute an additional $1,000 to an HSA when you have either type of health plan.
Your HSA funds roll over from year to year with no penalty. And if you have a balance after age 65, you can spend it on non-medical expenses. Before age 65, if you spend HSA funds on non-qualified expenses, you must pay taxes plus an additional 20% penalty.
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Jessica also mentioned that she’s contributing to a opens in a new window529 college saving plan for her child. If you want to pay for education expenses—such as tuition, books, computer equipment, Internet, and room and board—for you or a family member, a 529 comes with nice tax breaks. Plus, you can even use up to $10,000 per year for education expenses related to public or private schools for students in kindergarten through high school.
Once a student is out of high school, you can use a 529 for any college, university, graduate school, or vocational school without an annual limit, if the institution is eligible to participate in a federal student aid program.
While contributions are not tax-deductible, your account’s interest earnings and investment growth are never taxed if you use the funds for qualified expenses. And there are no restrictions on annual income to participate in a 529 plan.
Most states offer at least one 529; however, the fees and benefits vary, so it’s wise to compare plans. The good news is that you don’t have to be a resident of a state to enroll in its plan. For example, you could live in Florida, participate in a California 529, and use the funds to pay for a school in Michigan.
Also, note that some states that have an income tax offer residents a tax deduction or credit when you choose an in-state 529. Depending on where you live, that could add up to significant savings compared to an out-of-state plan.
The only downside of contributing to a 529 plan is that spending it on anything besides qualified education expenses comes with a penalty on the earnings portion of a distribution. You must pay income tax and an additional 10% penalty, on amounts that weren’t previously taxed. There are some exceptions, such as if a student receives a scholarship, becomes disabled, or dies.
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As I previously mentioned, no matter how much you contribute to a workplace retirement plan, such as a 401(k), you can also max out a traditional or Roth IRA in the same year. For 2022, you can contribute up to $6,000, or $7,000 if you’re over 50.
However, be aware that if you or a spouse participate in a retirement plan at work, the tax deduction you receive for traditional IRA contributions may be reduced or eliminated, depending on your income.
While it may seem pointless to make non-deductible or after-tax contributions to a retirement account, such as a traditional IRA or traditional 401(k), they still offer excellent benefits. That’s because your investment earnings grow tax-deferred–you typically avoid paying tax on the account growth until you take withdrawals after age 59½.
So, if you’re like Jessica and maxed out a retirement account at work and an IRA and you still have more to invest, consider making non-deductible contributions to your 401(k) or 403(b). As long as your retirement plan allows it, you can use it to shelter more of your income, up to an annual limit, from taxation on investment growth.
For 2022, the total amount of deductible and non-deductible contributions you can make to an employer-sponsored retirement plan is $61,000, or $67,500 if you’re over age 50.
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Once you’ve exhausted tax-advantaged ways to invest your extra money, it’s time to look at taxable options, such as a brokerage account or other investment platform. The investment firm you choose should depend on the types of investments you want to purchase, such as mutual funds, exchange-traded funds, real estate funds, opens in a new windowcryptocurrency, or precious metals.
When you have dividends or capital gains, you’ll have to report the income on your tax return. The brokerage will send you the appropriate tax forms in January for the prior year so you know the types and amounts of income earned or lost.
The tax rate you must pay depends on how long you own an investment and your taxable income. When you profit from an asset you owned for less than a year, it’s a short-term capital gain. You pay the same tax rate as for your wages or other “ordinary” income, which currently ranges from 10% to 37%.
Your tax on assets owned for longer than a year are long-term capital gains. They range from 0% to 20%, depending on your income, with the average investor paying 15%. While paying tax on investment growth in a brokerage isn’t ideal, the upside is that you can take withdrawals at any time without penalty.
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An annuity is a contract between you and an insurance company that promises to pay you income. They can be complicated investments because there are many different types sold by insurance companies, banks, and financial advisors.
Think of an annuity as insurance or a guarantee that you’ll have a future income stream. You purchase one with a lump sum or by paying premiums over time and the insurance company invests your money. They typically pay you over a set period, even for as long as you live, so you never run out of money in retirement.
Unlike with most tax-advantaged accounts, such as a 401(k), IRA, or HSA, annuities don’t have an annual contribution limit so you can put in as much as you wish. While the funds you contribute aren’t tax-deductible, your investment earnings are tax-deferred. And when you take distributions, the earnings portions of your withdrawals will be taxable.
Annuities may be a good option after you’ve maxed out all other tax-advantaged accounts, such as a retirement plan at work, one or more IRAs, an HSA (if you’re eligible) and are approaching retirement, say over age 50.
This article originally appeared on QuickandDirtyTips.com and was syndicated by MediaFeed.org.
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