Distributed order management (DOM) is a system that enables businesses to manage their inventory across more than one warehouse. Having a multi-warehouse network allows businesses to speed up delivery times at reduced shipping costs. This win-win is critical for growing ecommerce brands that operate on thin profit margins while competing with the same-day delivery expectation set by Amazon.
Of course, distributed order management isn't without its challenges. Let's take a closer look at what DOM is and why you should consider using it for your business.
What Is Distributed Order Management?
Distributed order management software helps fulfill customer orders in the most efficient manner possible by choosing the warehouse closest to the customer. With ChannelApe’s
Shopify location-based fulfillment capabilities, our rule-based routing automatically chooses which warehouse to ship from based on the “best” location (e.g., capacity, priority, proximity).
DOM also helps ensure that products are available when customers need them. If one warehouse runs out of stock, orders can be fulfilled from another location instead.
Why Should I Consider Multiple Warehouses for Fulfillment?
Shipping Cost
For online retailers, the average cost to fulfill an order is 70% of the average order value (AOV). Yikes! Minimizing these costs lead to substantial gains in profitability, and one way to do that is having your inventory stored in different locations so shipping is more strategic. Shipping orders from the nearest warehouse to the customer, instead of having to send them from a central (and further) location every time, saves time and money.
Speed
This one’s easy. By having inventory close to each customer demographic group, orders can be shipped faster and arrive sooner than if they had been sent from a single centralized warehouse. Someone in Florida would prefer to have their item shipped from New York instead of California… and so would your brand if you want to realistically achieve a 3-to-5-day delivery window.
Sustainability
Accenture found that, among a group of conscious consumers referred to as The Reimagined, 65% want to do business with brands that are eco-friendly. Having multiple warehouses reduces the environmental impact of your operations by reducing the amount of fuel needed for long-distance shipping trips.
While distributed order management software allows brands to split shipments to enable faster delivery, DOM can be adjusted to accommodate the “slow shipping movement.” For some super-green brands and their customers, waiting longer to receive their items for the sake of less packaging (and less emissions) is the preferred tradoff. ChannelApe is giving these brands the ability to drive their fulfillment practices according to their—and their customers’—values.
Risk
Having inventory stored in more than one place helps protect against any unexpected disruptions (e.g., natural disasters, COVID-19, weather-related shipping delays) at a particular warehouse. If one warehouse temporarily shuts down, brands don’t have all their eggs in one basket; the other warehouses can pick up the slack.
Returns
Having multiple touchpoints to store inventory benefits the reverse logistics journey as well. When warehouses are closer to the customer, the warehouse will get the returned item faster. And when you have ChannelApe, you have a central hub for all your inventory data, meaning you’ll never have returned merchandise sitting idly at the warehouse ever again. Get your returned items back to sellable ASAP, lowering the risk of needing to heavily discount the item due to it being out of season.
International
If you’re selling products internationally—or have your eyes on doing so in the near future—having multiple warehouses located near key markets will enable you to ship items much faster and cheaper than if they were coming from one location overseas.
What Are The Challenges With Distributed Order Management?
Understanding Inventory Levels at Each Location
Brands have three inventory locations with just one warehouse—what’s coming in from the manufacturer, what’s currently sitting at the warehouse, and what’s getting returned—so now there is added complexity when adding a second or third warehouse location. Managing inventory levels across multiple warehouses requires tracking stock levels in real-time at each location, across all statuses of inventory (on-hand, on-order, committed, reserved, etc.).
Promising Inventory Across Many Locations
You need to ensure that your Shopify sales channel or whole partners always have accurate information about which items are available in which locations so that orders can be fulfilled promptly—without overpromising inventory that doesn’t exist yet or has already been sold out elsewhere. If three warehouses hold 50 black sneakers but 30 are reserved for Nordstrom, you need to know not only how many black sneakers are at each warehouse, but also how many of those are reserved for wholesale. This gets complicated in Excel and is prone to error.
Picking the Right Location for a Specific Order
It’s important not just to understand where items are located but also how best to fulfill an individual order based on factors such as cost and speed. This means finding the right balance between shipping costs and delivery times while taking into account any international regulations or taxes that may affect shipments depending on where they originate from.
Split Shipping / Backorders
When fulfilling large orders with multiple products, available items may be scattered across multiple warehouses. To get all items to the customer ASAP, there may be a need to split the shipments. This requires being able to track which parts of an order have been shipped already (and when) so that customers aren’t left waiting for their purchases while other parts remain in transit indefinitely.
Backorders due to accidentally overselling an item can lead to a poor customer experience—and be detrimental to your customer retention rate. Ensuring you don’t over promise items on your ecommerce site is hard enough when inventory sits in just one warehouse—when you have more than one warehouse to account for, the tracking gets more complex, like in the wholesale scenario previously described.
Picking the Right Shipping Label for Each Order
This is critical as it ensures accuracy when orders move, particularly through customs checks at international borders. Incorrect labels result in additional expenses for the brand and delays in delivery that negatively impact customer satisfaction.
ChannelApe Solves the Challenges of DOM
ChannelApe’s distributed order management software can help you regain control and reduce costs. What’s better is that it syncs directly with your Shopify storefront.
Know why your inventory levels are the way they are with real-time, automated inventory tracking across all locations and statuses of inventory—no matter how many warehouses you add to your network.
Scale without costly operational mistakes. Know what you can (and cannot) promise your customers and when, knowing that inventory reserves for wholesale are removed from what is promised on your ecommerce site. Never oversell again.
Enjoy an unprecedented amount of control over the post-purchase experience. Split or combine shipments based on the most optimal cost and transit times. Take control over shipping label expenses by selecting trusted partners and ship with the most effective (and closest) carrier each time.
