Commerce

Thinking About DTC? Don’t Leave Out Order Management Systems

What is one trend that is more popular than the latest and greatest TikTok dance? Businesses looking to move into the Direct to Consumer (DTC) space. Why? Well, there are many reasons, but one of the top reasons is we as consumers are demanding to have conversations with the brands we love, without all the ‘middlemen,’ so to speak.

This, however, creates an age-old debate that manufacturing organizations have always struggled with. Typically, they think, “If I move DTC, my distribution network will pull my products and the revenue and customer loss isn’t worth the risk. Not to mention – we are only set up to fulfill in pallet, container-sized orders – it just won’t work.” While I agree in theory, the challenge comes back again to the sentence above where consumers are demanding conversations directly with brands, and in many cases, want to purchase direct.

In a recent Digital Commerce 360 article, I covered how to deal with channel conflict and how to build a branding strategy that will ease you into DTC. However, in this post, I want to cover the other half of the equation which is – once you’ve started down this DTC path, how do you fulfill the demand you’ve generated?

Let’s look at three reasons why an order management system (OMS) implementation will ensure your customers receive the product on time and within their level of expectations.

Pivot Delivery Logistics
If you’re planning to walk this DTC path, your business will need to change. Today, it will likely be challenging for your manufacturing holding center to break pallets and ship out small parcel orders. Systems need to be put in place that allows for pallets to be broken up, new bin locations to be created, and training elements to be developed to allow your staff to pick orders efficiently. By leveraging an OMS, you will be able to lay the groundwork to achieve all of this. Additionally, a warehouse management system (WMS) will need to be implemented to actualize the picking of smaller orders efficiently.

Ensure Profitability
When you implement an OMS, you’re also increasing your business’s profitability from day one. If you store inventory in many locations throughout the country, there will always be one location that will be more profitable to fulfill orders from versus another. If you have a warehouse in Houston and Denver and your customer is ordering from Dallas, the order should come from the Houston warehouse, correct? Not necessarily. Order fulfillment can be tricky and the lack of business rules and an OMS may cause that order to be fulfilled from Denver, where your business will incur a higher shipping cost which may not be passed along to the customer. Order management systems ensure profitability in this model and give customer service/sales representatives the ability to change order destinations and process returns in a more efficient process, which helps aid customer experience as well as profitability.

Exceed Customer Expectations
Back in January, I discussed why order management systems could be the secret sauce for customer experience success in 2022. I’m here again to double down on this and tell you this is the way to your DTC success. While all of the elements on the front end of the site are important, an order that is delivered when it says it will be delivered will do wonders for your customer retention numbers. Also, by exceeding customer expectations with every delivery, you’re creating a customer for life. There’s nothing worse than little to zero communication on order status, especially when things go wrong – which let’s face it, happens from time to time.

There’s no doubt DTC is the way of the future for manufacturers, it’s just a question of “when, how, and where” for your business. Timing is everything, but remember – for your business to be truly exceptional out of the gate, you’ll need to leverage a sophisticated order management system. Your customers want to have conversations and purchase from you today, but they will forget about you tomorrow if you’re not building experiences that meet and exceed the expectations of other brands they purchase from.

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Justin Racine

Justin Racine serves as a Senior Commerce Consultant and works with clients to build and achieve their business goals through commerce-enabled technologies. Justin has over 12 years of experience within the ecommerce space, working with companies such as Cardinal Health, Johnson & Johnson, and Olam International, and has spoken at over 20 global conferences on ecommerce and branding strategy. Additionally, Justin has been published twice for his thought leadership on branding and marketing in the Henry Stewart Journal of Brand Strategy, is a contributing writer for CMSWire.com, and a frequent contributor for many leading industry publications.

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