Order Routing: How Retail Brands Can Optimize Fulfillment
Posted by Julia Morrissey on Nov 19, 2024
Deliver modern, mobile-first shopping experiences that delight your customers. Drive ROI back to your business across all customer touchpoints—in-store, online, and on mobile. Book a time with our team to learn how we can help transform your business with our omnichannel solutions.
*Privacy Notice: By hitting "Submit," I acknowledge receipt of the NewStore Privacy Policy.
With so many omnichannel shopping options today and ecommerce giants like Amazon setting the bar for rapid shipping, consumers now expect fast and seamless delivery. To keep up, retailers need a strategy that meets these demands—and one of the most effective ways to do this is through order routing.
By investing in order routing, retailers can streamline the fulfillment process, move inventory more efficiently, and delight customers with faster deliveries. Let’s dive into how order routing works and why it’s essential for retail success.
Order routing directs customer orders to the optimal fulfillment location based on criteria like inventory availability, proximity, delivery speed, and fulfillment cost.
More specifically, order routing makes decisions based on:
Order routing is essential for omnichannel retail brands, offering a range of benefits such as lower shipping costs, higher customer satisfaction, and faster delivery times. Below, we’ll dive into the key advantages of order routing.
Order routing gets orders to customers faster by choosing the closest or quickest fulfillment location. It also lets brands tap into ship-from-store options, meaning online orders can be filled from nearby stores instead of waiting on fulfillment centers.
By selecting locations that reduce travel distance and grouping items when possible, order routing helps bring down shipping costs. These savings can be passed down to customers who then enjoy quicker deliveries at a lower price.
Order routing supports sustainable practices by shipping from closer locations to reduce emissions. It also minimizes split shipments, which saves on packaging and transportation costs. Plus, brands can route orders from locations with excess inventory, helping to clear stock and reduce waste—great for eco-conscious customers and long-term savings.
If orders can ship from the closest location to the customer, shoppers will experience faster shipping options at a lower cost. Customers who receive their purchases more quickly, and spend less or nothing at all on shipping fees, will have higher satisfaction.
By automating fulfillment decisions, order routing reduces manual work and helps maintain accuracy, ensuring customers get exactly what they ordered. It also helps prevent stock outs by directing orders to the store or warehouse with available inventory.
Order routing makes it easy for customers to shop on their terms by supporting options like ship-from-store, curbside pickup, and in-store pickup. It gives customers flexibility in how they receive their orders, boosting convenience and satisfaction.
Many legacy order management systems (OMS) have made it complex for retailers to set up routing logic and prioritization rules. These outdated systems often lack the flexibility needed to adapt to customer demands and optimize order routing.
In contrast, modern technology solutions, such as a flexible order management system, allow retailers to utilize order routing. A flexible order management system tracks all inventory on one platform. It also displays all purchase data on a dashboard, making it a one-stop shop for up-to-date inventory information. This data then helps predict which items will need reordering and manages returns with more efficiency.
A flexible OMS also supports item-level order routing, which directs each product to the best fulfillment location based on factors like proximity, stock availability, and delivery speed. This not only reduces shipping costs but also shortens delivery times, ensuring customers get their orders faster. Plus, it offers the flexibility for customers to choose from various fulfillment options like shipping, buy online pickup in-store (BOPIS), or curbside pickup, depending on their preferences.
Let’s walk through an order routing scenario for a clothing retailer with a customer order that includes five items:
The company has four locations—stores A, B, and C, plus a distribution center (D). All locations carry the five items the customer ordered, but store C is out of stock in one of the sizes ordered, so it’s ruled out as an option.
Stores A and B are both in the same city as the customer, while the distribution center is located in a different region. To keep shipping costs in check, the distribution center is excluded from the routing process.
The retailer’s order routing system is set up to prioritize the closest location to the customer to ensure the quickest, most cost-effective delivery. In this case, store A, which is closer to the customer than store B, is selected to fulfill the order.
However, if one of the items the customer ordered is particularly popular and store A has low stock, the system may choose store B instead. This helps reduce the risk of stockouts or the need for split shipments, ensuring the customer receives their complete order promptly.
Vince, a luxury retailer, elevated its customer experience with the NewStore Unified Commerce Platform, specifically leveraging the order management system’s advanced order routing capabilities. Previously, Vince’s siloed systems led to inefficiencies, requiring associates to call other locations to confirm item availability for customers. Now, with the NewStore platform, Vince has real-time inventory visibility across all locations, enabling associates to effortlessly sell inventory from any location. This streamlined experience now contributes to 8% of Vince’s total sales.
This improved order routing has benefited Vince in other ways too. Now, 38% of online orders ship directly from stores, getting items to customers faster and reducing shipping costs. Additionally, the brand’s ability to offer flexible fulfillment options, like buy online, pick up in-store (BOPIS), drives even more convenience. By combining order routing with intelligent inventory access, Vince not only meets customer expectations but also maximizes sales and boosts loyalty. Read our Vince case study to learn more about this partnership.
As retailers consider ways to enhance their omnichannel fulfillment options, investing in a flexible OMS with order routing should be a top priority. Not only will this help scale the business, but it will also provide a better customer experience. Retailers will benefit from greater inventory oversight and more sustainable shipping practices. Meanwhile, lower shipping fees and quick delivery options will increase customers’ loyalty in the long term.
Want to learn more about our flexible order management system? Reach out for a demo today.
