It's becoming increasingly important in the eCommerce world to have your order management down to a fine art. If you're after more information about what SaaS (software as a service) order management is, how it can help you, and how it compares to traditional software, you're in the right place.
In this guide:
- Multichannel selling and the need for an efficient order management system
- SaaS order management vs on-premise
- How much can SaaS improve your order management?
- What holds retailers back from adopting a SaaS order management system?
Selling products on multiple channels (eBay, Amazon, Etsy, webstores) is the new norm. To the point where customers are expecting no less from your business. Zendesk found that 87% of customers think that retailers need to put more effort into providing a streamlined brand experience across channels.To make things more interesting, it was found that 64% of people find customer experience more important than price.
So, in essence, it doesn't matter how competitive your prices are. If your customers feel they're not getting a great experience, they'll go elsewhere. Get the customer experience right, and you can boost sales and loyalty.
But that's a lot of pressure on you to get your order management into good shape. Coping with orders streaming in from multiple places. Making sure they're packed and shipped on time. Doing your best to ensure delivery goes smoothly.
Maybe you're already using traditional, licensed software and are considering switching to cloud. Or you're doing what you can manually but desperate to find a better way.
A great order management system should do this (and more):
- Pull your selling channels into one easy-to-use interface
- Track and sync your entire inventory across channels (with no need to split stock between selling locations so you don't miss out on bulk orders)
- Roll shipping labels and invoices into one, to save on paper and ink
- Let you scan invoices with a standard barcode scanner to view the order, or mark it as dispatched
- Enable you to connect with couriers and get your shipping labels from inside the software
- Send tracking information automatically to customers
But which route is better, SaaS or in-house software?
One of the top reasons why retailers are keen to ditch their on-premise order management system is because of high licensing costs. You either have to pay upfront for a license, or you may be able to get a lease to access the system. Whichever option you choose, you still have to factor in these typical ongoing expenses:
- Yearly maintenance contract which "can be priced anywhere from 25% to 50% of the initial license cost"
- Investment in hardware to run the system (and may need to upgrade this hardware at some point)
- Continual upgrades to get the latest version
- Paying your IT department to manage the software
- Additional licensing costs (if for example, you add new users to the system)
On the other hand, SaaS systems are much more flexible and fit around your business's needs:
- One subscription fee that includes maintenance and support
- No need to invest in hardware as the software is hosted by the vendor (you just need computers and internet access!)
- No need to have an IT department managing the software
- You can opt for monthly pay-as-you-go which helps with cashflow, or you can get a nice discount if you sign up for an annual plan
- You usually get a choice of tiers depending on your order volume to save you paying for something your business doesn't need
- Can usually upgrade or downgrade your plan anytime as your needs change
Pervez Gibbs points out that on-premise software (via a perpetual license) "usually costs around three times more than that of SaaS licensing."
With traditional software, you're essentially on your own. Doug Henrriquez phrases it best:
"[on-premise systems] leave the customers with most of the burden to maintain the product for the highest amount of availability and customization. The on-premise software comes with the mentality that if it is not on fire, don't call us – let your IT department handle the problem. This extends into the installation, IT infrastructure, and future upgrades as well."
Here's an overview of all the potential work involved with an on-prem order management system:
- Hardware configuration
- Staff training
- Ongoing burden on IT
- Applying fixes, patches, upgrades
- Managing downtime
- Performance tuning
- Rewriting customizations
- Rewriting integrations
- Upgrading dependent applications
- Maintaining/upgrading hardware, network, security and database
And here's the workload when it comes to SaaS:
Because the software is hosted by the vendor, you're not on your own to deal with everything because it's not your responsibility to manage the software. It's the provider's job to maintain, update, upgrade, and make sure you don't have any problems with the system.
And even better, you don't need to worry about server outages or problems with your own computer systems as SaaS doesn't rely on your internal systems to function. If the server fails, your application will simply be switched to another server and you (and more importantly, your customers) won't even know that it happened. That's the beauty of the cloud!
All you'll need to do is take a little time to learn your way around (even better if the vendor does training sessions to walk you through it). And then it'll just be a case of grabbing the data from your selling channels (again, the vendor should be on hand to help). And you're good to go from there.
As Mandy Movahhed over at Handshake observes:
"The time to a working solution can drop from months in the traditional model to weeks, days or hours with the SaaS model."
A survey revealed that one of the main reasons retailers were hesitant to use SaaS-based order management was concerns about cloud security. It seems to be the case that businesses confuse proximity with control and safety; if they're managing the entire system from inside the office, they feel in control of the situation because they can watch over the software. It's understandable but may ultimately be a risky stance to take.
If you're using an on-prem system and your team are already overloaded with work, what if something important doesn't get updated? Or what if something is configured incorrectly, leaving the software vulnerable to cyber attacks?
White Owl argues that on-premise software is more difficult to keep updated "because businesses have to install security patches for each workstation in the office. With a small in-house IT department, this could take days to complete."
Getting updates and patches implemented properly and quickly is critical for security. But sometimes this doesn't happen, as it was found that 76% of vulnerabilities discovered on business networks were at least two years old. It can be hard to make sure your systems are to the standard they should be, when there's always so much to do.
Whereas if you use SaaS order management, you don't need to worry about dealing with this yourself. It's the vendor's responsibility to keep the software secure. And you can rest assured that they will be invested in keeping everything airtight for you. A SaaS company without rigorous security measures wouldn't be in business very long! A trustworthy provider will have team members dedicated to constantly protecting against threats and keeping everything updated.
But we can't be making statements without backing them up of course. David Linthicum summarizes findings:
"On-premises environment users or customers actually suffer more incidents than those of service provider environments. On-premises environment users experience an average of 61.4 attacks, while service provider environment customers averaged only 27.8. On-premises environment users also suffered significantly more brute force attacks compared to their counterparts."
Using cloud-based order management software makes life a lot easier. Having a non-clunky system that doesn't nibble away at internal resources frees your business up to provide an awesome customer experience. It streamlines your process from the moment you take an order to delivery. They say that a good workman never blames his tools. But to have a thriving multichannel eCommerce business, you need to be equipped with the right tools.
And SaaS appears to be working well in the eCommerce world. OrderDynamics explains some of the key findings from the Forrester study they commissioned:
"when it comes to SaaS Order Management Systems, 62% of retailers surveyed have experienced or expect improvements across 11 critical metrics including better sales figures, faster time-to-ship and greater order fill rate. Seventy-one percent, 69% and 67% of respondents said they saw or expect boosts to these respective measures thanks to their switch to SaaS-based OMS."
They also found that in terms of employee satisfaction and customer loyalty, at least half of the survey respondents saw an increase in happy feedback.
Having one interface to log into anytime, anywhere, to quickly manage your orders across multiple channels. That's bound to make people happier!
It also seems that whether we like it or not, the industry is marching towards cloud. IDC attributes at least half of the IT spending in 2018 to cloud-based systems. And they predict that by 2020, cloud will make up 60-70% of all software and tech spend.
So if SaaS-based order management is so great, why aren't all retailers using it?
In the Forrester study mentioned earlier, these were the main reasons why retailers were hesitant to make the switch:
Data security concerns
We covered security earlier in the post and why on-prem software may not be as secure as it seems. It's completely understandable to have worries when data is being stored on. servers you don't own or control. And with something as important for operations and customer satisfaction as order management, you want to make sure your business is in the right hands. So we'll use ChannelGrabber as an example of good security practices (because why not):
- ChannelGrabber has been cloud-based since its inception so we're well-versed in security practices
- We run on private cloud
- We maintain our own servers in-house
- We have staff who are dedicated to continually protecting against threats by updating and monitoring everything
- Our latest Trustpilot trust score is 9.6 (surely that counts for something?)
The word 'migration' does make you think of a lot of work. But it really shouldn't be, depending on which software you choose. We can't speak for other providers, but at ChannelGrabber, it's certainly not a lot of tedious transferring across.
Basically, if you're selling stuff on a channel, and your stock levels are accurate, then we can quickly grab the data directly from your selling locations. We have what we call 'on-boarding professionals' on our team who can give you an initial training session to get you familiar with the software, before helping you with any 'migration' issues if necessary. In essence, we do everything we can to make sure it's a smooth transition.
SaaS-based order management is all about walking before you can run; the software grows with your business. Again, using ChannelGrabber as an example: as your order volume goes up, you can upgrade; if your order volume drops at any point, you can downgrade. You're literally only paying for what you need, and you get the choice of paying monthly or annually. It's not like with traditional software where you pay a high upfront fee that's not in tune with your business's growth at all (and comes with a bunch of additional costs and workload).
Thinking of making the switch to a hassle-free system? ChannelGrabber can help you create a seamless process.