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Optimizing transactional elements of composable commerce

In the digital age, providing an outstanding customer experience is one of the vital goals for online retailers. However, traditional monolithic e-commerce platforms don’t offer enough flexibility or scalability to meet the evolving needs of modern consumers. That’s where digital commerce modernization comes to the rescue. This process involves identifying and moving certain functionality to microservices according to business priorities.

When selecting legacy components for migration, it’s best to start with core technological aspects of commercial space. These are usually referred to as non-transactional elements, and they include the content management system (CMS), search and recommendations, loyalty and promotion optimization solutions. Replatforming these components allows you to build the foundation for a winning composable commerce platform, but the migration process shouldn’t just stop there.

In this article, we will focus on the transactional elements of the e-commerce system – inventory management, order management system (OMS), and payment processing services – that will help you handle the many curve balls thrown your way by live operations, such as stock issues, supply chain mishaps, order routing, product returns, and managing online transactions.

Inventory management platform

It’s of utmost importance for every e-commerce company to be aware of what they have in stock at any given time. Whether you are running a retail shop, a manufacturing facility, or a restaurant, if you are handling physical goods, a robust inventory system should become the backbone of your operations. With rapid omnichannel commerce expansion and ever-growing customer expectations for fast and reliable order fulfillment, it is key to building a successful business. An inventory management platform is a type of software that gives enterprises a global overview of on-shelf, in-transit, and on-order inventory across the entire supply chain. It helps businesses automate the sales order lifecycle, from the initial procurement of goods, and warehousing to allocating stock, packaging and shipment. Modern, lightweight API-driven composable systems enable granular selection and integration of best-in-class solutions for each of the inventory management processes, empowering retailers to operate more efficiently, enhancing customer service and overall profitability.

Improvement of inventory management practices is one of the top goals for nearly 75% of all supply chain management professionals. And while some only plan to reinvent their distribution network with real-time visibility enabled by automation, item-level tagging, sensors and analytics, leading retailers and brands are already leveraging best-in-class inventory management solutions for:

Consistent inventory across channels

Online businesses have to deal with a high number of product suppliers and a large portfolio of SKUs scattered throughout multiple locations. Modern inventory management solutions help enterprises to properly track all incoming and outgoing supplies and products, maintain stock synchronization between systems, and consolidate inventory data in a single window.

Improved inventory accuracy

Human error is a top issue in 46% of warehouses. An advanced inventory management system that features RFID tags, scanners, sensors, robots and drones throughout a facility, removes much of the potential for operator fault by automatically monitoring and updating product quantity, status, condition, and precise location.

Optimized inventory

Every year the retail sector suffers a $1.1 trillion loss in revenue opportunities caused by inventory distortions. Due to an imbalance between supply and demand, businesses have to face shrinkage, stockouts, and overstock, which lead to uncertainties and inventory errors. Inventory visibility solutions paired with predictive analytics capabilities can easily tackle these issues helping brands to manage their replenishment schedules, increase speed-to-insights, and reduce costs.

Order management system

Just as necessary as real-time information about inventory is the proper execution of trade between shoppers and sellers. From the moment a customer places the order to the moment the parcel lands on their doorstep, a complex string of events takes place. It includes order processing, updating inventory levels across all platforms, sending purchase details to an appropriate warehouse, where the order is picked, packed, and double-checked for accuracy. Then comes routing, shipping, tracking, notifying, and returning or exchanging products. The entire sequence can be controlled from within a single dashboard – order management system (OMS).

OMS is a retail tool designed to facilitate order entry and processing, stock control, and order fulfillment. It encompasses the entire buying and selling process, connecting clients, sales channels, and shipping solutions to speed up product delivery and create expedited and seamless customer experiences. It enables businesses to process large volumes of orders, manage order fulfillment on a large scale, optimize order sourcing decisions, and estimate order delivery dates.

Modern technology advancements allow retailers to build cutting-edge OMS solutions with cloud-native open-source tools. Thanks to their flexibility, companies can easily add or remove components as needed without requiring a complete overhaul of their digital commerce ecosystem. Here are just some examples of composable commerce capabilities that can boost end-to-end order processing and support changing business requirements:

Distributed order management

Online retailers typically operate in more than one location and therefore require defined rules to optimize their order fulfillment performance. Distributed order management (DOM) capabilities help businesses balance the need for meeting customer’s expected lead time and minimizing delivery costs by finding the best order routing options based on geographic proximity, availability at nearby stores, or network-specific availability, and ensuring the product is delivered to customers on-time and in-full.

Flexible fulfillment options

The global pandemic has fueled customers’ demand for same-day delivery, and expectations around order fulfillment are still going up. According to a Digital Commerce 360 report, 68% of shoppers said that fast shipping is one of their major decisive factors when placing an order online.

To keep up with this ever-growing demand, retailers have to optimize the time between a customer’s purchase and delivery by offering a broader range of fulfillment options. The majority of modern OMS provide capabilities for buy-online-pickup-in-store (BOPIS), curbside pickup, ship-from-store, or direct-to-consumer (D2C) delivery options, facilitating fulfillment speed and efficiency.

Reverse logistics

Managing returns and refunds is one of the major pain points for e-commerce businesses. OMS helps to make this process hassle-free through the automation of order routing, instant refund processing, and generating return shipping labels with the auto-filled address of the customer. It also allows both shoppers and sellers to track the status of the product returns, eliminating bottlenecks in communication between the parties, and providing a reliable customer experience.

Payment processing

The development of e-commerce gave a huge boost to online payments. They have become so commonplace that we hardly notice their progression. A recent study by PwC, shows there is a steady shift to digital payments with global cashless transaction volumes set to increase by more than 80% in the upcoming years, from about 1 trillion in 2020 to almost 1.9 trillion in 2025. Precedence Research estimated that the size of the digital payment market accounted for almost \$105 billion in 2022 and is predicted to reach \$375 billion by 2030, expanding at a CAGR of 17.25% over the forecast period.

These numbers show the rising demand for cashless payments. Therefore, brands of any size or business domain need to be able to offer this payment option both online and in-person to be able to reach all of their potential customers. The most practical way to do that is to employ a company, service, or application that acts as a financial middleman between your website and your clients, allowing you to accept payments for goods and/or services.

A payment processing solution is a type of software responsible for taking payments made via credit or debit cards, digital wallets, bank transfers or other means. It enables smooth, efficient and secure interaction between the parties involved in the transaction, that is, the customer, the merchant, the payment processor, the payment gateway, as well as the customer’s bank and the merchant’s acquiring bank.

Modern payment processing services come with numerous capabilities that help digital commerce businesses handle sales, speed up the payment process, improve their customer journey, and earn more revenue. Some of the most notable features of payment gateways are:

Seamless online shopping experience

With the development of technology, people have become increasingly comfortable paying online. Since payment processing solutions can improve the visibility of transactions and reduce the time required to complete the payment, e-commerce brands can easily deliver the convenience, clarity, and security their customers are looking for.

Robust security protocols

E-commerce businesses are taking on new risks as they acquire large quantities of customer data from their internal sources, partner systems, mobile apps, and many others, which they must preserve and keep safe from cybercriminals. Payment processing services have embedded encryption algorithms, effective data protection tools, and PCI compliance, that safeguard sensitive information, such as credit card numbers and client addresses, as it passes from customer to merchant.

Mobile optimization

Smartphone penetration is estimated to reach 80% globally by 2025, and if an e-commerce site is not geared up for mobile devices, the business is likely to be out of step. Luckily, most of today’s payment systems are well-equipped to sustain the growth in use of mobile-based retail solutions among consumers, providing them access to affordable, convenient payment mechanisms.

Bottom line

Composable commerce is a flexible approach to building an online retail system by combining specialized APIs, dedicated microservices, and third-party applications and integrating those solutions with best-of-breed commerce systems. It allows retailers to continually optimize and evolve their digital efforts to delight their clients and develop a competitive edge.

However, to be able to handle the volatile ups and downs of live commerce, you should be able to have access to real-time inventory data, unify your order management processes and workflows across multiple channels, and ensure fast and secure payment processing. This will result in more accurate demand forecasting, efficient inventory management, improved order fulfillment, and better cash flow for your organization. Do you want to know what else you can do to enhance customer satisfaction and boost revenue for your online business?

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