Is the new found focus on Marketplace, the end of the road for core Order Management?
Over the last few months, a couple of my clients asked me if Order Management is passé now that every retailer might start logging onto the Marketplace mantra given Walmart's foray into the Marketplace arena.
While I see some dilution in terms of focus on Order Management Systems, a Marketplace does not necessarily replace the need for a core Order Management system. Actually, I see more work in the existing Order Management implementations. Let me elucidate.
Order Management & hence Multi-channel integration (MCI) at its core is about integrating the various Capture channels with the various Fulfillment channels. The focus in MCI is towards providing a uniform experience to the customer across the various Order Capture channels, in terms of inventory visibility, fulfillment capability and in terms of returns capability. These capabilities are generally built into the Order Management System (OMS). And of these, the most basic capability is the Inventory visibility, which ties the demand across the various Capture channels to the supply across the various Fulfillment channels.
At a basic level, a Marketplace is primarily about extending the front end Order Channel to support Partners or Registered Sellers. I see two main variants of the Marketplace (keeping in mind the Order Management requirements)-
1. The current Walmart or Amazon model of having their own sales channel plus providing a Sales channel for Partners
2. The eBay model of providing a Sales channel for any registered seller, private or otherwise.
The eBay model is primarily just order capture for various sellers and does not need an actual Order Management. I agree that the eBay model can be built without a hardcore Order Management system, since the Order Capture system can be extended to maintain visibility of the items across various Sellers.
But given that retailers would have their own offerings also, they would primarily go in for the first model. And in this model, an Order Management system is of prime importance to handle all the internal moving parts. The Marketplace would not replace the need to tie in all the internal supply across the multiple Fulfillment channels to the Order Capture channels. At best, the Directship Suppliers (or Dropship suppliers as they are called in many places) could be moved to the Marketplace as Sellers and provide their own assortments without requiring to sign up with the retailer for a second hand fulfillment.
On the other hand, on-boarding a Marketplace into the Ordering Channel would probably add work in the Order Management arena. This would essentially need the Order Management systems to change to handle inventory at a level below products (since each Seller would have their own listing & inventory at that level), support more complex rules across Sellers especially for Order Amendments and probably even support non-core functions like exposing Fulfillment Services.
All in all, while Order Management Systems need to evolve to handle the changing landscape, there is no doubt in my mind that an Order Management System will be a pre-requisite for any retailer going in for a Marketplace implementation.
Comments
Nicely explained article Mr Prasad. Just curious, What if we consider the various travel portals (like makemytrip) as marketplace, and then look at the need of OMS? In this case, various airlines (or hotels) are the equivalent to retailers, which have their own channels (like own websites / agents) for fulfillment as well as multiple marketplaces (i.e. various websites). Dont you think this makes OMS little more complex. In fact, it also opens up one more option for real world retailers i.e. to use their own sales channel, as well as online marketplaces for fulfillment.
Posted by: Vinay | January 12, 2010 4:46 AM
Vinay -
Just a minor clarification. I was covering a point of view for delivery of physical goods where the Order goes through a specific lifecycle of pick-pack-ship over a finite amount of time.
For most Service Portals (of which Travel portal is an example), the Order Management part in terms of pick-pack-ship is almost non-existent. The Management part is only in terms of managing & booking the Capacity (# of seats, pricing for each particular seat) rather than in delivering the Service. The Service Delivery itself is integral to the Operational systems within that particular entity (be it the ticket system within the airline or the reservation system within the hotel).
To apply it to your example, the Travel portals will essentially have to figure out which seats/rooms are available for which particular day, but once that is decided by the customer, the actual delivery is analogous to updating records and providing the e-ticket (or a reservation slip in case of hotels).
So, while it is a bonafide Marketplace, I would think that the complexity would come in terms of integrating with the underlying Schedule Management System rather than an Order Management system.
One final word though - A lot of the OMS systems do support the actual tracking and execution of applied Services. As an example - There are multiple OMS implementations where we have configured a Washing Machine installation service (in terms of which slots and how many teams) which is provided when you buy the Washing machine. In this case, we actually track the service provided and the cost if any against these services within the OMS.
Posted by: Prasad Acharya | January 12, 2010 8:06 AM