How Automated Order Routing Enhances Ecommerce Efficiency

If your ecommerce brand uses a single fulfillment center, all of your orders are fulfilled in the same warehouse. But what if you operate two or more fulfillment centers? How do you decide which orders get fulfilled where?  

While there are many ways to tackle order routing, there’s usually a logic to it that lets you maximize efficiency, shorten an order’s transit time, and minimize shipping costs. To apply that logic quickly and effortlessly, many brands leverage an automated order routing system.  

In this article, we’ll break down what automated order routing is, its role in ecommerce, and how expert supply chain partners like ShipBob can help you implement it in your brand’s operations.  

What is automated order routing? 

Automated order routing (or AOR) is a piece of ecommerce automation in which software uses pre-determined logic or routing rules to automatically send each order to its ideal fulfillment location.  

When a brand uses an automated order routing system, they configure a rule-based algorithm that evaluates each order based on certain characteristics or circumstances, and which then determines the fulfillment center the order is sent to.  

For instance, orders may be routed to a certain fulfillment center based on proximity, which will speed up the delivery process. In some cases, orders may be routed to specific warehouses based on which locations have the order items in stock to minimize order splitting and improve customer satisfaction.  

Automated order routing goes hand-in-hand with automated order processing, where order information is collected and processed by the order management system. During this process, the system can also be configured to determine the best place to route each order. 

Key components of automated order routing 

Automated order routing systems are complex and require coordination across many different technologies and data sources. Here are just some of the key elements that enable automated order routing for an ecommerce brand.  

Real-time inventory tracking 

Automated order routing systems rely on real-time inventory tracking functionality to achieve the most up-to-date data on stock levels across multiple fulfillment centers. This level of visibility allows the system to make routing decisions according to stock availability. 

For instance, say an order would normally be routed to the fulfillment center closest to its final destination, but that fulfillment center has run out of the items in that order. Rather than putting the customer on backorder until restocking, the automated order system can see in real-time which locations do have the item in stock, and route the order to one of those. That way, the order flow remains uninterrupted. 

“ShipBob’s dashboard is super intuitive and easy to navigate. I love that you can view orders based on when they are processing, completed, on hold, and in other stages. It is super helpful for us to have that and track the order every step of the way. We have a Shopify store but do not use Shopify to track inventory. In terms of tracking inventory, we use ShipBob for everything — to be able to track each bottle of perfume, what we have left, and what we’ve shipped, while getting a lot more information on each order.”

Ines Guien, Vice President of Operations at Dossier 

Robust inventory management 

Automated routing systems have powerful inventory management features to help you keep enough of the right SKUs in the right locations to optimize order workflows. These features include reorder point notifications and automatic reordering to ensure that you’re stocking up on time. 

Additionally, some systems even show you how to distribute your inventory across your fulfillment network optimally. This helps you balance your inventory levels so that you don’t experience sudden stockouts or accidentally overstock certain warehouses. 

Barcode data collection 

The real-time inventory visibility that AOR relies on is built on a strict barcode scanning system. Whenever warehouse associates move a piece of inventory – whether it’s to receive it, stow it, or pick it – the associate scans the barcode on the inventory unit, which is then recorded through an inventory management system (or IMS).  

This data collection procedure helps you keep track of inventory locations and levels throughout the supply chain, improve inventory control, and keep your inventory records accurate, so your AOR is always working with correct information and can avoid a “garbage in, garbage out” scenario.  

“We interviewed around a dozen different SaaS providers before ShipBob was on our radar, and I felt like none of them met our needs. They were all missing key features that you can’t run a business without.

For instance, using universal product code (UPC) verification — the process of scanning a product’s barcode to track inventory as it moves through fulfillment — was incredibly important to us. Half of the vendors’ systems could only do UPC verification on pick or pack, but not both, which leaves you prone to errors.

Then, I stumbled across ShipBob. From the very first call, I thought, “This is it.” ShipBob is a global fulfillment platform that wrote its own software instead of using someone else’s, and uses it to run their own outsourced fulfillment service. That was definitely a solution we could trust, and the solution we wanted.”

Ben Tietje, Co-Founder and CEO of Earthley 

The role automated order outing plays in ecommerce 

When properly deployed, an automated order routing system is a win-win for both you and your customers. Let’s break down how automated order routing impacts ecommerce brands efficiency, costs, and customer experience.  

AOR massively upgrades the customer experience 

Customers today expect quick shipping for free – or at least for very little cost. Automated order routing optimizes the shipping and order fulfillment process to ensure orders are routed to the fulfillment locations that will result in the fastest, most cost-effective delivery experience possible.  

For instance, orders may be routed to the fulfillment center nearest to the end customer to shorten the distance a package must travel, thus speeding up shipping while reducing shipping costs. This directly facilitates timely deliveries and, in many cases, enables the affordable (or even free!) 2-day shipping that customers love. 

An AOR system can also prevent backorders and delays that annoy customers and hurt brand loyalty. If the ideal fulfillment center is out of stock, AOR can split a shipment between two or more fulfillment centers at a brand’s discretion to ensure that the customer’s order doesn’t get delayed until restocking. While this is a bit more costly in the short term, this strategy can help brands retain customers and encourage repeat purchases later on.  

Streamline operations with smarter resource allocation 

With AOR systems enabling automatic routing, you reduce the need for manual work and allocate your resources more optimally.  

Rather than being your own order router and spending hours determining where each and every order should go, an AOR system can send orders to the most optimal fulfillment locations in an instant. Automating routing also means that your team is free to focus on tasks and activities that require human attention, which makes the best use of their labor hours and helps you streamline your operations. 

These time and effort savings combined with the cost savings from faster and cheaper deliveries (as well as the potential for increased revenue from a better customer experience) make smart order routing an efficient – and lucrative – choice for ecommerce brands.   

ShipBob’s winning approach to automated order routing 

As an expert supply chain and fulfillment platform for ecommerce brands, ShipBob’s proprietary warehouse management software automatically routes orders across our network of 50+ global fulfillment centers for you. Whether you outsource fulfillment to ShipBob or leverage our WMS in your own warehouse, here are some of the ways ShipBob can help you optimize your inventory and order routing.  

ShipBob integrates with top ecommerce platforms 

ShipBob’s technology seamlessly integrates with leading ecommerce platforms (including Shopify, BigCommerce, WooCommerce, etc.), so your orders are automatically pulled from your online store, processed, and sent to the optimal fulfillment center. ShipBob also has a Developer API if your brand requires a custom integration.  

ShipBob can also process all your orders across all your different sales channels, including marketplaces like Amazon and Walmart Marketplace and B2B retail partners like Target, Macy’s, and Nordstrom for effortless omnichannel fulfillment.  

“Because we’ve been able to utilize ShipBob to fulfill all of our orders as a mini-ERP – including integrating directly to Amazon, multiple B2B channels, and our Shopify store – everything is so streamlined.”

Tyler McCann, Co-Founder of Taste Salud 

ShipBob tracks inventory and orders in real-time 

Through ShipBob’s dashboard, you can achieve the real-time inventory visibility that you need to make informed decisions about restocking, allocation, product catalog management, and more. 
Businesses looking to enhance their technological capabilities without building an in-house team might outsource web development to create sophisticated inventory tracking interfaces.   

Our warehouse associates use barcode scanning technology to track each piece of inventory as it moves through your supply chain. Our software then updates inventory levels in real-time, so you can always view the most up-to-date inventory counts at a glance and quickly determine which locations are running low on stock. This can be used to inform your distribution strategy, helping you balance your inventory levels to maintain optimal stock at various locations.  

You can also access key inventory and order analytics, like: 

• Inventory turnover 
• Estimated days inventory on hand 
• Average shipping cost 
• Average transit time 
• Order volume by ship option 

ShipBob distributed inventory based on real order data 

You can take advantage of ShipBob’s global fulfillment network to strategically distribute your inventory across the country. This helps you store your inventory closer to your customers and route orders to the nearest fulfillment location, significantly speeding up delivery while ensuring that you get the best price with the right carrier. 

ShipBob’s analytics dashboard even uses your historical order data to calculate the most strategic allocation of inventory across our 50+ fulfillment centers. This distribution is designed to minimize your average shipping zone and reduce your shipping time and cost while ensuring that each fulfillment center has enough stock to meet demand.  

The best part? Through ShipBob’s Inventory Placement Program, ShipBob will actually physically distribute your inventory across to multiple regional fulfillment centers for you. Simply send your inventory to a single ShipBob receiving hub, and we’ll handle allocating and placing inventory at recommended fulfillment centers (or whichever ones you select). This saves you time, money, and the headache of figuring out how best to split your inventory.  

ShipBob’s automated order routing in action: Our Place 

The viral kitchenware and cookware brand Our Place strives to deliver the most exceptional customer experience possible – and to do that, they knew they needed to expand their fulfillment network geographically.  

After partnering with ShipBob, Our Place began leveraging four of ShipBob’s US fulfillment centers and arranged for orders to automatically get routed to the most optimal fulfillment center location.  

Not only did this significantly reduce shipping times (from five to six business days to just two and a half days on average from order placement to customer receipt), but with 98% of their parcels shipping locally to lower zones, they saved $1.5M in outbound freight costs. Now that cost-effective ground shipping is possible, Our Place can also extend holiday shipping cutoffs to capture 4 to 5 extra days of revenue – over two million dollars – thanks to ShipBob’s fulfillment network and automated order routing capabilities.  

“ShipBob’s technology streamlines inventory management across our network, ensuring optimal inventory allocation. Once the inventory is allocated correctly, passing orders to ShipBob is seamless. ShipBob automatically routes orders to the nearest warehouse to the customer. We receive notifications confirming the warehouse selected for shipping, eliminating inventory discrepancies between the warehouses. Efficient inventory allocation significantly impacts our outbound shipping costs, and with ShipBob, managing this has been effortless.”

Ali Shahid, COO of Our Place 

For more information on how ShipBob can help you automate your logistics and optimize your ecommerce operations, click the button below. 

Automated order routing FAQs 

Below are answers to the most commonly asked questions about automated order routing.