Distributed Order Management (DOM): The Ultimate Guide to Smarter, Faster Fulfillment
Herding Cats No More: Ecommerce businesses can streamline order fulfillment with Distributed Order Management (DOM) software, avoiding chaos and maintaining seamless inventory control across various sales channels and locations, reducing customer loss.
DOM—Your Inventory Maestro: DOM orchestrates order fulfillment by centralizing inventory data, enabling businesses to efficiently manage stock from multiple locations, ensuring real-time synchronization and accurate inventory visibility.
Route Orders Like a Pro: With smart order routing and rule-based automation, DOM optimizes the fulfillment process, choosing the best and most cost-effective path for each order based on customer preferences.
DOM vs OMS—The Epic Battle: DOMs handle complex operations with scalability, sophisticated algorithms, and multichannel support, offering advantages over traditional order management systems (OMS) in growing ecommerce environments.
Stay Flexible, Stay Happy: DOM systems adapt to real-time changes, such as inventory adjustments and order rerouting, ensuring a smooth customer experience with features like BOPIS and cross-channel returns.
Ecommerce businesses often hemorrhage opportunities when managing inventory across stores, warehouses, and sales channels like herding cats.
When things don’t go as planned and the stock runs out, there’s a chance that 71% of your customers will switch brands.
But picture this. It’s the peak of the holiday shopping season. A customer is frantically searching for that last-minute gift.
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Your competitor’s website screams “out of stock,” but your business? It seamlessly ships the same item from a store 300 miles away.
The result? One thrilled customer. Zero missed sales.
That’s what distributed order management (DOM) software can do for you. Let’s talk about what DOM is and how it helps you transition from chaos to competitive edge.
What is Distributed Order Management (DOM)?
DOM is a software solution that orchestrates order fulfillment across multiple channels, inventory locations, and fulfillment methods.
Clunky systems of yesteryear could only handle a single warehouse and failed to match the growing need for speed and precision in ecommerce.
Basic order management systems might work fine for businesses with one warehouse and one sales channel.
After ecommerce’s 2020 growth spurt, most online retail businesses increased warehouse occupancy, making their inventory and warehouse management processes more complex.
In fact, a 2021 report by the UK Warehousing Association showed a 614% increase in warehouse occupancy by online retailers.
With this scale came a few challenges. Modern customers started expecting merchants to offer a buffet of delivery options, such as BOPIS (buy online, pickup in-store), ship from store, and same-day delivery.
That’s where DOM comes in.
DOM is a non-negotiable tool for ecommerce businesses that want to deliver a “buy anywhere, return anywhere” experience and juggle inventory across multiple warehouses and stores.
But it’s valuable for most modern retailers because it helps find the best, fastest, and cheapest way to fulfill orders every single time.
How does distributed order management work?
DOMs sync inventory, automate decisions, and ensure every order is fulfilled efficiently. But how does it run this whole circus behind the scenes? Here’s how:
Let’s take a peek into what goes on behind the scenes.
- Multichannel integration. If you sell through multiple channels—a website, marketplace, and social media—DOM can seamlessly connect all of them and funnel orders into one system.
- Inventory data is centralized. DOM pulls inventory data from everywhere: warehouses, retail stores, dropshippers, and even the dusty stockroom that you haven’t opened in decades. Real-time sync ensures you always know what’s in stock and where, so you don’t promise what you can’t deliver.
- Rule-based automation. When orders start rolling in, DOM uses pre-set rules to decide the best way to fulfill orders. It finds the best way to ship orders based on the customer’s preference—whether they want fast delivery, low cost, or a balance between the two.
- Smart order routing. Once an order lands in the system, DOM finds the best fulfillment path—this could be from a warehouse, store, or partner. It even handles complex scenarios like splitting an order across multiple locations.
- Real-time adjustments. Things happen. Inventory might run low, shipping routes might get delayed, or the customer could change their mind. But DOM tackles these challenges for you—it updates inventory, re-routes orders, and keeps the business running smoothly.
DOM vs OMS: How they differ
DOMs and order management systems (OMS) belong to the same family, but here’s how they’re different:
| Feature | DOM | OMS | Why it matters |
| Scalability | Built for complex operations across multiple warehouses, stores, and fulfillment partners. | Handles moderately complex setups, but struggles to scale. | If you're growing rapidly or adding fulfillment options, a DOM can scale with you. |
| Rule-based logic | Sophisticated algorithms optimize fulfillment paths for speed, cost, and customer preferences. | Basic workflows handle orders but lack advanced optimization. | DOMs save time and money by automating smarter decisions. |
| Multichannel support | Seamlessly integrates with multiple sales channels, syncing inventory and orders in real time. | Limited channel support or workarounds may be required. | For businesses selling across platforms, DOMs reduce friction. |
| Inventory management | Real-time visibility across all inventory sources—stores, warehouses, and 3PLs (third-party logistics). | Tracks inventory for smaller setups, like a single warehouse. | For businesses managing stock at scale, DOMs ensure accuracy. |
| Customer experience | Powers omnichannel features like BOPIS (buy online, pick up in-store) and cross-channel returns. | May struggle to deliver seamless experiences across channels. | Customers expect flexibility; a DOM keeps them happy. |
| Adaptability | Dynamic, real-time updates for inventory changes, delays, or disruptions. | Manual input often required, slowing reaction times. | DOMs keep operations smooth by reacting to changes instantly. |
Key Features of a Distributed Order Management System
DOMs are packed with features that simplify complex fulfillment operations. Here are examples of features you can expect in a modern DOM:
Real-time inventory tracking
DOM tracks stock levels across warehouses, stores, suppliers, and even that box of returns in the corner in real time.
This means no more selling what you don’t have, accurate ETAs for your customers, and the ability to reroute orders instantly if something’s out of stock.
Omnichannel order management
DOM coordinates orders across channels, including BOPIS, ship-from-store, split shipments, and curbside pickup.
Got an online order for a pair of shoes and a matching bag from different locations? DOM splits and ships seamlessly without breaking a sweat.
Need to ship to a customer but let them pick up a gift in-store? DOM’s got you covered.
Rule-based automation
DOM uses pre-configured rules to decide how orders get fulfilled. It calculates the fastest, cheapest, and most logical way to ship each order while prioritizing local inventory.
Say you sell t-shirts online. A customer from New York orders two t-shirts from your ecommerce store.
Assuming you’ve configured the DOM to look for the warehouses closest to the customer’s ZIP code, the DOM automatically routes this order to your Brooklyn warehouse.
Unfortunately, one of the t-shirts is only available at your warehouse in Olean, far away from Brooklyn. Here’s what DOM does at this point:
- Checks availability at Olean warehouse. If both t-shirts are available at the Olean warehouse, the order is fulfilled from there.
- Route order to a nearby store. If a nearby retail store has both t-shirts available, DOM routes the order there for ship-from-store fulfillment instead of using warehouses.
You may have more flexibility depending on the tool you’re using and your preferences. For example, you might even choose to delay fulfillment for a single shipment and wait until both t-shirts are available at one location before dispatching.
Integrations
The best DOMs integrate with commonly used ecommerce platforms and business apps such as ERP (enterprise resource planning software), WMS (warehouse management systems), and 3PLs.
This allows seamless exchange of data between systems, facilitating workflow automation and real-time data sync.
AI-powered forecasts
Advanced DOM systems include an AI-powered forecasting feature that predicts demand based on historical trends.
This information is critical to avoid overstocking and stockouts and minimize carrying costs.
Dynamic order routing
DOM dynamically re-routes orders to keep things on track when things go wrong. For example, if a warehouse is out of stock, DOM finds the next best location to fulfill the order.
Customer communication tools
DOM ensures your customers stay in the loop.
It sends updates related to shipping, order status changes, and ETA adjustments. Keeping customers in the loop improves the delivery experience and also reduces WISMO (Where is My Order?) queries.
Benefits of Distributed Order Management
DOMs can cost a fair bit upfront, so it’s best to do a cost-benefit analysis before you take the plunge. Here are some benefits you can expect after investing in a DOM:
Improved inventory visibility
360-degree visibility is critical to maintaining adequate inventory without overstocking. Real-time inventory data also minimizes errors and supports decision-making.
Complete inventory visibility enables smarter redistribution.
If you have too much inventory in one region, DOM spots this imbalance and suggests corrective actions, saving you from excessive carrying costs.
Suppose you’re a fashion retailer.
You operate 50 retail stores and an ecommerce site and, lately, you’ve been dealing with stock discrepancies that have led to lost sales.
Here’s where a DOM can offer value—it can help gain visibility into every SKU, allowing you to consolidate inventory data across your network.
Once you implement DOM, you’ll likely see a drop in stockouts and a rise in fulfilled orders.
I spoke to Zarina Bahadur, CEO and founder of 123 Baby Box, a monthly subscription service for babies aged one to three, to get more insights into the dollar value of the benefits they received from a DOM.
Zarina said she uses Cin7 and believes inventory visibility has made managing inventory across their online store and warehouse locations easier.
I estimate that our stock availability generated an additional $20,000/month from customers who didn’t cancel their subscription after our recent sales peak
Streamlined order routing
Does someone on your team manually choose the best store or warehouse to fulfill orders? Surely they have better things to focus on, right?
Let them focus on more strategic parts of their job by handing this rote task to DOM with its automated, rule-based logic.
A DOM routes orders based on factors like cost, proximity to the customer, and current inventory levels.
DOMs also handle multi-item orders from different locations by automatically breaking orders into shipments and synchronizing delivery timelines.
This means lower shipping costs, faster deliveries, and a streamlined workflow that lets your team focus on higher-priority tasks.
I asked Wesley Littlefield, the marketing manager at Anglers, to share estimates on how much their DOM saves them in shipping and other costs.
Our shipping costs have dropped by about 20%, translating to annual savings of $80,000, and our average delivery time has decreased by two days after implementing a DOM.
Improved customer satisfaction
Features like BOPIS, real-time tracking, and accurate delivery windows help you deliver the type of experiences a modern customer expects, improving satisfaction and retention rates.
DOM’s ability to dynamically allocate orders to the best fulfillment location speeds up the order-to-delivery process. It also minimizes shipping errors and late deliveries, thanks to the availability of real-time inventory and fulfillment data.
Even during peak season, DOM helps process and ship orders at faster speeds through automated routing and real-time adjustments where needed.
Scalability
Scalability is every business owner’s dream, and DOM ensures it doesn’t turn into a nightmare.
Whether you’re opening new fulfillment centers, expanding into new markets, or adding new sales channels, DOM scales with your business and keeps inventory in sync and under control.
If you’re currently only selling through a website and planning to sell via marketplaces and social selling platforms like Instagram and TikTok as well, DOM can help you expand into these channels without operational chaos.
Data-driven decisions
DOM gives you a steady stream of valuable inventory data.
It tracks everything from order trends to shipping costs and empowers your team to make data-driven decisions.
With DOM, you can forecast demand, identify top-performing channels, warehouses, and shipping partners to optimize operations, and understand your customers’ buying patterns, preferences, and behaviors to tailor.
How to Implement a DOM System
Instead of straight away onboarding a DOM system and ending up with a mess, follow these steps for a clean, disruption-free implementation.
Step 1: Evaluate your current order management processes
To lay a good foundation, you need to identify recurring issues in your order management process. This could be inventory mismatches, delayed shipments, or manual overrides that slow operations.
Here’s how you can evaluate your current process:
- Map out your order lifecycle. Where are the hiccups? Look at fulfillment accuracy, processing times, and shipping costs to see where things are costing you time (or money).
- Assess your systems infrastructure. Do your current systems support real-time inventory tracking? Are there any tools that need an upgrade to handle DOM’s demands?
- Make way for data. Check if your existing tech stack plays ball with marketplaces, ERPs, and logistics platforms so data transfer is smooth and implementation is faster.
- Run a quick process cleanup. Identify redundant or outdated workflows and kiss them goodbye. For example, you might consider eliminating single-warehouse routing if multi-node fulfillment is possible.
Document these findings into must-fix and nice-to-have categories. This ensures you’re not just plugging holes but building a scalable, future-proof order management system.
Step 2: Define clear goals and requirements
If you don’t have goals to aspire to and things you consider ‘must-haves’ for your DOM, you’ll have a hard time finding the right tool and tracking your successes.
Prepare a wishlist of things you want from your DOM—do you want it to fix fulfillment delays that are hurting your customer satisfaction scores, or perhaps you want to steer clear of inventory discrepancies causing overselling nightmares?
Pinpointing these challenges helps shape your goals.
Make sure your goals are tied to a specific metric. A vague goal like “faster shipping” is like saying “better weather”—nice in theory, useless without specifics.
You need a goal you can measure—at any point in the process of achieving it, you should be able to answer how far along you are.
How fast do you want shipping to be? Do you want to prioritize speed or maximize it while keeping costs under control?
For example, a clear goal could be reducing delivery times by 20% while keeping shipping costs unchanged.
Seek inputs from other relevant departments to define requirements.
Here are some departments you might want to chat with:
- IT team. They might need seamless integration with existing ERPs and APIs because their sanity depends on how easily systems can communicate.
- Warehouse operations. They might want more efficiency from the DOM—things like automated pick-pack-ship workflows.
- Customer service. They’d probably like real-time order tracking and inventory visibility to avoid awkward “Where’s my order?” calls.
- Finance. Your friends in finance might prioritize accuracy and transparency. They’ll care about clean reconciliation, clear reporting, and cost-efficiency fulfillment.
Step 3: Research and select the right DOM solution
Start by vetting DOM systems. Here are some factors to consider:
- Feature set. Multichannel integration and real-time inventory tracking are non-negotiables, while advanced AI features might be a bonus depending on your business size.
- Compatibility. Check compatibility with your existing tech stack to prevent data silos. The DOM system you select should at least integrate with your ecommerce platform, ERP, and 3PL platform.
- Scalability. If you’re a mid-market player and plan to expand globally, pick a solution with enterprise capabilities. Cost-effectiveness is critical too, so consider a tool that charges based on usage to avoid overpaying in low-volume months.
- Customization. Some workflows may require a DOM that allows custom rules. For example, you may want a DOM that allows you to allocate stock based on regional demands or prioritize eco-friendly delivery partners. See if the DOM you’re considering offers that level of customization.
- Support. Customer service makes or breaks your experience. Read reviews and case studies and test the customer success team’s responsiveness. Request a live demo before you settle on a tool—watching the tool in action helps assess usability and feature depth.
Here’s a list of the top options for order management systems, if you want to get started right away:
Step 4: Prepare your infrastructure and team
Start with some data hygiene. Consolidate product SKUs, clean up duplicate entries, and verify inventory levels.
Your fancy new DOM can’t deliver desired results until you feed it accurate data.
Sometimes, it’s not quite easy. Zarina, for example, mentioned that they needed to design the integration between Cin7 and their existing technical systems to prevent service interruptions.
Our main challenge was ensuring the new system could accept data transfers from our outdated system without compromising its precision.
We collaborated with Cin7 support personnel to build duplicate data sets and conducted multiple test operations ahead of activating the system,.
“Our main challenge was ensuring the new system could accept data transfers from our outdated system without compromising its precision.
We collaborated with Cin7 support personnel to build duplicate data sets and conducted multiple test operations ahead of activating the system,” - Zarina Bahadur, CEO & founder of 123 Baby Box
The next step is to prep your infrastructure.
Are your warehouses equipped with real-time inventory tracking hardware? If not, get those RFID tags, barcodes, or IoT sensors in place.
Then shift your focus to training.
Employees who have been using legacy systems might resist change, so engage them early. Schedule hands-on training to show them how DOM will simplify their job.
Consider assigning internal champions. These are team members who grasp the tech quickly and can guide others during the transition.
Before you start implementing, test your team’s preparedness with mock scenarios.
For example, you could try simulating a flash sale or system downtime, so your team can learn firsthand how to respond.
Step 5: Define and configure workflows and rules
This is where you build the DOM’s brain. The first order of business? Outlining your fulfillment priorities.
Do you want speed, cost-efficiency, or customer preference to drive decisions?
For example, a rule might prioritize the closest warehouse for shipping unless it’s out of stock, in which case the system automatically shifts to the next best location.
Define rules for stock allocation as well, such as reserving inventory for high-demand regions or specific sales channels, like your DTC site over marketplaces.
Go beyond the basics with exception handling.
What happens when a delivery route is disrupted or an item is backordered? Configure rules to notify the customer, update timelines, and reroute orders automatically.
You can also set up customer-centric rules, like offering free upgrades to expedited shipping for VIPs or bundling split shipments to reduce costs.
Step 6: Test the system
Before you go live, stress test your system. Here are some ways you can ensure it is up to the task:
- Start with a basic check. Pretend to be a customer and place, track, and return orders to see if the system updates inventory accurately and triggers real-time notifications.
- See if the DOM can handle the details. Mix high-priority VIP customers with bargain hunters to see if your routing rules hold up. And don’t forget international orders to see if the DOM can juggle customs delays and regional preferences.
- Simulate your busiest day of the year. Think about Black Friday, for example—throw in a tsunami of orders and see if your system can handle the heat.
- Test for edge cases. Simulate stockouts at one of your warehouses or simultaneous orders for the same item across multiple channels. See if the system reroutes orders efficiently or panics like it’s never seen traffic before.
If you spot glitches, fix and retest. Contact support if necessary to iron things out. When you’re done, prepare for takeoff.
Step 7: Launch and monitor performance
Start with a soft launch. Apply the system to a single region, channel, or product category to minimize the fallout if something goes awry.
Once the dust settles, and you’ve transitioned to using the DOM, keep your eyes glued to key metrics:
- Fulfillment times. Are customers getting orders faster?
- Routing accuracy. Is the system sending orders to the right locations without hiccups?
- Shipping costs. Are you seeing unexpected spikes, or are they staying stable?
Based on the answers here, you can determine whether your routing rules are working efficiently.
Also, set up alerts for anomalies like inventory mismatches or delayed shipments so you can jump in before customers notice.
If the new system causes minor hiccups—which it probably will—acknowledge them and let customers know you’re upgrading to serve them better.
People are surprisingly forgiving when you own the narrative.
Once you’ve confirmed the system works, scale up to all channels and regions.
Step 8: Scale and continuously optimize
Scaling a DOM system involves more than just adding warehouses and sales channels. Just focusing on more will only end up giving you more problems.
Start by digging into the historical data. If demand is surging in certain regions, add fulfillment centers there to cut down delivery times and costs. Be adaptable with where you put your resources to make a more strategic impact.
If you’re expanding internationally, tailor your DOM rules for each region. That means customs compliance, local carriers, and preferred payment methods. This will make scaling globally a buttery smooth ride.
Even when everything is running smoothly, don’t stop optimizing.
Maybe that static routing rule for East Coast orders could benefit from dynamic carrier selection based on real-time shipping rates. Or perhaps you realize VIP customers need their own fulfillment stream to get priority processing during peak seasons.
Trends to Watch in Distributed Order Management
Emerging trends on various fronts are shaping the DOMs of the future. Here are a few noteworthy trends to be mindful of and stay updated with if you’re looking to stay ahead of the curve:
More AI power
Demand forecasts are a common feature, but most tools rely on historical data to predict demand.
AI is capable of ingesting larger volumes of data to identify trends and patterns, allowing it to make better predictions.
Here’s why AI is a critical forecasting tool for modern businesses:
- Throws external factors in the mix. AI can factor in the impact of external factors like weather, or look at what people are saying on social media to predict demand.
- Make smart decisions based on predictions. For example, AI-powered DOM can more dynamically reallocate inventory from slow-moving regions to hotspots during a flash sale.
- Goes beyond static data. Instead of simply calculating cost and delivery times, AI factors in carrier capacity, delivery windows, and real-time traffic updates to find the most optimal way to deliver an order.
Yes, AI-powered tools cost more. But early adoption comes with benefits. It can reduce logistics costs by 15% and decrease inventory levels by 35%.
That’s a win-win for you and your customers.
Sustainability-focused order management
Sustainability is the future of logistics—consumers are becoming increasingly aware of their carbon footprint. A DOM system can help you lower your carbon footprint through:
Carbon-aware order routing
Emerging DOM systems now consider carrier emissions and optimize shipping routes to reduce each delivery’s carbon footprint.
Carbon-aware routing is excellent for customers who prefer sustainable options and builds a solid reputation for your brand.
Even big brands like Amazon are carbon-aware—the company claims its sustainability initiatives, including carbon-conscious delivery, have cut emissions by avoiding 16 million miles driven in 2023.
Consolidated shipments
Instead of shipping from three locations, modern DOM systems consolidate orders into a single shipment. This drastically reduces packaging waste and emissions.
Consolidated shipment strategies like shared truckloads are also more cost-effective and can cut costs up to 20% per truckload.
Customer-friendly green options
Many DOM systems now allow customers to choose sustainable delivery options.
Sure, this could translate to slower shipping, but many customers are happy with receiving orders a bit later to reduce emissions and choose eco-friendly carriers.
In fact, 60% of online consumers in Europe and North America are interested in carbon-neutral delivery options.
Zarina says that while Cin7 doesn’t directly impact sustainability, it creates positive environmental effects.
“Our logistics operations emit 10% less carbon, thanks to our shipment consolidation strategy,” explains Zarina.
Final Thoughts
DOM systems offer two key ingredients that often decide the fate of an ecommerce brand.
It improves customer experience and increases profitability. Combine a high retention rate with a decent profit margin, and you’ve got a formula for long-term business success.
Before you put your money into a DOM system, make sure you’re looking at the total cost. In addition to software, you’ll need to spend on training your staff and building a tech ecosystem that will play ball with your new DOM system.
Looking for more such insights about the latest trends or tips about ecommerce? Subscribe to The Ecomm Manager weekly newsletter.
DOM System FAQs
Here are some commonly asked questions about DOM systems.
How does a DOM system integrate with platforms like ERP or WMS?
DOM systems integrate with other platforms like ERP or WMS through application programming interfaces (APIs).
Your DOM system may include various out-of-the-box integrations, which means you can set them using just the interface of both platforms.
When ready-to-use integrations are not available, you’ll need to configure the API to integrate two systems.
What businesses benefit most from distributed order management?
Any business with a complex and diverse fulfillment network can benefit from a DOM system. This typically includes multichannel or omnichannel ecommerce businesses or offline retailers selling goods globally.
What challenges might businesses face when implementing a DOM system?
Here are some challenges you may face during implementation:
- Integrating systems can be complex, especially if you use legacy systems.
- Employees might need training to understand new workflows, or they might resist change.
- Licensing, implementation, and integration can add up, especially for smaller businesses.
Is distributed order management suitable for small businesses?
DOM systems may be suitable for small businesses, but it depends on the complexity of their operations.
If a small business sells across multiple channels, manages inventory across locations, or offers options like BOPIS or same-day delivery, investing in a DOM system may be worth the cost.
How can DOM reduce shipping costs?
Here’s how DOM reduces shipping costs:
- Smart order routing. It selects the fulfillment location closest to the customer to reduce last-mile delivery costs.
- Carrier rate optimization. It integrates with multiple carriers and chooses the most cost-effective shipping option based on rates, delivery speed, and destination.
- Consolidated shipping. It bundles items into fewer packages to minimize multi-shipment orders.
- Reduced split shipments. It matches inventory availability to orders to avoid expensive split shipments across locations.
What role does DOM play in reducing out-of-stock situations?
DOM reduces stockout instances through:
- Real-time inventory visibility
- Accurate demand forecasts
- Backordering or routing orders through alternative fulfillment centers
- Automated orders when inventory hits safety level
How does DOM support omnichannel retail operations?
DOM ensures seamless integration across sales and fulfillment channels, provides real-time inventory visibility, and enables services like BOPIS, ship-from-store, and curbside pickup. This solves most inventory and shipping-related challenges omnichannel retailers struggle with.
