In the fast-paced world of eCommerce, the cornerstone of merchant-supplier trade communication is purchase orders. 📝 As an eCommerce owner, you surely understand the importance of effectively managing purchase orders – from ensuring accuracy to swift processing. That's why, in this article, we've prepared free templates to help you save time and streamline your PO creation process. ✨ But before we dive into the templates, let's refresh our memory on purchase orders.

What is a Purchase Order?

Shopify defines a purchase order (PO) as a list of the products, prices, and quantities for an order a business places with a supplier. Purchase orders are also used to monitor information like incoming inventory quantities, inventory expenses, payment conditions, and estimated arrival times. Keeping a close eye on these details is crucial for effectively managing customer expectations, particularly when products are out of stock, and plays a crucial role in making decisions about restocking and relocating inventory across different sites.

📌 Are you looking for a way to manage out of stock? Start accepting backorders. After you understand how it works, it brings many benefits and generates cash flow for your eCommerce store. Read Ultimate Guide: Backorder & Preorders and How to Manage Backorder on Shopify & Best Practices for more information.

What is the difference Between a Purchase Order & a Money Order?

You may hear the name ‘’Money Order’’ occasionally, so let’s review the difference between a purchase order and a money order. While both involve financial transactions, a purchase order is a contractual agreement between a buyer and a seller for goods or services. On the other hand, Investopedia defines a money order as a secure alternative to cash or a personal check, which you can use to send money or pay bills. In short, the purchase order is a contract, while the money order is a payment method. Well, but how do purchase orders work in eCommerce?

How Do Purchase Orders Work in eCommerce?

In eCommerce, purchase orders work similarly to retail but are often automated and integrated into the online ordering process. Here's how it typically works:

1️⃣ Customer Places an Order: A customer visits an eCommerce website, Shopify, and selects the products they want to purchase. They add these items to their shopping cart and proceed to checkout. 🛒

2️⃣ Generation of Purchase Orders: The eCommerce platform automatically generates a purchase order once the customer completes the checkout process. This purchase order contains details of the customer's order, such as the items purchased, quantities, prices, shipping address, and special instructions. 📝

3️⃣ Notification to Seller: The eCommerce platform notifies the seller or retailer about the new purchase order. This can be done through email notifications, alerts on the seller's dashboard, or integration with the seller's inventory management system. 📬

4️⃣ Processing by Seller: The seller reviews the purchase order and processes it accordingly. This may involve confirming product availability, preparing the items for shipment, and generating an invoice for the customer. 🛠️

5️⃣ Fulfillment and Shipment: The seller fulfills the order by packaging the products and arranging shipment or delivery once the items are ready. They update the purchase order status to indicate that the items have been shipped or are ready for pickup. 📦

6️⃣ Delivery to Customer: The ordered items are delivered to the customer's specified shipping address. The customer receives the products and the corresponding invoice. 🚚

7️⃣ Payment Processing: The customer's payment is processed after the order is successfully delivered. This may involve charging the customer's credit card or processing other forms of payment. 💳

8️⃣ Order Completion: The purchase order is marked as completed, and the seller and the customer have a transaction record for future reference. 🏁

Overall, purchase orders in eCommerce streamline the ordering process, help manage inventory levels, and lead to efficient order fulfillment and delivery processes. Do you know that you can automate the purchase order process easily? Book a free demo and learn more from our experts. Now, let's discover the different types of purchase orders.

Purchase Order Types

🔹 Standard Purchase Orders

Standard POs are the most common type used for one-time purchases of goods or services. They detail specific items, quantities, prices, and delivery dates. For example, a Shopify store owner may issue a standard PO to restock inventory for a seasonal promotion.

Details you may need when creating a standard purchase order:

• Specific items with descriptions,
• Quantities of each item,
• Prices per unit or total cost,
• Delivery dates and shipping instructions.

🔹 Blanket Purchase Orders

Blanket POs are used for recurring purchases over a specified period, typically for a fixed quantity of goods or services. They provide flexibility while maintaining a long-term relationship with suppliers. For instance, an eCommerce retailer might establish a blanket PO for monthly shipments of packaging materials.

Details you may need when creating a blanket purchase orders:

• Description of goods or services,
• Quantity to be delivered over a specified period,
• Price per unit or total cost,
• Terms of agreement (e.g., delivery schedule).

🔹 Contract Purchase Orders

Contract POs are based on predetermined terms and conditions negotiated between the buyer and seller. They often involve large volumes or ongoing services and ensure consistency and compliance throughout the procurement process. An example is a contract PO for the regular supply of raw materials to support production in an eCommerce manufacturing business.

Details you may need when creating a contract purchase order:

• Terms and conditions negotiated between buyer and seller,
• Detailed description of goods or services,
• The volume of goods or services to be supplied,
• Pricing structure (e.g., unit price, total contract value).

🔹 Planned Purchase Orders

Planned POs are created in anticipation of future demand. They outline the expected requirements for specific items or services, allowing suppliers to prepare in advance. For example, an online clothing retailer might issue a planned PO for seasonal apparel to ensure timely availability during peak sales.

Details you may need when creating a planned purchase order:

• Anticipated demand for specific items or services,
• Expected delivery dates,
• Quantities needed for each item,
• Special requirements or instructions.

📌 With the additional insights of efficient inventory forecasting & seasonal demand forecasting, you can create your purchase orders for the future more confidently. Forecasting brings many benefits to your eCommerce store; it allows you to anticipate trends, plan inventory levels more accurately, optimize purchasing decisions, and improve customer satisfaction.

Dropshipping Purchase Orders

Dropshipping POs enable eCommerce businesses to fulfill orders without stocking inventory. When a customer orders, the retailer purchases the item from a supplier, who then ships it directly to the customer. This type of PO minimizes inventory costs and storage space. An example is when a Shopify store owner receives a dropshipping PO from a supplier for a product sold on their website.

Details you may need when creating a dropshipping purchase order:

• Product details and descriptions,
• Customer shipping information,
• Supplier contact details,
• Price per unit or total cost,
• Shipping method and delivery timeframe.

Are you looking for a ready-to-use PO template for your eCommerce needs? 🤔 We prepared it for you! ✨

Do you also need ready-to-use backorder templates? We have plenty; read Klaviyo Templates for Backorders & Preorders. Our templates are not over yet; you can access the Free Inventory Management Excel Spreadsheet Template now.

How to Manage Purchase Orders Effectively in eCommerce?

In eCommerce, demands and expectations change rapidly, and as an eCommerce owner, it's crucial to keep up with this evolution. The purchase orders constitute one of the most important parts of your procurement process, and if not managed correctly, it can lead to disruptions. On the other hand, when managed correctly and effectively, it not only reduces the need for extensive oversight but also provides significant benefits to your inventory management process. Okay, but how can you manage POs effectively? Can using Excel be the ideal solution for it? 🤔 We unfortunately don’t think so. Why? Let’s discover together.

Using Excel for Creating Purchase Orders

Do you know how much time you spend manually creating your purchase orders on Excel daily? You are always on the radar, and there's a constant need to monitor inventory and orders. 😪 When there are so many inventory management apps that serve automated purchase orders, using Excel is extremely time-consuming ⏰ for an eCommerce store.

If you're still using Excel for purchase orders and are happy with it, you might be in the early stages of your eCommerce journey or dealing with a relatively small inventory. 📦 However, as your business expands, you'll likely encounter the limitations of Excel and the complexities of managing larger volumes 📦📦📦 of orders and inventory. Here are some reasons why using Excel for your growing eCommerce store’s POs may not be the best solution:

1️⃣ It’s error-prone.

Manual data entry in Excel increases the risk of errors, with studies showing that up to 90% of Excel files contain misleading data. As data volume grows, so does the likelihood of mistakes. ⚠️ Imagine you're a Shopify store owner managing purchase orders in Excel. One morning, before coffee ☕, you updated inventory quantities manually but made mistakes. As a result, you ordered incorrect quantities from suppliers, which led to overstock issues & extra storage costs, all due to human error in Excel.

2️⃣ It’s not functional.

Unlike more advanced inventory management systems, Excel does not provide automated application of rules like MOQ and batch sizes to purchase orders. This manual process in Excel can lead to delays and inaccuracies in inventory management, impacting operational efficiency and customer satisfaction. For example, managing purchase orders in Excel for a Shopify store may require constant manual adjustments, which increases the risk of stockout and missed sales opportunities when demand fluctuates unexpectedly. ⏰

3️⃣ It’s time-consuming.

It consumes valuable time, as manual data entry and processing require hours of effort each day. Imagine you're a Shopify store owner managing purchase orders in Excel. Each morning, you spend hours manually updating inventory quantities and processing orders. This time-consuming process leaves you less time for strategic tasks like analyzing sales data or negotiating with suppliers. For example, you might miss out on an opportunity to secure a bulk discount because you're bogged down with manual data entry in Excel.

All these factors indicate that Excel might not be the ultimate solution for managing purchase orders. ☹️ The most effective way to manage your purchase orders? It is a fully integrated inventory management app that seamlessly integrates with your eCommerce platform. Why do you need an application to manage the entire inventory process for POs? Because all the features in inventory operations support each other, giving you a faster and more efficient assistant. I can almost hear you saying: ‘’Which app is it?’’ Of course, it's Fabrikatör.  ✨

Create Purchase Orders with Fabrikatör!

Ready to transform your eCommerce store with Fabrikatör’s automated and functional purchase orders? 🥳 You don’t have to lose time or resources because of Excel limitations or manual errors. Fabrikatör forecasts your future inventory, replenishes stocks, and ensures your purchase orders reach suppliers on time.⌛

As your eCommerce store grows, so do your inventory needs. We are here for it and offer much more than automated purchase orders. As a 5/5-rated Shopify app,

🧩 We work fully integrated with Shopify,

🖇️ We offer valuable integrations with Klaviyo, Shiphero, and more,

🔄 We're constantly renewing and evolving,

📱 We offer all the essential features of inventory management and much more!

Do you have 30 minutes? Schedule a free demo with our experts right now! 💫 Give Fabrikatör a shot and discover how easy and efficient inventory management could be. 🚀

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