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I know this is old post, but you can get help from Extends order status in Episerver Commerce blog.
Hi,
I followed the blog post https://world.episerver.com/blogs/Quan-Mai/Dates/2019/2/new-feature-in-commerce-13-extendable-orderstatus-and-ordershipmentstatus/ for creating a new custom order status, which I named "On Hold Error Mail Sent", however I cannot change the orderstatus away from it. All the options are greyed out. Also the status text does not appear at the Status label, however it appears in OrderManagement Beta.
The idea is that if an order fails to be sent to the customers ERP it will be marked as "On Hold". Afterwards a job will send an error mail for the orders On Hold, and change the status to "On Hold Error Mail Sent".
Have I missed something or does the UI not support changing custom OrderStatuses and are we required to handle it with our own code?