Using EDI for e-commerce

How to become the perfect e-commerce business partner

Some online retailers offer their products online, but never actually have physical contact with their merchandise. That is because their dropshipping partners take care of storing, packaging, and shipping products to their end clients. For this collaboration to work without a glitch, it is advisable for all business partners to use Electronic Data Interchange (EDI), which has become standard practice. The same holds true when no dropshipper is involved. Read on to find out how manufacturers who work with online retailers can use EDI to professionalize their processes.

What has been used in the brick-and-mortar retail business for decades is now a must-have in e-commerce as well. Professional retailers, suppliers, and manufacturers no longer exchange orders, despatch advices, and invoices via e-mail or traditional mail, but using Electronic Data Interchange. This technology is also key for so-called dropshippers and their online trading partners that take care of marketing and sales. In this setup, online retailers offer their products online, but outsource all logistics tasks to one or different partners immediately after receiving an order. This means that warehousing, packaging, shipping, and even returns management are taken care of by specialized dropshipping partners. Sometimes, they conveniently manufacture the merchandise themselves.

Quite a few opportunities exist for manufacturers of goods, importers and wholesalers that might previously have supplied brick-and-mortar stores only and would now like to explore online retailing.

What opportunities do I have in online retail?

You can…

• accompany your brick-and-mortar stores on their journey to e-commerce,
• work with new online retailers and supply them with merchandise,
• act as a dropshipper, which means that you work with retailers who do not want to take care of warehousing and also want to entrust you with the shipping process,
• or you can also use all three online sales options at once.

While option number four seems to be very lucrative at first sight, it also requires a lot of work. Especially because you might simultaneously be receiving orders from multiple business partners. Subsequently, you will have to send out order confirmations and shipping confirmations, issue invoices, and file your invoices. And let’s not forget returns management and related credits as well as alternate orders.

To keep an eye on everything and always have a good overview, Electronic Data Interchange is key. And here’s the beauty of it: the principle of EDI is the same for online stores as for brick-and-mortar stores. EDI allows you to conveniently reach all business partners with a single connection to the data hub eXite®. You also have the option of entrusting data conversion to an EDI service provider.

What could EDI for dropshippers look like?

If you are a manufacturer and act as a dropshipper, the technical procedure for EDI would ideally look as follows: immediately after an end client has placed an order with a retailer, the Electronic Data Interchange process between business partners is triggered. The retailer will send an order (ORDERS). You will then inform the retailer that the merchandise has shipped to the client (DESADV = despatch advice) and will subsequently send your invoice (INVOIC) to the retailer. This “EDI cycle” barely requires any manual work. Each and every transaction can be fully traced. Needless to say, no more paper documents will be involved.

Why is EDI especially beneficial for e-commerce?

Integrated EDI is a great asset for industries with a high order and invoicing volume. The need for human resources is minimal and the system works reliably day and night. For business partners’ different ERP systems to be able to communicate with each other, data are automatically exported via interfaces, converted into an EDI language, transported to the business partner via the data hub eXite® and then once again converted into the correct format. More than 20,000 businesses are connected to our EDI platform eXite® and the number is on the rise. The same is probably true for the number of internet users who shop online.