From higher efficiency to greater effectiveness in order management the benefits of connecting your ERP system with a commerce platform are clear as...
Frustrated with EDI as a wholesaler? There’s a better way.
EDI providers aren't the only effective way to sell to large retailers, there's an easy way to cut costs and be more efficient without being stuck with traditional providers.
If you’re a wholesale vendor, it’s more than likely you’ve had issues with the electronic data interchange (EDI) systems your large purchasers are forcing you to use. You can’t play ball without them, but they wreak havoc on your business processes, and in some cases destroy any profitability your revenue streams have.
Traditional commercial EDI systems aren’t made for you, they were built in the 80’s and 90’s as an emerging technology. Large retailers adopted this technology as a way of streamlining the way they manage their supply chain across a wide range of vendors. These systems are so ingrained in their business, it’s difficult to make drastic changes to evolve to modern technology which is why you are forced to adapt to and adopt their processes. Anything done to support streamlining processes for your business is an afterthought at best.
Being a vendor in this environment means playing second fiddle to the interests of each of your retailers EDI providers. However, there is another way.
We’ll break down the common issues that vendors face when working with traditional EDI, and how you can make selling directly to your retailers and their end consumers easier.
Why traditional EDI methods don't work for vendors
Large retailers pay a lot of money for their EDI solutions, and for good reason — it works. Often they have to manage hundreds or thousands of suppliers around the world, so having a central solution that forces vendors to bend to their needs makes sense for them.
For vendors, this creates a host of issues that you have to deal with daily. These can range from high monetary costs on transactions, to labor intensive processes just to fulfill an order. From what OrderEase has heard from our customers and prospects, there are a few main issues that wholesalers are facing with EDI.
1. Traditional EDI providers are gatekeepers
To start selling to a major retailer (let’s use a fictional company as an example — “All-Mart”) you need to be able to be EDI compliant. This is most often done through their official provider who makes it clear that you need to use them. You are provided the option to pay a monthly fee to access a web portal to manually manage all aspects of the order fulfillment process OR if you have your own EDI department you can develop the maps and go through testing and certification with your trading partner’s EDI provider.
This means you have to pay a third party for the luxury of doing business with any large retailer, and lock yourself into their systems. To politely paraphrase what we’ve heard many wholesalers say, working with traditional EDI often feels like you can’t take control of how you sell your own products.
2. Traditional EDI providers are expensive
Getting EDI set up even for a single retailer isn’t just a one-time thing, it’s a series of fees that you need to pay just to get an order together. Most providers you’ll be working with will charge you monthly for the basic dashboards you need to keep track of your orders. On top of that, some will also charge for carrier modules if you need shipping and tracking information to populate vs manually entering into the dashboard.
Not only do you have to pay fees for the basic tools and functionality required to do business with your large retailer, you’re also nickeled and dimed for every document required to do business. When completing a regular EDI order your team has to fill 5-7 documents on average. Traditional EDI providers charge up to $1.25 per document on every order that you create through them. Some providers charge by the kilocharacter, which is even more complicated to figure out. The longer the order, the more kilocharacters there are, the higher the cost to process the order.
While this has staggering implications on the cost of doing business for anyone, it’s felt most acutely in dropshipping, especially if your organization is working with high volumes of lower price, lower margin products.
We’ve talked to companies who rely on dropshipping these types of products and they’ve faced major issues with the added costs of EDI. To give an example, one of these companies had multiple sales channels generating over a million dollars but it wasn’t profitable due to the fees associated with EDI ordering. While they couldn’t write the channels off (who would to millions in sales?) they were clearly getting no value.
3. Traditional EDI is labor intensive
For each and every one of your EDI connections there’s a lot of manual labor involved. It’s likely that you, or your employees have to log in to a portal, download your orders, then manually key them into your ERP or accounting system as well as manually entering information into your logistics software.
The manual process doesn’t stop there, you also log into each of the portals to confirm quantities, update shipping information, sometimes retrieve labels then complete the process by sending the invoice from the portal. This has to happen for every new order, at every step of the way.
Frankly, it’s ineffective and inefficient, especially when dealing with multiple trading partners with multiple portals. Manually managing orders and updating inventory takes too many hours to get things done. We’ve found that many companies have to focus on just getting their orders correct instead of growing their business.
4. Traditional EDI doesn’t scale well
This goes hand in hand with EDI being labor intensive. For every company you start an EDI connection with, you may need a new login portal, and you need to make sure that you’re hitting the right standards for that EDI provider.
That means that for each and every major retailer you work with, you need to pay the fees associated with their EDI provider. It also means that you have to log in to a separate portal for each one of your revenue streams and make sure that each one is fully managed separately. This leads to training nightmares for staff who have to manage all of the nuances of these multiple portals.
With differing EDI requirements between trading partners, simplifying your EDI management can be a herculean undertaking. While integrating one EDI system into your ERP might be feasible, integrating multiple EDI systems is a completely new project every time putting a cost and time burden on your resources.
For that reason, we’ve found that 80% of the wholesale vendors we’ve talked to have given up on pursuing integrations with their trading partners in favor of manual inputs. For them, it feels too complicated, and not worth their time and energy.
But, it doesn’t have to be that way.
You don’t need to face these problems — there is a way to escape from being stuck in a relationship with traditional EDI providers. It’s possible to work directly with your trading partners without having to constantly live within different portals and be charged exorbitantly for just trying to make a sale.
There’s a simple solution to your EDI woes
You probably haven’t been told the whole truth by EDI providers. It makes sense for them, nobody wants to bring up an alternative that will reduce their revenue, but there is a simple solution for all of the issues that EDI brings to wholesalers like you.
You don’t need to use your trading partner’s EDI provider to connect to their EDI system.
If you have something that works better for you, you can use it as long as it goes through the testing and certification process with your trading partner or their managed EDI service provider. You do not have to pay the portal fees or the transaction fees to the trading partners provider if you use an alternative (with minor exceptions).
To give an analogy on how this works, think of placing a phone call to a good friend. You’re on Verizon while they’re on AT&T. You don’t get charged extra money because you’re talking to someone who is on a different service, because at the end of the day you’re all using the same lines.
This is the same for EDI, as long as you can communicate with your trading partner’s EDI system with a provider you choose, you don’t have to be on the same carrier.
You have the freedom to work with a system that solves the issues that EDI brings to wholesalers.
OrderEase makes EDI simple for vendors
OrderEase automates the flow of information between your business and your trading partner’s EDI system. This comes in a variety of forms, but ultimately acts to make EDI transactions as automatic as possible
Through multi-integration capabilities, OrderEase works with multiple business systems you operate to send and receive data throughout your order fulfillment lifecycle.
To give you an example, here’s what a simplified average workflow for an EDI order would look when leveraging OrderEase integrations.
- Your customer (“All-Mart”) creates an order for your company for a box of 10,000 widgets.
- OrderEase automatically picks up the EDI order and passes it through to your integrated ERP or accounting system such as QuickBooks.
- If you have a shipping software such as ShipStation, your information is sent there as well. When the shipment is generated, OrderEase uses the tracking information to generate an Advanced Shipment Notice (ASN) EDI transmission and send it to your trading partner. As your order moves through the fulfillment process, OrderEase tracks it and sends out relevant updates via EDI transmissions without the need for you to log in to a vendor portal.
- When the shipment is sent, the status of your order is changed to “shipped”, which then will trigger the invoice to be generated from QuickBooks. The QuickBooks invoice sends to OrderEase which then converts into the 810 EDI format and sends back to your trading partner.
- A hands off experience that makes for a happy you, and an even happier customer.
Compare this with the complexity you face today. Entering retail EDI portals, noting orders and manually copying them into your systems. Working with traditional systems is an exercise in rote work that doesn’t help you build your business.
In terms of scalability and flexibility, we can make sure that your sales team has the time to find new clients, and your business doesn’t have to worry about extensive integration work. Since we sit between you and any EDI (or API) connection with your customers, we can get you up and running with multiple customers with minimal effort.
This means you can expand your customer base and not have to worry about how you’re going to integrate with yet another company. We handle it all, helping you scale without having to pay for extensive IT projects, or bring on additional team members just to fill data.
If you want to learn more about how OrderEase can help you simplify your EDI relationships, contact us today.