We are all going through tough times – economically, health-wise and socially. During these times, we are also seeing an accelerated shift to eCommerce, as people are meeting face-to-face much less than they used to.

As a reader of this article, we assume that you either operate or intend to operate an eCommerce business. You sell goods to consumers (that you may manufacture yourself ), and are probably using a platform like Shopify or Magento to list and market your products to the world. As an eCommerce business, you may encounter EDI – an age-old data standard – and face a number of options. At Vitamin Software, we believe in making technology simple and understandable for businesses.

We believe software and technology should propel your business forward, not stand in your way or hold you back. So, in the spirit of keeping it simple, we are going to explain how you harness EDI for competitive advantage in simple, non-technical terms.

One lucky day, Mr. Buy-em-All, a buyer for a larger wholesaler (Sell-em-All, Inc.) sends you an email.

Mr. Buy-em-All and Their Requirements

Mr. Buy-em-All’s message is simple yet exciting: Your products are part of a category that’s seeking to expand because of COVID-19. Maybe your products are used in outdoor sports, or you are selling indoor UV lamps. In fact, they are looking to sell your products on the digital shelves of a chain. These are exciting times! Instead of selling products one-by-one to individuals, you will now be selling larger quantities of products to the retail chain for a slightly discounted price. In the current context of uncertainty, Mr. Buy-em-All’s message seems like a breath of fresh air.

Yet when they send over their requirements for the collaboration, you notice one thing that you don’t really understand: “Will accept orders through EDI only”. You call your friend who’s a software programmer, and after Googling around you learn that EDI is a data standard from the 1960s used by businesses to exchange documents (like P.O.s and invoices). Not only do you frown, but worse is you wonder how you can let this opportunity slip away.

You call your friends who have dealt with Mr. Buy-em-All before, and they tell you that you must sign up for a third-party website where you complete a bunch of manual data entry in order to fulfill orders from Ms. Sell-em-All. You also learn that the more you sell the more data entry you have to do to fulfill orders. While you were expecting some level of bureaucracy and longer payment terms, you weren’t expecting manual data entry. Why is this so complicated?! What is EDI and does it really make online sales that more efficient?

Why Does Sell’em All Inc. Use EDI?

One thing you need to understand about Ms. Sell-em-All, Inc. is that they are a large, investor-backed company. It there is on thing investors like, it is efficiency and profits.

So, all their orders are issued electronically, and all invoices are received electronically. Ms. Sell-em-All makes investments to build software systems that automate what would normally be done by entry-level employees over the phone and via email. This allows for automation and cuts down on the number of people that are needed to run and operate the business.

This is where EDI comes in. EDI was invented to help companies exchange documents in an electronic format. It is supposed to be efficient and seamless, but it seems daunting, complicated and expensive. So, when Ms. Sell-em-All, Inc. wants to send product orders to or receive invoices from you, they would likely ask you to sign up for one of the EDI platforms available in the markets, like SPS Commerce.

As a result, you will have to log in to a third party website in order to see the orders sent by Sell-em-All, Inc.; acknowledge them; fulfill them; and invoice for them.

In exchange for subscribing to the third party website -- a bureaucratic process, but with a low monthly fee -- you can now receive orders from Ms. Sell-em-All, Inc. You can now go back to focusing on your business: keeping Mr. Buy-em-All happy, and looking for more distributors like them.

But do things ever go as planned? I’m afraid not...

Nothing is as Simple as it Seems

What you were picturing would be a simple sign-up ultimately took several weeks. Mr. Buy-em-All put you in touch with their technical team, who provided an account number; you went to the EDI platform they suggested, and signed up for a free account; you went through two demos with sales representatives; exchanged a couple of back and forth messages over email; and then received a cost-quote.

Once you signed the contract, you needed to schedule time with your account representative and coordinate with the technical team of your “trading partner”. Mr. Buy-em-All (generously) escalated the issue internally, so that you could get your test order setup within days instead of weeks. But once everything seemed ready to go, you realize that now your sales team needs to learn some new terminology and processes:

850 - PO (the order you receive from your client)
855 - PO acknowledgement (yes, we received your order and we accept it or not)
856 - Advance Ship Notice (your order will be on the way soon)
810 - Invoice (here’s the invoice for the order we’ve just shipped you)

Wait, you thought your sales people were supposed to talk to people and convince them to buy your products – not learn codes. Obviously, you will also need to learn them, so that you can speak the same language when talking about Mr. Buy-em-All’s orders.

So we created a simple diagram to help you out:

But then it gets even more interesting: the real problems start appearing.

Mr. Buy-em-All calls you to say they’ve submitted an order. Three hours later, the order shows up on the website, after numerous refreshes. You acknowledge the order, and agree to pay your driver three hours of overtime to ship the goods today. Your driver cancels dinner with their family and gets going.

Then the good news, or is it bad news. The number of orders grow and your driver having to cancel dinner and never be home becomes a daily occurrence. To boot, now your top salesperson is complaining that they are now spending five hours a week inputting data from SPS Commerce to Shopify. How can they sell more if the more they sell consumes more of their time to do data entry, now into multiple systems. If they don’t do the manual data entry and tracking, there is no easy way to track orders coming in from two different platforms, schedule deliveries, etc. Success is driving insanity and your team is losing morale.

Now with the success, you have a new wholesaler wanting to work with you, but as you get into the partnership, you find that it is taking another six weeks to get their first orders through the system AND your sales team is doing more and more manual data entry and tracking.

Keeping it Simple: EDI for Human Beings

Supply chains have been disrupted by the global pandemic, so a number of wholesalers are looking for new suppliers. You might be one of them! But in order to keep Mr. Buy-em-All happy, you need to know about the order as soon as possible, and ensure that your salespeople are busy selling and providing excellent customer service to your customers instead of doing data entry, manually tracking things and trying to figure out arcane EDI codes.

We understand your predicament. One of the biggest problems with EDI is that you will rarely get an explanation of what needs to be done and how to do it in simple, human terms. Things don’t need to be as complex as they are described above. There are such things as EDI enablers that are software tools that when well designed and implemented in the right way, get your business back to being not only simple, but scalable so that you grow your profits as you grow your sales.

Vitamin Software are specialists in EDI. We design and implement solutions that not only work for you, scale with you, but we do so in a cost efficient way because we have mastered keeping it simple yet effective for our customers. We can help you.

Conclusions

If you have questions about EDI and how it can be applied to your business, please reach out for free consultation at (415) 800-3984 or hello@vitaminsoftware.com.

We at Vitamin Software do EDI for Human Beings.