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EDI vs B2B: EDI’s Efficient for Big Business (Part 2 of 2)

This is part two in a two-part series. You can read part one here.

In part one of this two part series, we explored the reasons why a B2B eCommerce platform might be the best fit for a company that primarily serves other businesses. In this second part, we’ll explore the mysteries behind the electronic data interchange and the companies that use them.

For most small to medium sized businesses, a B2B eCommerce platform is an option that’s familiar, it’s less intimidating and it seems like something that the business owner or an employee with little specialized skill can get up and running easily. It’s a solution that makes sense and is intuitive, so when EDI is offered, the easy answer is to simply turn it down. However challenging and drastic EDI looks, though, it can be a very useful part of an eCommerce platform, or a powerful ordering system all on its own.

The Basics of EDI

In order to take advantage of an EDI system, both parties must have the right software installed on their systems. This means that your customer and you (or your 3rd party logistics company) will need to invest in specific software and hardware to perform the translation and transfer of data between the systems involved. A Value Added Network is also sometimes added in order to maintain ongoing transmissions. In addition, your team and your customers’ teams will each need at least one person trained to use the EDI system because of the proprietary nature of the software.

If you want to do business with companies that use EDI, you’ll need to invest, sometimes heavily, in tech, software, dedicated hardware and training. Even though that seems like a lot for a small business right now, an EDI system is an investment in the long term. Unlike a B2B eCommerce system that requires constant updating, your EDI system will only need to be updated or changed when a product changes, is added or is discontinued. Since EDI doesn’t play into your Google Search algorithm, the upkeep can be considerably less if your product catalog is limited.

Other benefits of EDI include:

Easing bulk order placement. A shopping cart is great for buying a few things, but when another business wants to order grosses of products, the shopping cart can become incredibly cumbersome. Instead of creating another barrier to purchase, EDI makes purchasing exactly what a business needs — easy, especially when that business needs a lot of things. If you plan to do business with companies that will buy in bulk or purchase several of many items, EDI will speed up their check-out process and make your business an efficient supply option.

Automating the supply chain. From capturing inbound purchase orders to sending advanced shipment notifications and customer invoices, EDI can help to automate the supply chain even further. Instead of manually entering this information, the EDI interface hands it through to the appropriate party, freeing you up to do something else with your time and eliminating the errors that can be introduced by manually entering data into the supply chain.

Even though EDI can cost a bit to initially set up and requires specially trained employees to maintain, it can be your business’s best friend if you’re handling large orders for big companies. If it’s not in the budget today, partnering with a 3rd party logistics (3PL) company can give you all the advantages of EDI without all the added expense right away. Depending on your B2B business model, this type of partnership could give you the best of both worlds when it comes to product ordering and fulfillment.

Source: Multichannel Merchant

September 15, 2016
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