Transform your store with EDI and 360 degrees of drop ship automation
By Logicbroker | October 20, 2014
As a follow up to the webinar Transform your store with EDI and 360 degrees of drop ship automation we are posting this blog to recap key features and the Q&A session.
- While the first EDI messages were sent in 1965, it was in 2004 when Walmart adopted the AS/2 standard to communicate with suppliers that EDI’s popularity began to soar. As a result of Walmart’s EDI adoption, many other large retailers followed suit. It is estimated that over 100,000 companies in the United States currently use EDI to communicate with business partners.
- A true solution for EDI automation should be 100% touchless. If you are logging into vendor portals, importing and exporting files, or copying and pasting information from one spreadsheet to another, your process is not truly automated and there is a better solution.
EDI & Drop Ship Automation
- An automated drop ship process via EDI will automate communication between retailers and their drop ship vendors. Without this level of automation, manual processes will increase errors and inefficiency. Now, there has been some criticism of the drop ship model particularly around poor communication and errors that result from it, but many of these seemingly negative aspects are combatted by implementing a solution for drop ship automation.
Seamlessly Add Virtual Inventory
- Virtual inventory allows you to expand your product offering without growing your warehouse. With EDI, you can seamlessly bring in product feeds from your suppliers directly into Magento via Magento’s API. You can also elect to run your entire business with virtual inventory, completely removing the need to hold your own inventory. An EDI solution will also allow you to source your orders based on cost, allowing you to maximize margins.
Lower Risk of Out of Stock Items & Quicken Delivery
- With EDI, you’ll be working with a company that specializes in integrations and already has a point of contact with numerous vendors, speeding up the integration process and allowing you to rapidly grow your vendor network. By having multiple vendors, you are lowering your chance of having out of stock inventory.
- A loyal shopper in the top ten percent of a merchant’s active customers will typically spend $163 per order, according to RJMetrics, or more than three times as much as the average shopper. One way to ensure a great customer experience is by delivering orders on time, or before the scheduled time and offering low shipping costs. Since drop ship automation quickly onboards vendors, you can have a number vendors around the globe to ensure quicker shipping periods and lower costs.
Enhanced Efficiency: Eliminate Data Entry & Improve Speed
- Manually entering order data can be time consuming and forces employees to work on a task that isn’t the job they were hired to do. If your sales team is manually entering data for just one hour a day, this is an hour each day of lost sales opportunities. With EDI automation, orders are transmitted automatically into the appropriate system, eliminating the need for manual rekeying. In addition to seemingly adding more time, there will be a reduction of errors from manually entering data since all information is sent and translated automatically and delivered into the appropriate system. EDI allows for order and tracking information to be seamlessly carried over rather than typed in.
- Drop ship automation via EDI is seen as a favorable way to conduct business transactions because of its incredible speed. EDI documents send faster than faxes, emails and postal mail, and taking orders via phone call. A survey conducted by Forrester Research found that EDI can speed up your business cycles by 61%. This enables you to exchange transactions in minutes rather than days or weeks as seen by utilizing the postal service. In addition to the time you gain from removing manual data entry the ease and speed of EDI documents creates a new level of efficiency for your business
Scale While Remaining Lean
- As you add more vendors and receive more orders—having a drop ship automation is a key component to giving you the agility to keep up with the customers’ demands.
- Rather than hiring a team to data enter, you can leverage the team behind your drop ship automation solution. If your employees were previously wearing many hats, one of which was rekeying order data, they can focus on their true tasks. When your team in 110% focused on the job they were hired to do, you can excel in customer service, sales, marketing, and IT. This allows your team to focus on creating a world-class shopping experience today’s online shoppers expect.
Manage Supplier Relations
- As your business grows, you will need to have reporting and visibility in one centralized spot. You can leverage the power of Magento to view reporting and Manage statuses. When tracking information and shipping confirmation is made available, the status will change. Based on these order statuses, branded emails/notifications will be automatically sent to customers out of Magento to keep customers notified about the progress of their order. By having Magento as your hub for all reporting you can easily check the activity of your trading partners.
Shorten Order-to-Cash Cycle
- Because drop ship orders are processed in real-time without manual processes, drop ship automation enables you to get paid faster by speeding up the order lifecycle. A faster order cycle allows you and your trading partners to get paid faster, which should foster a better b2b relationship.
Drop Shipping for Suppliers
- While Magento is known as a world-class shopping cart platform, it has the functionality to do much, much more. Gartner predicts that By 2017, about 70% of e-commerce sites in North America will be dependent on services from Amazon or eBay. One particularly unique functionality of Magento is that it can be used as an ERP system. In this situation, orders are brought into Magento automatically from big box retailers such as Walmart and bed bath and beyond and Marketplaces, like eBay and Amazon via your drop ship automation provider. Inventory feeds are sent from the drop ship supplier to the EDI provider where it is translated and sent to the large retailer in exactly the format they are expecting.
Q & A:
What will my supplier do if they do not support EDI?
- There are a variety of different methods to communicate with your trading partner, including XML, CSV, or web portal. Everyone can play the game.
How will my customers be able to track their shipments if they are ordering numerous items and they are being dropped ship from different suppliers?
- It’s important to make sure that orders sourced from Magento are treated at the line item level, not the order level. Make sure that you have support for multi-vendor sourcing and partial shipment.
If my supplier drops ships his last item, how quickly will Magento update that the item is out of stock?
- This is critical. It’s important to receive inventory updates with quantity on hand to make sure that you don’t run into an out of stock situation. Ideally this is an automated process. Also, with multi-vendor souring, you can have the order fulfilled by a secondary vendor when available.
Can I check my own warehouse first, and if the item is out of stock or cheaper… execute a drop ship order?
- This depends on your configuration, however yes…typically we recommend sourcing internally first to help with inventory turns.
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