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Have you ever stopped to think about how much data must be processed to operate a mid- to large-scale online business? What about one that interacts with dozens of different suppliers and sales channels, all of which use their own unique data management systems?
If you have contemplated this situation before, it’s probably because your own online business currently has you swimming in data and documents, and you’re realizing it might be time to get some help in managing it all. Luckily, many businesses have been where you are now.
As they matured into thriving companies, just as many online brands are currently doing, traditional retailers like Wal-Mart and Target generated an enormous quantity of digital records, which made inefficiency very likely. Time-consuming data entry, sluggish communication, endless supply chains, and various types of human error were commonplace.
These retailers had to figure out a way to transmit documents like purchase orders and invoices to suppliers who used various types of electronic systems without losing details or sacrificing accuracy in the process. Often quantities and other vital details got scrambled along the way. This was a major problem, and retailers needed a solution.
If you sell through more than one sales channel, you’re familiar with this challenge. You’ve got to translate data and documents across many channels, sometimes without knowing if the original message has even been delivered accurately. Luckily, when traditional retailers encountered this problem years ago, they handled it by adopting a standard data exchange format called Electronic Data Interchange (EDI). And you can do the same. In fact, if you’re a high-volume merchant and aren’t using an EDI system already, you should be.
How EDI can improve your operations
As a growing online company, you probably face a few common issues regularly. You have business partners using non-standardized forms and formats for sending data. You’re exerting real effort to make sure details aren’t misunderstood, and still you often have to make manual corrections within systems that seem like they should be working on their own without your intervention. As you continue to grow, it becomes increasingly important that you can exchange data with other companies without having to account for all the different systems those companies use. In short, if some of your processes could just be automated, you’d save time and money and reduce mistakes.
That’s where EDI comes in. There’s a lot that EDI can do for online retailers in terms of automation and keeping track of information. Here are some common uses:
- Entering data
- Uploading inventory orders
- Transmitting invoices via mail, fax, or email
- Cutting down on printed documents (all that paper really adds up)
- Confirming orders
- Sending tracking information
Additionally, using EDI enables you to show more accurate inventory on your website and process (and ship) orders more quickly, which then speeds up the payment process. In general, EDI will allow you to better allocate your brand’s resources, so you’re no longer monitoring how data gets transmitted and can spend that time and energy on other tasks that really need your attention.
Besides the peace of mind and efficiency you’ll gain, the fact is that if you want to do business with any of the big physical retailers like Wal-Mart or Nordstrom, using an EDI system is all but required. The vast majority of big-box companies use one, and many won’t do business with another party that doesn’t. For example, Wal-Mart won’t even let your brand sell through its marketplace if you don’t have an EDI system in place. (Remember, for all the talk about Amazon in the news, Wal-Mart is still the country’s second-largest online retailer.)
As your company grows, adopting an EDI system is practically a mandatory step.
How EDI systems work on Amazon
Amazon works with a variety of EDI software providers and types. Just to give you a sense of the kind of standardization that this makes available, here are some of the main EDI documents that Amazon works with:
EDI 855—Order Confirmation
EDI 856—Advance Shipment Notice
EDI 810—Invoices to Customer
EDI 753—Routing Request
EDI 860—Order Change Notification
You can send these documents without worrying that incorrect formatting will cause a missed payment, wrong date, incorrect amount, or other misinterpretation. Your days of re-keying and transferring data will mostly be over. Time spent on phone or email communications will decline.
Image: Example Vendor Central Manual Ordering Process versus EDI ordering process as summarized by MyShipZone - EDI Software Provider.
An automated system will also enable you to bypass a lot of the bottlenecks that can slow down an otherwise successful Amazon merchant, such as having a backlog of orders to enter during a busy season. With the potential for high sales volume that Amazon makes available, your brand could soon get to a point where entering orders manually feels like running a race that never ends. Continuing to manage orders and other data manually is just asking for slip-ups, whereas using EDI will feel like a walk in the park.
When it comes to inventory, issues like stock availability and shipping dates also become much clearer with EDI. For example, it becomes easier to prevent stock-outs and overstocking, situations that can be detrimental to any e-commerce seller. And with integrated barcodes on each item, EDI will let you create automatic shipping notifications as an order leaves a warehouse and then change the order’s status in your system immediately after. You’ll know just where an item is at any given moment.
Another process you’ll be able to streamline is providing customer service. If you’re manually examining orders, it can take a long time to report issues to customers or respond to other problems. But with an EDI system in place, these tasks will become easier and you’ll even be able to reject orders much more rapidly than you otherwise could. Overall, because it reduces the incidence of human error, the automation provided by EDI will ensure that you have fewer problems and mistakes to handle and that the ones you do have will be easier to deal with.
Final Word
Beginning to implement EDI software is a transition every growing online retailer and successful Amazon merchant must go through at some point. As you scale up, there’s simply little choice but to use the same type of standardized system that the big companies use. Once you start using it, though, you’re likely to find that it saves you time and money and makes the experience of running your business less stressful.
If managing large numbers of products and purchases is straining your resources right now, an EDI system is probably what you need. If you’re selling high volumes of products on Amazon and hope to continue doing so, using an EDI will let you stop dwelling on details so you can start to enjoy watching your business grow.
At Bobsled Marketing we help established consumer brands to scale their Amazon marketplace, including merchants with very large product catalogs and sales volume. We’re familiar with the operational challenges that the vendors and sellers face, and provide ongoing management of the operational aspects of the Amazon channel as well as promotions and advertising. If your company is looking for help in managing and optimizing your Amazon sales channel, request a consultation today with one of our Amazon experts.
