The Logicbroker Blog

Why EDI for Drop Ship?

Jul 17, 2018 1:28:11 PM / by Becca McCarthy

Electronic data interchange (EDI) is the structured transmission of data between organizations by Close-up of worker putting a box on conveyor belt for shippingelectronic means. Today, EDI is a mandate of large retailers, but it took many decades to get to this point. Here is a brief timeline and overview on the history of EDI. EDI is popular with, and a mandate of many large retailers. To best offer customers a wide variety of products, these retailers turn to a drop ship model. Drop shipping is a retail fulfillment method where a store doesn't keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the merchant never sees or handles the product. EDI enables all order documentation to be sent between the third party drop ship vendor and retailer quickly and efficiently, enabling a seamless order lifecycle.

Typical EDI order documents exchanged include 850 (purchase order), 855 (purchase order acknowledgement), 856 (advance shipment notice), 810 (invoice), and more. By electing to transmit documents electronically, error prone email, phone (or fax) messages are eliminated from the order fulfillment lifecycle.

Though EDI has been around since the 1960s and was heavily adopted in the 1980s, vendors are searching for an easier approach and immediate validation of files by seeking out EDI alternatives. Walmart has taken an interesting approach in offering EDI alternatives. While Walmart.com requires all vendors be EDI compliant, the Walmart Marketplace enables vendors to integrate via API.

EDI can oftentimes be an expensive undertaking for smaller companies, leading these companies to settle for inefficient manual processes to complete orders. A majority of retailers have been slow to adopt APIs in favor of maintaining EDI communication, as EDI is a well-established standard. Quite frankly, there is no other generally accepted standard like EDI. With such detailed definitions, EDI can handle nearly every business case you can think of.

However, as you may know, EDI can be tricky to read, and transmitting a file is like dropping data into a black box with no immediate validation. Let's say you send a file and your format was incorrect, you then have to wait to receive a Functional Acknowledgement or an email notification of the error with an undefined wait period. How do you know that it made it into the right user who can resolve the issue? Wouldn’t it be better to post/retrieve the data to an API which can provide an almost immediate response with all defined errors?

People want to do business with retailers and marketplaces utilizing their existing APIS rather than EDI. APIs are easier to digest, boasting the ability to post/retrieve data with an immediate response and defined errors (if any). Logicbroker, specifically, built a platform around commerce document exchange by taking the API-first approach. With this technology, vendors can easily connect to numerous retailers and marketplaces, including Wayfair, Target, Nordstrom, and more. If you’re interested in an Amazon Vendor Central API integration, you’ll want to read this blog which can walk you through the setup process.

Another area that can lead to drop ship headaches is shipping. Shipping can be unnecessarily complicated and inefficient. ShipStation software makes it easy for entrepreneurs to scale their businesses by eliminating those complications.

With ShipStation, ecommerce shipping is easy – users will be up and running in minutes — no installation or insanity involved. You’ll be able to do all of this and more:

  • Import orders from all your selling channels into a single platform
  • Create shipping labels and ship with 30+ carriers
  • Take advantage of incredible USPS and FedEx discounts
  • Sync order status and tracking details with your store and marketplaces
  • Promote your brand on notification emails, shipping documentation, and more
  • Manage orders and view reports from anywhere with ShipStation Mobile
  • Leverage Fulfillment by Amazon (FBA) and other fulfillment providers

You can connect your ShipStation account to Logicbroker by just sharing your API keys. Logicbroker performs all testing prior to going live with drop ship retailers and marketplaces. No EDI experience is necessary. To learn more about implementing ShipStation, click here.

There is a clear shift to democratizing digital commerce. Democratizing digital commerce relies heavily on flexibility. Brands and retailers are exploring other means of connectivity and data exchange, but this does not mean a complete abandonment of the tried-and-true methods of old. EDI has been around since the 1960s and was heavily adopted in the 1980s, so it is safe to say EDI is here to stay. However, companies searching for an easier approach and immediate validation of files are seeking out EDI alternatives.

As APIs become more common, connecting applications becomes easier. With flexible integration options, brands and retailers are able to grow their businesses by meeting vendor’s requirements for communication, thus expanding their business network. Traditional (legacy) EDI provider often have the misconception that it is either EDI or API. This can be easily become a confusing matter for retailers and brands to force a decision. A great technology solution will provide flexibility that works with your integration needs, which is why in the right environment, API and EDI are two complementary technologies. APIs will never completely replace EDI, but rather APIs offer an easier way to leverage EDI communication. For more information, visit dev.logicbroker.com.

Topics: Blog

Becca McCarthy

Written by Becca McCarthy

Becca has a passion for brands and analytics. She brings expertise from working with Fortune 1000 brands and helping them sell directly to consumers online. An avid online shopper, Becca is thrilled to be a part of Logicbroker and help clients provide a better shopping experience for their consumers. As the Director of Marketing at Logicbroker, Becca focuses on building out the Logicbroker brand, strategic partnerships, and bringing customer success stories to light while keeping a pulse on industry trends and best practices. Becca holds a BA in Communications and English from the University of Connecticut. Outside of work, Becca enjoys cooking, Jeopardy!, and spending time at home with her husband and their two dogs, Zulu and Luna.

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