Any in the business of e-commerce might have some knowledge on EDI and dropshipping. If not, read closely. EDI stands for electronic data interchange, and that’s exactly what it is. EDI is the practice of electronically sending (and receiving) documents and data via the internet. It is the easiest way to communicate thoroughly with your business partners, especially when sensitive information is involved.
So what about dropshipping? Dropshipping is a shipping practice that is becoming much more common with ecommerce entrepreneurs. It means that you have an online store of some kind marketing your products, but you don’t actually have those products on hand. Instead, when a customer places an order, the item is “drop shipped” from another source directly to the customer.
You might be wondering how the two play together. Investing in an EDI drop ship program makes things 1,000 times easier for dropshipping businesses. There are three main benefits of investing in electronic data interchange if your business practices dropshipping.
Automation of Inventory
The most difficult aspect of dropshipping has to do with keeping track of inventory. With normal shipping practices, a business will actually have the inventory onsite. Since this is not the case with dropshipping, managing inventory can become tricky. Luckily, if you and your vendors utilize the same EDI program, there is no chance of any confusion when it comes to available and unavailable inventory.
As long as your vendors use the same program, you will have complete visibility of their inventory list to see what you can make available to your customers. If you’ve also invested in an order management system, these inventory lists will be linked with your online store and update in real time. This leaves no chance of a customer ordering an item that is actually out of stock.
EDI Provides Updates for Customers, Vendors, and Business Owners
With EDI, you and your customers will always receive notifications regarding every order’s status. EDI provides Order Status Updates, especially for custom orders or products that might experience a longer delivery time. This keeps everyone in the loop about when to expect an order to arrive.
Highjump.com says that “besides the two primary transaction documents — Purchase Order (850) and Invoice (810) — another commonly used EDI document for drop shipping arrangements is the Purchase Order Acknowledgement (855). This document is sent to advise the buyer that the vendor has or will ship the merchandise.”
EDI Follows Through To the End
EDI doesn’t just stop performing once the vendor has shipped a product. It sees everything through to the end and provides everyone involved with tracking numbers. This will come in the form of Advanced Ship Notice and can be used by retailers to update order statuses on online customer accounts and email/text notifications for customers.
If you have tried dropshipping for your ecommerce store, but just can’t seem to stay organized enough to make it work, EDI is a great solution.