{"id":12168,"date":"2023-02-16T00:56:24","date_gmt":"2023-02-16T08:56:24","guid":{"rendered":"https:\/\/oroinc.com\/b2b-ecommerce\/blog\/comparing-edi-and-b2b-ecommerce"},"modified":"2023-02-22T06:28:42","modified_gmt":"2023-02-22T14:28:42","slug":"comparing-edi-b2b-ecommerce","status":"publish","type":"post","link":"https:\/\/oroinc.com\/b2b-ecommerce\/blog\/comparing-edi-b2b-ecommerce\/","title":{"rendered":"EDI and eCommerce: Definition, Difference, and Strategy for B2B | OroCommerce"},"content":{"rendered":"

Manufacturers and wholesalers that need to digitize their sales process can be confused by the options. Just because something is called a \u201csolution\u201d doesn\u2019t mean it will solve your problem. We\u2019ve previously looked at <\/span>eProcurement<\/span><\/a> and <\/span>punchout catalog<\/span><\/a> solutions to see how they differ from eCommerce systems for B2B companies. Today, we conclude with a comparison of EDI and B2B eCommerce systems. <\/span><\/p>\n

What is EDI?<\/span><\/h2>\n

Electronic Data Interchange (EDI<\/a>) is a way for computers to transfer documents by using predetermined formats and digital rules. It is a direct data transfer between the sending and receiving company. \u00a0No translators or extra processing is needed. <\/span><\/p>\n

EDI arose as a way of solving the problem of transferring documents between businesses. If the Company A wants to buy or offer their customer widgets from Blue Widget Express, both companies are going to create documents that must be shared. Company A will prepare a Purchase Order (PO) to send to Blue Widget Express; Blue Widget Express must then create a Sales Order and Invoice. When humans create documents, errors are bound to occur; if computer programs create the document, the chances for error are dramatically decreased. Besides, computer-to-computer information exchange is much more cost-effective than handling paper documents. There’ve been studies that showed manual processing of paper-based order costs can go as high as $70<\/strong> while computer processing costs are less than $1<\/strong>. <\/span>
\n<\/span>But, computers can only talk to each other when they have an agreeable format. This is where EDI comes into play. <\/span><\/p>\n

How Does It Work?<\/span><\/h2>\n

Businesses that want to share documents using EDI must first agree on one of several EDI standards. These include ANSI, EDIFACT, TRADACOMS and ebXML to name a few. These standards provide a predetermined format for the information in the document. The larger business usually sets the standards and is unwilling to modify their EDI terms. This means the smaller business has to conform to these standards in order to do business. However, there are times when an EDI relationship can be highly custom with different pricing, fulfillment terms, and protocols.<\/span><\/p>\n

So, let us provide a sample use case. From the example above, a Company A employee would prepare a PO using the agreed-upon standard and then electronically send it to Blue Widget Express. Blue Widget Express would receive the PO and it would be automatically entered as an order. Because Blue Widget Express isn\u2019t manually entering the order, order entry and other human errors are eliminated. The order can be filled – with the sales order and invoice generated – and these documents are sent back electronically to Company A using the same predetermined format. Company A and Blue Widget Express no longer need to use the same software, as long as they agree on an EDI standard for sharing documents. <\/span><\/p>\n

Is EDI Different from eCommerce?<\/span><\/h2>\n

EDI is a way of conducting commerce and it is electronic, so technically it is eCommerce. But it is more about transmitting documents and less about what actually goes into the buying and selling process. EDI is a means of placing orders, eCommerce is a way of not only accepting orders but providing buyers with a complete shopping experience including a front-end store. For example, if a buyer at Company A knows they need to buy 600 Tiny Aqua Widget SKU 148439 from Blue Widget Express, EDI is a perfect way to place the order. However, if the buyer isn\u2019t sure what widget they need, or if they need specs on the Tiny Aqua Widget, or if they need to compare the Widget to another widget, EDI won\u2019t be of much help. Let\u2019s look at EDI and B2B eCommerce side-by-side.<\/span><\/p>\n

 <\/p>\n\n\n\n<\/colgroup>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
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Main benefits<\/strong><\/h3>\n<\/td>\n<\/tr>\n

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EDI<\/strong><\/h4>\n<\/td>\n

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eCommerce<\/strong><\/h4>\n<\/td>\n<\/tr>\n

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    \n
  • Electronic ordering<\/li>\n<\/ul>\n<\/td>\n
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    \n
  • Electronic ordering<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
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    \n
  • Eliminates manual order entry<\/li>\n<\/ul>\n<\/td>\n
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    \n
  • Eliminates manual order entry<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
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    \n
  • Perfect for repeat orders<\/li>\n<\/ul>\n<\/td>\n
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    \n
  • Perfect for researching products and brand promotion\u00a0 (although it supports repeat orders as well)<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
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    \n
  • Doesn\u2019t include product information<\/li>\n<\/ul>\n<\/td>\n
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    \n
  • Contains complete product information<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
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    \n
  • Excellent for automating orders based on inventory levels<\/li>\n<\/ul>\n<\/td>\n
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    \n
  • Provides cross-selling & upselling opportunities<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
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Use Cases<\/strong><\/h3>\n<\/td>\n<\/tr>\n

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EDI<\/strong><\/h4>\n<\/td>\n

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eCommerce<\/strong><\/h4>\n<\/td>\n<\/tr>\n

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    \n
  • Manufacturer ordering\/reordering raw materials<\/li>\n<\/ul>\n<\/td>\n
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    \n
  • Manufacturer ordering supplies<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
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    \n
  • Wholesaler ordering regular inventory<\/li>\n<\/ul>\n<\/td>\n
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    \n
  • Wholesaler selling to distributors<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
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    \n
  • Distributor ordering regular inventory<\/li>\n<\/ul>\n<\/td>\n
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    \n
  • Distributors selling to retailers<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
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    \n
  • Automated ordering based on inventory levels<\/li>\n<\/ul>\n<\/td>\n
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