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Comparing EDI and B2B eCommerce

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Manufacturers, wholesalers and business models can benefit from digitising their sales process using a B2B eCommerce solution. However, just because it’s called a “solution”, it doesn’t mean that this will solve all of their problems.

We have already looked at eProcurement and punchout catalogue solutions for B2B companies, but how would we compare EDI and B2B eCommerce systems?

What is EDI?

Electronic Data Interchange (EDI) 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.  No translators or extra processing is needed.

EDI arose as a way of solving the difficulties of transferring documents between numerous businesses. When we create documents, errors are bound to occur; and if documents are created by computer programs, the chances for error are dramatically decreased. 

The main issue is, computers will only talk to each other when they have an agreeable format. This is where EDI comes into play.

How Does It Work?

Businesses sharing documents using EDI need to agree on one of several EDI standards. These include ANSI, EDIFACT, TRADACOMS and ebXML, which provide a predetermined format for the information in the document. There are times when an EDI relationship can be highly custom with different pricing, fulfilment terms, and protocols.

The larger business usually sets the standards and is unwilling to modify its EDI terms. This means the smaller business has to conform to these standards in order to carry out business. However, there are times when an EDI relationship can be highly custom with different pricing, fulfilment terms, and protocols.

From this example, an employee belonging to Company A 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. As Blue Widget Express isn’t 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.

Is EDI Different from eCommerce?

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 accepting orders and providing buyers with a complete shopping experience, including a front-end store.

What Are the Main Benefits Of EDI and eCommerce?

Main benefits

EDI

eCommerce

  • Electronic ordering
  • Electronic ordering
  • Eliminates manual order entry
  • Eliminates manual order entry
  • Perfect for repeat orders
  • Perfect for researching products and brand promotion  (although it supports repeat orders as well)
  • Doesn’t include product information
  • Contains complete product information
  • Excellent for automating orders based on inventory levels
  • Provides cross-selling & upselling opportunities

Use Cases

EDI

eCommerce

  • Manufacturer ordering/reordering raw materials
  • Manufacturer ordering supplies
  • Wholesaler ordering regular inventory
  • Wholesaler selling to distributors
  • Distributor ordering regular inventory
  • Distributors selling to retailers
  • Automated ordering based on inventory levels
  • Manufacturers/wholesalers selling direct

EDI and B2B eCommerce: Which Option is Better?

As a B2B seller, EDI is simply another way to accept orders from your existing customers. A sales rep doesn’t need to be available by phone to take the order, meaning that customers can order at any hour. This creates a streamlined process of placing orders, without the need to invest in the technology integration necessary for punchout catalogues. 

EDI is highly-efficient for customers who know what they want. eCommerce is built for reaching new markets and expanding sales with existing customers. With eCommerce, you can easily upsell and cross-sell to existing customers, all while providing detailed product information for an improved buyer experience. Product catalogues can be indexed by popular search engines where new buyers can be made aware of your offerings. 

eCommerce can process new RFQs when EDI works with already established agreements. While EDI and eCommerce both streamline the ordering process, eCommerce has the ability to expand your customer base, reach new markets, and showcase your brand.

What Strategy is Right for You?

The right strategy is usually a blend of digital solutions, such as EDI and B2B eCommerce. 

If your existing customers rely heavily on their e-procurement systems, it’s possible that EDI and/or punchout catalogues could simplify the process of ordering. But these solutions cannot be relied on alone.

To build new business and expand an existing business, eCommerce gives B2B buyers the online shopping experience that customers want. And to support the back-office, the right sales portal does more than handle sales orders. It can be used for support, marketing, and customer service.

For more information about finding the right digital solution to grow your business, please get in touch.

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