Manufacturers and wholesalers who are moving to digital platforms can experience decision paralysis with so many options, especially when every digital ‘solution’ won’t necessarily solve your specific problem.
One such option is comparing EDI and B2B eCommerce systems, knowing how they’re different and which is best suited to your business.
Electronic Data Interchange (EDI) is a way in which computers transfer documents between two parties using predetermined formats and digital rules. It is a direct data transfer between the sender and receiver and no translators or extra processing is needed.
Simplified, if Company A wanted to buy or offer a customer some 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 create a sales order and invoice.
Because these documents are computer-generated, they don’t run the same risk of having human errors and transferring documents from computer-to-computer is more cost-effective than handling paper documents.
In a nutshell, EDI offers a great solution that decreases human error and saves money on admin. But computers can only talk to each other when they have an agreeable format. This in essence is what EDI is.
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.
Traditionally, the larger business typically has a set standard requiring the smaller business to conform to these standards in order to do business.
Using the above example, a Company A employee would prepare a PO using the agreed-upon standard and send it electronically to Blue Widget Express. Blue Widget Express receives the PO and it’s automatically entered as an order. Because 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.
How’s EDI different from eCommerce?
EDI is a way of conducting commerce and it is electronic, so technically it’s eCommerce, but it’s really more about transmitting documents and less about the buying and selling. 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’t 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’t be of much help.
EDI vs B2B eCommerce: which is better?
As a B2B seller, EDI is simply another way for you to accept orders from your existing customers. Sales reps don’t need to be available to take orders, customers can order anytime it suits them and it streamlines getting an order into your system without investing in integrating punchout catalogues.
If a customer already knows what they want, EDI is highly-efficient. 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. You can provide detailed product information for an improved buyer experience. In addition, product catalogues can be indexed by popular search engines where new buyers can be made aware of your offerings.
B2B eCommerce Platforms can process new requests for quotes while EDI works with your already established agreements. They both streamline the ordering process, but only eCommerce has the ability to expand your customer base, penetrate new markets, and showcase your brand.
The right strategy is usually a blend of both solutions. If your existing customers rely heavily on their e-procurement systems, it’s possible that EDI or punchout catalogues will simplify the ordering and approval process. But you can’t simply rely on those solutions alone.
To build new business and expand an existing business, eCommerce gives B2B buyers the online shopping experience that customers want.
Having the right blend of both also does more than handle sales orders. It can be used for support, marketing, and customer service.
Contact Oro to discover how to create the right mix for your business.