B2B companies now rely on technology more than ever before. Modern e-commerce is a vital strategy for B2B businesses due to forced digital transformation, fast-changing market conditions, and shifting buyer preferences.
Many firms used to think of Electronic Data Interchange (EDI) when discussing electronic sales in the B2B market. However, as businesses grew and new revenue streams were necessary, B2B e-commerce use skyrocketed.
When we speak with corporate customers, we are frequently asked about the differences between EDM and B2B e-commerce. People frequently ask whether EDI will be phased out in favor of B2B commerce and the best solution for their company.
EDI and B2B E-commerce are not mutually exclusive in practice.
According to the Digital Commerce 360 B2B 2020 B2B E-Commerce Market Report, EDI accounted for 78.4 percent ($7.00 trillion) of all B2B electronic sales in 2019. Statistics like these demonstrate that EDI isn’t going gone anytime soon. And it will be the smart use of EDI and B2B e-commerce by thoughtful businesses that will lead to success.
It’s crucial to understand that EDI and B2B e-commerce are two distinct solutions ideal for tackling various challenges within a company.
In this article, we’ll look at the two most common queries we get about EDI and B2B e-commerce:
- What is the difference between electronic data interchange (EDI) and business-to-business (B2B) e-commerce?
- Why are EDI-centric companies including B2B e-commerce into their sales and distribution plans?
What is EDI?
Electronic Data Interchange (EDI) is the electronic communication of structured data between computer systems using agreed-upon message standards without the need for human intervention. To put it another way, EDI is essentially the transfer of data from one computer to another, making it ideal for automating repeated transactions.
Many large corporations and their suppliers have made significant investments in EDI over the years, and the technology continues to function as intended. In a supply chain where products are predefined and known with contracted pricing, EDI is most commonly utilized for large, recurrent orders.
EDI allows businesses to transact with one another using well-defined standards. These standards specify how business documents (invoices, purchase orders, and ship confirmations) are transferred, ensuring that supplies flow smoothly throughout the supply chain.
Essentially, an EDI is a system that allows organizations to transfer business papers linked with a sale back and forth without the use of paper or people.
Benefits of EDI:
- Reduced customer churn and the establishment of key system-to-system automation.
- Reduced order cycle time results in increased speed and accuracy. With EDI, your business cycles can be accelerated by as much as 61 percent.
- Reduced order errors result in cost savings. Automation eliminates time-consuming and error-prone manual order processes.
- Improved inventory and supply chain visibility and a clearer picture of transaction progress.
With EDI, there are two main challenges:
- Only once a customer connection has been formed for a contracted set of products and pricing should EDI be used.
- Because not all customers and new technology solutions enable EDI, you’ll need to complement other operational optimization choices.
Today’s B2B companies must pay close attention to the customer experience during the ordering process. It’s worth noting that an EDI doesn’t have a modern user interface. It cannot be used for marketing, such as communicating with customers or sales teams to promote new items, market, or cross-sell and upsell.
Once a customer relationship has been established, EDI removes your brand and salespeople from the order placement process. Companies that use electronic data interchange (EDI) run the danger of developing their buyer market. To buyers, acquiring the same product from various vendors via EDI may simply be a matter of pricing rather than an organization owning the purchasing decision in the commerce experience.
What is business-to-business (B2B) e-commerce?
B2B e-commerce refers to interactions and transactions between a corporation and its trading partners over a value-added network or proprietary connection, such as an electronic marketplace.
The B2B industry has grown in recent years, largely owing to shifting buyer wants and market forces. As huge corporations have focused on customer experiences, convenience, and self-service, the border between B2C and B2B buying experiences has blurred. B2B e-commerce is essential for distinction because it allows businesses to enter new markets, improve efficiencies, and generate new revenue streams.
Unlike EDI, which deals with massive, recurrent transactions, B2B commerce deals with ad-hoc ordering scenarios or items with complicated order management systems.
B2B e-commerce offers more than simply online ordering; it also allows you to communicate with your consumers engagingly. It allows people to browse and educate themselves by bringing your product catalog to them. It gives you a new way to sell to them and keep them up to date on product news, company updates, special offers, and promotions.
Your clients can maintain track of orders and other data online with B2B e-commerce, just like they can with other orders they place outside of their business transactions.
B2B e-commerce capabilities:
As a B2B company, standing out from the competition is critical. The strict EDI regulations may prevent a company from utilizing the levers necessary to get a competitive advantage in the market. The capabilities of B2B e-commerce, on the other hand, give businesses an advantage over their competitors.
Customization: The capacity to tailor products to the needs of specific clients is critical to success. Product availability, pricing, and value-added services need to be integrated into a single experience, only achievable with B2B e-commerce. For B2B, the levers or inputs into those modifications are generally far more thorough, as they revolve primarily around the model of thousands of buyer-customer entities that demand their transactional workflows and product mix to reflect their operational requirements in doing business with you.
Consistency: The organization has some unique challenges due to its growth through digital transformation and commerce. How businesses scale experiences to meet customer demands will be the most significant advancement. This can take the form of large-scale cloud transformations for businesses or the acquisition of isolated solutions by individual departments or business units to manage their digital transitions.
Control: Companies who successfully upgrade their e-commerce strategy experience an increase in their core B2B customer base immediately. Internal interest in pursuing other markets, such as B2C or B2B2C, usually follows. Once your B2B e-commerce strategy is in place, it becomes evident that the technology levers that support your B2B customer base translate incredibly well to other markets.
Why are EDI-centric companies including B2B e-commerce into their sales and distribution plans?
Both EDI and B2B e-commerce aid in automating the ordering process and improving overall business processes. And, in most cases, one technique isn’t necessarily superior to the other.
However, in today’s digital age, organizations that previously focused on EDI understand the advantages of B2B e-commerce channels to support the required revenue and customer growth.
Complementing traditional EDI with API
Businesses may provide a modern ordering experience for their clients by incorporating B2B e-commerce techniques into expanding channels. Traditional EDI has gaps that can be filled with modern, API-first e-commerce. B2B e-commerce, unlike EDI, allows businesses to deliver more to their customers:
- Inventory and pricing are updated in real-time and sent to your customers’ procurement systems.
- As APIs to customers, we’ve improved order status and tracking capabilities.
- Beyond what may already be configured in your customer’s EDI system, you can provide broad catalog access and search capabilities.
Today’s purchasers anticipate a great ordering experience, thanks in part to digital platforms like Amazon, even if the purchase is for “work.” Companies who invest in their customers’ needs today with modern, digital purchase experiences will undoubtedly reap the benefits as expectations rise.
HubBroker helps businesses find the right solution for their integration needs. Whether you are looking to modernize your integration, consolidate systems, or looking for an easier way to integrate your ecosystem, HubBroker has got you covered. Contact us today for more.