How EDI can Streamline a Drop-Shipping Business

Online sales make up for a large percentage of total retail sales worldwide. Sales from online channels are growing so fast that the global online shopping market is expected to cross the 4 trillion mark by the end of this year. 

The rise of online marketplaces has had a significant impact on consumer behavior as well. Demand for products is now very much in line with dynamic trends, and such trends have become much more short-lived. Retailers & sellers are required to keep pace with this change to retain their customers as well as to capture new clients which is why more and more retailers & sellers are switching to drop-ship models. 

Fulfilment via Drop-Shipping

Drop-ship also called Direct-to-consumer, is a fulfilment model that allows retailers to deliver products directly to their customers by shipping orders right from the suppliers. With this approach, retailers do not have to worry about maintaining products in their warehouse. They just purchase the product from a third-party and ship it directly from there to the customers while not even handling or seeing the product during the entire process. Drop-shipping grants the sellers critical agility that allows them to react instantly to new trends & demand fluctuations by adding new products to their catalogue. 

Drop-Ship with EDI 

Order fulfilment process in the drop-ship model is a very complex process. The number of parties involved in the process is more starting from the seller, supplier, shipper/carrier and ending with the customer. Critical data is required to be transmitted between all the parties to ensure efficient execution of the process. 

Electronic Data Interchange (EDI) helps in automating the entire drop-ship process by allowing reliable & dynamic exchange of information between all the trading partners while being

compliant with the applicable standards & regulations. EDI facilitates the secure exchange of business documents, such as purchase orders, shipping notices, invoices, sales orders and receipts. This exchange of data with EDI ensures that the drop ship requests from the retailers are sent directly into the supplier’s ERP  drop shipping system. Vital benefits of EDI in this process are

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  • Importing orders from all the channels into a single platform.
  • Provides real-time visibility of inventory levels by exchanging inventory enquiry documents between trading partners.
  • Efficient exchange of transaction documents such as purchase order, purchase order acknowledgement, invoice, etc.
  • Easy access to updates for all involved parties about order fulfilment progress via order status report, shipment report, etc.

With an increasing number of retailers and e-commerce partners trying to lower their inventory storage costs and relieve some of the burden associated with fulfilment, Dropship arrangements with suppliers along with reliable EDI reliable offer a cheaper, efficient & easier solution. Contact us to know more about our EDI services and how our solutions can be seamlessly integrated into your current system.