Marketplace and EDI, a major topic for those who want to sell on Marketplaces in an automated way. Indeed, without automation, order processing is time-consuming, with lengthy manual processes, a source of delivery delays and errors. The merchant’s rating will suffer as a result.
For this reason, companies wishing to sell on marketplaces must focus first and foremost on successfully integrating with them. Electronic Data Interchange (EDI) is the key to successful integration. In this article, discover all the reasons to use EDI on marketplaces.
The specifics of selling on marketplaces
Since they first appeared in the early 2000s, with Amazon, eBay, etc., CtoC and BtoC marketplaces have made a major contribution to the development of e-commerce.
Today, marketplaces are no longer limited to CtoC and BtoC, but offer their services to all BtoB companies. Some are pure players in specialized professional sectors: building and public works supplies, car parts for professionals, agricultural inputs, etc.
According to a Gartner study, by 2023, at least 70% of marketplaces launched will be open to BtoB customers. On these MarketPlaces, merchants are already competing with each other. The winners are often those with the best ratings.
To develop sales and build customer loyalty on these new sales channels, you need to understand the requirements of marketplace sales.
The requirements of selling on marketplaces
A marketplace is more than just an e-commerce site.
A marketplace is an intermediation platform between buyers and sellers, acting as a trusted third party. The marketplace provides functionalities for sellers and protection for buyers :
- It provides access to a large audience, gives greater visibility to the products and services on offer, and increases conversion rates,
- It secures transactions, guarantees payments, and intervenes in the event of disputes,
- It demands the same high standards from merchants as the marketplace applies to itself.
Merchants commit to :
- Fair inventory management to avoid stock-outs,
- Real-time order management.
- 24/7 service,
- Products delivered as ordered,
- Fair pricing,
- Advertised delivery times respected.
A rating system and reviews left by end-customers allow us to judge whether our commitments have been respected.
Synchronization between the front office, i.e. the marketplace, and the back office, i.e. the merchant’s information system, must be fast, reliable and secure. That’s what marketplace and EDI are all about.
Reliable and frequent data flow exchanges to integrate the marketplace into the Information System
To sell on a marketplace, you need to master three layers :
- The Front Office, where end customers browse and buy,
- The Middle Office, which is the connector between the Front Office and the Back Office. The Middle Office enables merchants to interact between their Information System and the marketplace :
- Offer their products for sale,
- Exchange commercial documents: purchase orders, delivery notes, invoices, payments, etc…
- Track sales trends and obtain statistics,
- The Back Office, which enables merchants to manage orders. Thus, it is the merchant’s Information System, Sales Management, CRM, WMS, etc.
Every time a product is put on sale, every time an order is taken, every time a payment is made, information is exchanged between the Front Office and the Back Office. The challenge is to build an efficient, reliable and secure Middle Office.
Companies can interface their Back Office with a marketplace in a number of ways :
- Manual management, via web pages and forms, or via .xlsx, .csv file streams,
- Automatic management using APIs (Application Programming Interfaces) or EDI systems.
EDI is the right choice for selling on marketplaces
EDI is the most reliable and widespread technical solution in the world of commerce and distribution. EDI enables the exchange of commercial documents – purchase orders, shipping notices, invoices – between trading partners in a standard format. EDI documents are machine-readable, which means that business processes can be easily automated.
As a result, most marketplaces, such as Amazon, communicate their EDI specifications to developers and EDI access providers.
Why choose EDI over APIs?
Recently, APIs proposed by marketplaces and flow integrators have been competing with EDI to implement synchronization between information systems and marketplaces. However, EDI still has its advantages :
Adaptability to business needs
- APIs are code, written to meet the specific functional requirements of a marketplace, and optimized for rapid execution. API modifications in response to specific business needs are delicate and costly to implement.
- EDI is essentially parameterization; consultants or developers can easily make modifications when necessary.
Partner network integration
- As each API is customized to the trading partner, using APIs for trading with multiple partners becomes difficult to maintain.
- An EDI system is standardized and built to handle electronic flows with multiple trading partners. VAN EDI networks are capable of handling very large volumes securely and reliably.
- As the API is a recent solution, its compatibility with all BtoB technologies is not guaranteed.
- EDI has been offered for several decades now in different solutions: EDI On Premise, EDI SaaS, WEB EDI, so companies can be sure of having an EDI solution compatible with their information system.
- APIs are often vulnerable to intrusions into information systems, and multiplying the number of APIs for each marketplace multiplies the risk of data breaches,
- On the other hand, an EDI system can easily be secured using an EDI VAN network.
What EDI flows are exchanged ?
For each flow to and from the marketplace, EDI messages in EDIFACT standard will be used.
- The order (ORDER), the order will be integrated into the merchant’s sales management system,
- Order acknowledgement (ORDER REPONSE): the merchant confirms receipt of the order and processes it,
- DESADV, the merchant notifies the MarketPlace and the end customer that the order has been shipped,
- Invoice (INVOICE): the invoice is integrated into the accounting system and posted when payment is received,
- The stock update (INVRPT), for information by product reference on stocks available for sale, reserved stocks, etc.
The benefits of EDI
Advantages of a proven and popular solution in the world of Distribution and Commerce :
- EDI is essentially parameter-based, so consultants or developers can easily make changes when necessary.
- An EDI system is standardized and built to handle electronic flows with multiple trading partners. And VAN EDI networks are capable of handling very large volumes securely and reliably.
- For several decades now, EDI has been available in a range of solutions: EDI On Premise, EDI SaaS, WEB EDI, so companies can be sure of having an EDI solution that is compatible with their information systems,
- EDI implementation is a project that is both technically and financially mastered by CIOs and EDI solution providers.
Strategic advantages of marketplace and EDI
EDI offers companies strategic advantages for selling on marketplaces:
- Improving gross margins through economies of scale and reduced administrative costs,
- Enhance customer service by guaranteeing delivery times and reducing the risk of order errors, and ultimately obtain good ratings and positive reviews from end customers,
- Be able to respond to changing customer demands,
- Demonstrate that the company is actively seeking to develop its e-commerce business with a long-term partnership policy.
Operational benefits of EDI marketplace
Companies will also benefit from all the advantages of EDI in their day-to-day business :
- Elimination of paper documents, replaced by electronic files
- Order processing time savings,
- Reduced costs thanks to task automation,
- Inventory optimization, by easily adjusting stock levels to demand,
- Reduce the risk of errors or inaccuracies in data and information transmitted to the marketplace, which often lead to financial penalties.
Marketplace and EDI : a future-proof, scalable solution for retailers
EDI integration with marketplaces is the long-term, scalable solution. EDI provides merchants with :
- A complete library of messages for commercial transactions and logistics,
- A popular system adopted by many companies and organizations,
- Access to secure EDI VAN networks,
- A wide range of EDI skills for managing EDI projects,
- EDI service providers adapted to all business sectors,
- Adaptability to the specific needs of each company.
With EDI, suppliers and sellers of products and services control their sales on marketplaces from their own information systems. This enables them to be much more responsive to sales and demand, monitor service levels and develop sales.