What are the advantages of EDI and B2B ecommerce combined?
Why you still need B2B ecommerce when you already have EDI?
B2B companies in this day and age are repeatedly encouraged to invest in B2B ecommerce. However, is a B2B web store really necessary when Electronic Data Interchange(EDI) is already in place? Considering the fact that both systems process orders digitally, what exactly is the difference between them? Moreover, where will the additional value be derived when combining them?
It’s important to understand that both EDI and B2B ecommerce have their own distinctive features. While B2B companies often keep EDI as a system for their customers to place product orders, EDI does not deliver the expected ecommerce transaction experience . What’s more, even if the majority of your customers have set up EDI, the orders of customers who haven’t will still require a significant amount of your resources.
What exactly is EDI?
Electronic Data Interchange (EDI) has proven to be of major value to a business by decreasing costs and enhancing speed, accuracy and business efficiency. By automatically placing orders, EDI decreases processing costs and order handling time considerably. Moreover, the elimination of human intervention reduces data-entry errors, thereby improving accuracy . However, even if the majority of your customers have set up EDI, the orders of customers who haven’t will still require a significant amount of your resources. In our experience (Sana Commerce, red.),companies process over 75% of their orders with EDI. So, in most cases, only up to 25% of all orders are handled with ecommerce. Although that might not seem significant at first sight, its means that 25% of your customers are limited to placing orders via old, traditional methods such as the telephone and accessing information through sales agents. For your sales staff, this means a lot of extra work.
A second consideration is that an EDI system is not a source of new product information or product range information, nor does it provide contextual information or user experiences. EDI is primarily used to place large recurring orders and does not form an incentive for customers to purchase more or different products. Put differently, it is not able to tempt customers into cross-selling and upselling.
Where does B2B ecommerce come into play?
The main benefit of having a web store is that all your customers – even the ones with EDI – will have a significantly better buying experience because they can seamlessly order the goods they need.
B2B ecommerce: What can it do?
Imagine looking for a very specific product. In contrast to EDI,you will want all the product specifications possible. Unfortunately, finding the right product and eventually ordering it – whether by telephone or e-mail – can be tedious and time-consuming. This is where ecommerce comes into play. Although, like EDI, sales orders suitable for ecommerce are processed online, they usually have a more ‘occasional’ character, like the example above. With ecommerce, it’s possible for customers to order occasionally and in irregular order quantities, instead of in predetermined large batches as is the case with EDI. B2B ecommerce enables the display of many different types of detailed figures and images.
It provides you with the opportunity to exhibit your full product or parts range in an attractive and interactive manner. This allows your customers to navigate effortlessly through your products and assists them in making a well-informed buying decision. B2B ecommerce is more than a sales portal or computer language like EDI. It represents an opportunity to interact with potential customers via websites, mail and videos and offers them the expected ‘ecommerce experience’. In other words, a web store is capable of tempting customers to engage in cross-selling and upselling. With increasing conversion as a result. In addition, the Internet provides for real-time processing of orders and electronic data storage: vital factors when improving order cycle time. If utilized sensibly, these features of the Internet can enable substantial value creation via B2B ecommerce.
Booming B2B ecommerce growth
Although the B2C market has received the majority of attention, the real opportunity for ecommerce can be found in the B2B market. Frost & Sullivan predicted that in 2020 the B2B ecommerce market will be twice the size of the B2C ecommerce market. It is therefore no surprise that approximately 55% of the companies we interviewed stated they have a web store for their B2B clients. These companies also noted they are searching for a more extensive ecommerce system in order to maximize their online potential and gain further market share.
How can this exponential growth in B2B ecommerce be explained? A B2B ecommerce platform assists companies in three focal areas:
- The first constitutes higher sales efficiency,realized through a fast 24/7 ordering system where customers can navigate effortlessly throughout the entire product catalogue and have direct access to their order history.
- Secondly, ecommerce improves your customer service. With the opportunity of displaying high-resolution images and context, you can provide customers with product information, but also product enrichment.
- Lastly, B2B ecommerce results in more revenue and a growing business. Online orders are generally larger and because you have an excellent way of displaying your entire catalogue of products, it will result in relevant cross-selling and upselling.
Many B2B companies are therefore considering adding an online sales channel. However, starting with a B2B ecommerce channel works particularly well when it is used as an addition to an already existing EDI system. This brings us to the advantages of B2B ecommerce relative to EDI.
How EDI and B2B ecommerce complement each other
Complementing your EDI system with B2B ecommerce constitutes a perfect marriage as they serve very different purposes. EDI is used for large-volume, repetitive orders, whereas an online sales portal is mostly used for placing orders with a more ‘occasional’ character. It provides a way to communicate with existing customers and improves the processes for frequently placed orders.
As a result, EDI is invaluable for frequent order placings for standard and repetitive products. In fact, a B2B web store would not be able to handle these types of orders as efficiently as EDI does. However, when a company works exclusively with EDI, it will have to deploy traditional methods – such as a telephone service – to cope with non-standard orders. The human intervention required for these traditional methods is characterized by time inefficiency. Instead, an automated B2B web store could process these non-standard orders in a much more efficient manner.
Moreover, although EDI’s efficiency is very valuable for manufacturing companies, manufacturers naturally want to expand. They want to find new customers, enter new markets and sell more products than the ones they are already known for. So an online sales portal provides an extra channel on top of the existing channels.
Additionally, you would like to inform your customers about the products you offer. Compared to EDI, ecommerce opens up a way of providing richer information about products. The differences between EDI and B2B ecommerce, and how they supplement each other, are listed below.