Do You REALLY Need EDI?

First, you need to know that EDI is nothing more than a format for a specific record type such as a PO, Acknowledgement, Ship Notice, Invoice, etc.  Depending on the retailer, there may be other non-EDI record formats, such as XML, CSV, etc. in which you can communicate with them. 

So, the real question is do you need a 3rd party EDI Company or VAN (Value Added Network) to send and receive this data for you.  With a very small number of exceptions, the answer is NO.  No matter what the retailer’s help line says when you request information about setting up as a vendor. 

Unfortunately most suppliers are just unaware of the alternatives.  As a case in point, an OPAL user recently approached Houzz about getting connected and was told that they needed to connect through SPS Commerce.  Of course, this would require the traditional monthly fees and data transmission costs of an EDI provider to do business with them.  

However, the OPAL team was aware that there were other options available:  Houzz also offers API (Application Program Interface) connectivity and we were able to complete the connection without the use and cost of SPS Commerce. 

Of the nearly 90 major retailers that OPAL is currently connected with or in the process of connecting with for its customers, less than 10% actually REQUIRE the use of a 3rd party EDI Company in order to communicate with them – and this number is decreasing all the time as retailers add new connectivity options.  All others have alternative connections available such as API, FTP or AS2 which allows you to communicate with them directly.  These are the methods that OPAL employs whenever a retailer allows it, and OPAL does not charge for this data translation and transmission which eliminates these 3rd party charges. 

OPAL is the only self-driving drop ship and order fulfillment software solution in the market today.  Adapting to your specific business processes, OPAL automates receiving orders from retailers, manages all retailer communications, processes and invoices orders through your ERP and accounting system, and creates packing slips and custom branded 3rd party shipping labels per any retailer’s requirements in as little as 8 seconds per order.  Once shipped, it sends back tracking information and invoices to the retailer, as well as tracking packages and sending inventory updates.

What is the Future of EDI?

All companies large or small that sell product on-line or for warehouse fulfillment to retailers and e-tailers eventually find themselves in a position where they need to rely on EDI (Electronic Data Interchange) to communicate with them.   It’s a hassle, forcing many suppliers to employ individual(s) just to manage it and keep it accurate.  But does EDI really have a sustainable future? 

Well, first, let’s discuss its evolution and the path that this technology is on.  The EDI concept was introduced in 1960 and the first EDI document was sent in 1965.  The primary motivation behind the development of EDI was to facilitate better communication in the commerce / trading world by overcoming these obstacles: 

  • Computers were not connected
  • Data Transmission costs were very high
  • There was no consistent format for data files
  • There were no standards for file format  

EDI has continued to play a significant role over the last five (5) decades.  However, over the last two (2) decades there has been a major shift in the industry because of the Internet. Business processes have changed because of the Internet and the speed of data transmission has increased by a 100 fold.  The only thing that has not changed is EDI and the new reality is that now: 

  • Computers are seamlessly connected
  • Data transmission cost is zero due to the Internet
  • There’s no need for a file format to exchange data 

Everybody wonders then why do we still have EDI?   The answer is simple – resistance to change. Traditional businesses have been using it for so long that they no longer question it.  EDI companies, on the other hand, cannot change without destroying their revenue stream. 

As business has evolved, the Typewriter was replaced by the Telegram, the Telegram was replaced by Fax, and the Fax was replaced by EDI.  EDI is now being replaced by the Application Programming Interface (API).  

Businesses in the current time are far too dynamic to rely on such an outdated tool to be the backbone of their business operation.  APIs are a messaging format that allows data to be transmitted from one system to another in nanoseconds WITHOUT those expensive EDI Document fees.  Opal is the answer.  Book your FREE Demo now to learn more.

Bulk Orders AND Drop Ship Orders? Show Me the Money!

Currently, much if not all, of your order processing may be in the fulfillment of bulk orders: LTL, truck load or container shipments.  While not simple by any means, bulk shipment orders have high revenue values and can absorb a lot of order processing and handling costs and still be highly profitable.  Unfortunately, as you begin drop ship order fulfillment, you find that much of those same costs that apply to bulk shipments now severely impact the profitability of low revenue, single package orders.

You receive an order, pick it, pack it and ship it to the consumer.  That is simple drop shipping.  Unfortunately, reality is never that simple.  It’s actually a time consuming, detailed and often painful process with a great deal of pressure on profit margins.  Especially if you are selling through large retailers and e-tailers; additionally, industry trends over the last five years indicate that there’s going to more drop shipping in the future, not less. 

What’s needed is something that helps your team to continue managing those bulk shipments while even reducing some of those order processing costs, as well as making drop ship orders easy to handle and highly profitable, too.

OPAL is AUTONOMOUS and bridges both worlds – container, truck load and LTL shipments, as well as giving you the capability to efficiently and profitably drop ship orders.  Take a look at this pretty common cost scenario:

Traditional Bulk Shipping

1 order worth $40,000

Order Processing Cost of $4.00 Each

1 Clerk, 1 PC and 1 Desk

2+ EDI Transaction Charges

Traditional Drop Shipping

2,000 orders worth $20 each

Order Processing Cost of $4.00 each

3+ Clerks, 3+ PCs and 3+ Desks

4,000+ EDI Transaction Charges

OPAL Bulk Shipping

OPAL Drop Shipping

1 order worth $40,000

Order Processing Cost of $4.00

1 Clerk, 1 PC and 1 Desk

Zero EDI Transaction Charges

2,000 orders worth $20 each

Order Processing Cost of 40 cents each

1 Clerk, 1 PC and 1 Desk

Zero EDI Transaction Charges

But what does AUTONOMOUS really mean?  It enables you to eliminate nearly all, if not all, of the manual steps we must all perform when processing an order. 

This includes receiving orders from your customer retailers and e-tailers, managing all of their EDI transactions, processing and invoicing orders through your ERP and accounting system, downloading or creating custom packing slips, creating shipping labels, UCC128 labels and / or other required shipping documents, getting them to the warehouse for pick, pack and ship and monitoring delivery progress of the order.  Now, imagine doing that 24 hours day, 7 days per week, and only having to focus on the few exceptions that will inevitably occur outside of your control.  That’s what OPAL does for you.

May You Never Have to Drop Ship!

If you’re not already doing it, here’s hoping you never find yourself in the position where you have to drop ship your products directly to consumers.  It is a time consuming, detailed and often painful process with a great deal of pressure on profit margins.  Especially if you are selling through the large retailers and e-tailers.  But, if the 2017 industry trends are to be believed, you may very well find that you will need to adapt.

If you’re already drop shipping, you are aware of the problems:

  • Consumer expectations are getting higher almost every day.  If they order something at 3:00am Saturday morning, they want to see an acknowledgement, tracking number and expected delivery date very quickly.  They also expect to receive that order in a few days at most.
  • Marketplaces also have increasingly high expectations, and if you don’t meet those expectations there are financial penalties.  More and more, they want their suppliers to drop ship from their own warehouse rather than one of their fulfillment centers, provide acknowledgement, tracking number, ship it in three (3) days maximum, provide accurate invoicing and provide them with accurate item inventory updates.
  • One of the highest expenses for any drop shipping business is labor.  It’s the wages you pay; plus having the correct number of employees on hand when you need them. Having more employees than orders to process can be costly and the other side of that is not having enough employees to process orders. 
  • Product profitability can be severely impacted, especially if the retail cost is low.  You may be selling more but your profit margin may be very thin or even non-existent. 

Now, on the other hand, large shipments can be very profitable because it requires much less order processing labor to handle those high revenue orders.

So, as I said:  May you never have to drop ship!  But many of you already are.  The retail world is changing rapidly with on-line shopping by consumers growing by double digits each year.  Are you ready for an inevitable change?

OPAL bridges both worlds – container, truck load and LTL shipments, as well as giving you the capability to expand more and more into the drop ship business as available without the problems we just spoke of.  It gives you the ability to grow and adapt over time, easily.

Are you striving to achieve productivity gains to increase drop ship order profitability?  Are you currently avoiding drop shipping, but see the writing on the wall.  Before dismissing the possibilities, please contact OPAL – the ONLY Autonomous Order Processing solution – to see what it can do for your business.  Book your FREE Demo now.

Can You Hire an Order Processing Team for $800 a Month?

Do you have a drop ship order processing team that works 24 hours a day, seven days a week for $800 a month?  Probably not, but this is what OPAL, an Autonomous Order Processing Solution gives you.  And, you do not need to have a one size fits all solution.  In fact:

  • It adapts to your specific business rules and processes
  • It works transparently with all of your retailers and e-tailers to exchange mandatory electronic information and create compliant Packing Slips
  • It works transparently with your e-commerce shopping carts to process orders and communicate shipment tracking to your customers
  • It works with your Accounting and Inventory System to create accurate invoices and decrement inventory without manual entry
  • It works transparently with your primary shipping carriers such as USPS, FedEx, UPS, DHL, etc. without having to use 3rd party software for shipping and labels or going to one of their portals.
  • And, it works effectively with and optimizes your warehouse or 3PL. 

So, think about it for just a moment.  $800 a month ($9,600 a year) as opposed to $15,000-$20,000 per year plus overheads for one person to handle order processing.  And this one individual will not be processing your orders 24 hours per day, 365 days per year.  

If you add order volume to the equation, how many orders per month can one person really handle?  If it’s 1,000 then your labor cost per order is probably going to be at least $3,000 ($3.00+ per order) versus $.80 with OPAL ($800 divided by 1000 orders).  And, the more orders processed each month reduces this per order cost even more.

 Are you striving to achieve productivity gains to increase drop ship order profitability?  Before dismissing the possibilities, please contact OPAL – the ONLY Autonomous Order Processing solution – to see what it can do for your business. Book your FREE Demo now.

The ROI of Autonomous Order Processing

We’ve talked extensively in the past about the productivity gains and increased revenue potential through the use of Autonomous Order Processing, especially as it relates to the huge, positive impact it has on drop ship order profitability. 

But, many times, business owners are reluctant to even consider the potential cost to their business – so much so that they don’t even investigate it to see if it is viable.  And, sometimes if they do, they have serious sticker shock and dismiss the idea.  However, what’s often not considered is the very fast Return on Investment (ROI) that is achieved and how quickly that increased profitability and productivity comes to pass for your company. 

Yes, it’s not free.  An Autonomous Order Processing System is NOT a one size fits all solution and it needs to work with a lot of moving parts within your business, like:

  •           It must adapt to your business rules and processes
  •          It must work transparently with all of your retailers and e-tailers to exchange mandatory electronic information and create compliant Packing Slips
  •          It must work transparently with your e-commerce shopping carts to process orders and communicate shipment tracking to your customers
  •          It must work with your Accounting and Inventory System to create accurate invoices and decrement inventory without manual entry
  •          It must work transparently with your primary shipping carriers such as USPS, FedEx, UPS, DHL, etc. without having to use 3rd party software for shipping and labels or going to one of their portals.
  •          And, it must work effectively with and optimize your warehouse or 3PL. 

So, for example, let’s say that you have to invest $10,000 to connect all of those moving parts discussed above.  Sounds like a lot doesn’t it, but you REALLY need to consider the following: 

  1. I don’t know what your current per drop ship order processing cost is, but in my experience it runs at least $3 per order in labor cost.  At a run rate of around 1,000 orders that would be $3,000 per month.  With Autonomous Order Processing it would be $.80 or $800 per month.  A savings of $2,200 and an ROI in 4 to 5 months. 
  2. Also, if you are growing, as I’m sure you are, and have the need to add personnel to manage the load at some point, Autonomous Order Processing eliminates the need to hire additional personnel.  A savings of $15,000-$20,000 plus overheads each year.  Once again, the cost of one additional hire more than covers your investment. 

Before you dismiss the possibilities out of hand, contact OPAL – the ONLY Autonomous Order Processing solution – to see what it can do for your business, while also paying for itself extremely quickly.  Book your FREE DEMO now. 

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