Automating the Dropshipping Order Process Through API or EDI

It’s hard to imagine an efficient dropshipping order process or system that doesn’t rely on either EDI, API, or both.

Based on today’s consumer expectations for fast shipping, order processing and fulfillment methods must be more streamlined than ever before. Marrying above-average order processing speed and quality customer service can increase customer satisfaction levels and give your business a competitive advantage. 

API and EDI integrations allow you to quickly and securely exchange data between systems. This is a significant chunk of the supply chain management process. 

Keep reading to learn why API and EDI investment is key to automating the full dropshipping order process.

The Benefits of an Automated Dropshipping Order Process

A fully automated order management system integrates with a sales channel, or multiple sales channels, to process and verify orders. Once orders are placed, the system updates the order status in real-time. Customers are notified as the order fulfillment process begins and when their order is shipped, as well.

The quickest way to automate this process is through API or EDI integration. API and EDI solutions offer tangible benefits for retailers’ bottom lines, including streamlined workflows and fewer order processing errors due to manual methods.

Fewer Manual Processes

One significant benefit of API/EDI implementation is that it lessens or completely eliminates the need for manual processes.

If you’re trying to rapidly scale, manual tasks can significantly slow you down. When you depend on human workers to complete repetitive tasks, scaling up during peak or seasonal times is extremely difficult to manage from a cost and resource perspective. You must locate, hire, and train new employees and spend time guiding them through the learning process. With a lack of trained staff or inability to adapt to quickly changing demands, you may lose business growth opportunities.

It’s much easier to scale software than people.

EDI was introduced in the 1970s. Before then, companies relied on individuals to record information such as purchase orders and invoices. Businesses can reduce the occurrence of errors during data entry by limiting manual processes through implementing automation. With EDI integration, important data can be sent electronically and automatically, which ensures the data is accurate before it reaches its destination.

Think of the 1-10-100 Rule, which states that the cost of prevention is less costly than correction is less costly than failure. It makes sense to spend $1 in prevention than to spend $10 on correcting a mistake. It certainly makes more sense to invest in prevention than to incur the cost of a $100 failure.

The “cost of prevention” includes the costs to minimize or avoid errors—in this case, implementing an API or EDI solution to manage orders. The “cost of correction” is the expense of removing or fixing defects, such as re-typing data due to keying errors. The “cost of failure” is the downstream cost incurred if you fail to fix an issue before a customer feels the effects of it—such as high levels of customer dissatisfaction and potential loss of loyal customers.

Decreased Order Fulfillment Costs

An automated order processing system will help you save on fulfillment costs by reducing the amount of labor needed to fulfill an order. The process is made much more efficient by eliminating manual order entry and shipment tracking.

Plus, through automation, your team can process orders from anywhere. Regardless of where your customer places an order, your integrated operation will verify and process the order in a systematic manner.

The use of API and EDI-compliant software reduces costs and increases the productivity of the companies that use it. Removing manual data entry not only prevents errors down the road but allows yourself and your employees to dedicate time to essential tasks that require human interaction. 

Streamlined Workflows

API/EDI provides the foundation for automated inventory management and order processing. These services streamline and improve dropship workflows while improving supply chain visibility and predictability. 

What does this look like? In a workflow that uses EDI, an employee creates a purchase order when it’s time to place an order with a supplier. The EDI integration works behind the scenes to create an EDI-friendly version of the order to send to the supplier. 

Even if the supplier uses a different platform or technology, their system will correctly translate and receive the EDI purchase order automatically. The transaction is completed much faster than a manual process and is error-free.

API vs. EDI Automation

API and EDI are widely used across multiple industries and software solutions, but they are different. Understanding these differences is essential for making an educated decision about which integration is best for your business. 

First, EDI has been around for much longer, so it’s more widely used. API, however, is becoming more popular as it’s a solid choice for data transfer tasks. Let’s briefly analyze each technology solution and how each can be applied to the dropshipping order process.

EDI Explained

EDI stands for electronic data interchange. It’s the most popular communication technology used to transfer data between systems.

Using EDI, businesses have a way to transfer data to other businesses securely and without relying on manual processes. EDI employs standardized formats that make it simple for systems to process data, which effectively reduces or entirely eliminates the need for manual labor.

When utilizing EDI, there are several ways to exchange information, including serial links, peer-to-peer networks, and internet-based options. However, access to EDI is only provided for predefined, authorized users. The technology uses audit trails and archives to track its use, which makes it an excellent option for systems that require a higher level of security—this is a big reason why EDI is so popular. 

With EDI, you can send large amounts of data efficiently and conveniently. An EDI integration can send massive quantities of data in a single transfer, another reason for the reduced potential for inaccuracies. 

Because EDI reduces human intervention, the computer systems that talk to one another must be able to understand the information. This is why all parties must maintain EDI’s clearly defined standard format.

When it comes to the reliability of data, EDI implementation is a massive improvement over manual data transmission methods. It removes the need to manually enter or rework orders, which results in a faster, improved order management process. 

EDI Standards

EDI creates standards for the layouts of traditional business documents such as EDIFACT<ANSI and ebXML, which improves efficiency through reduced document integration costs. However, there are drawbacks in addition to the benefits this introduces. 

The number of available standards is high because each EDI standard has three versions. However, this can make it harder for smaller businesses to work with larger ones that are using newer versions of the same standards. Sometimes smaller companies can’t keep up with technological software developments, such as responsiveness and real-time visibility, which forces them to look for EDI alternatives. 

API Explained

API (application programming interface) refers to a set of programming standards and instructions for accessing web-based applications that enables software platforms to communicate with each other. 

It primarily serves as an interface that helps programs interact effectively. This interaction is similar to how a user interface helps us interact with computers, applications, and websites. 

For instance, APIs are working in the background when you shop online. As you enter your credit card number to complete a purchase, the sales channel uses an API to translate the information to another application. The second application verifies your card number and, once confirmed, sends a confirmation back to the sales channel. 

API offers a real-time connection, which makesit favorable over EDI in most situations. In fact, API transfers can occur in less than a second. Data is updated instantly, without the need for an intermediary. This presents several supply chain management benefits.

Another example of an API at work is using one to automatically insert a pickup request into a carrier system—dramatically decreasing the time it would take to request this manually. API technology provides 3PLs and retailers real-time access to information that makes it easy to respond to tasks quickly while providing accurate visibility into the supply chain.

Which Solution Should You Choose?

EDI remains the industry standard and a popular choice for retailers due to its robust security and reliability. However, APIs are becoming increasingly more popular thanks to innovative functionality. 

The choice between API and EDI technology will come down to your company’s needs. Both solutions transfer data between systems, the difference is how they accomplish this. Over time, the internet’s capabilities have grown, yet EDI hasn’t grown along with it. 

APIs are essentially messengers that carry data between systems in nanoseconds. Companies will leave parts of the software open to enable software developers to integrate with them for a streamlined flow of information. 

API doesn’t have the standardized handshaking qualities that EDI possesses or the defined message types found in EDIFACT, for example. These message types and data security protocols are the tell-tale characteristics and hallmarks of EDI.

Because EDI is the older technology, more companies use it and it remains the popular standard—it becomes the more convenient option. API is newer but has robust features for syncing web applications. While it’s not ready to completely replace EDI technology, it’s an option worth considering. 

In fact, it’s only a matter of time before API becomes the industry standard. According to a survey completed by EFT, 55% of executives consider APIs a viable alternative to EDI because of the more efficient exchange of data and overall flexibility. So, perhaps implementing API now will put you ahead of the game. 

APIs are becoming more popular for data transmission due to speed—developers can begin and complete projects more quickly. Plus, APIs are easier to use due to simpler development environments and interfaces. More challenging projects become simpler to accomplish, which saves teams precious time and money.

Another thing to consider is basic functionality, which APIs are beginning to excel in as well. EDI isn’t as useful in secondary interactions. Web services are most often used in secondary calls between business entities. Due to simplicity, API management is often the favored technology.

Streamline Your Workflows With an Automated Dropshipping Order Process

No matter which solution you choose, both EDI and API development can improve your order processing operations and increase customer satisfaction by automating your order fulfillment process.

You just need the right way to connect them. 

Partnering with a dropship automation solution like Flxpoint can automate many aspects of the dropshipping order process to help you save time and resources while efficiently scaling your business.

To learn more about how Flxpoint can help you optimize your business through automating your dropshipping workflows, talk with an expert.