E-Commerce and EDI

E-Commerce and EDI

What is E-Commerce?

E-Commerce can be viewed as being a virtual market place, whereby all transaction that is carried out in the physical world is also available via the Internet. It involves mainly distribution, buying, selling, marketing and servicing of products or services through the use of electronic means such as the Internet, and other computer networks. E-Commerce involves not just businesses, but individual consumers and corporations. It generally utilizes the World Wide Web at some point in the transaction’s progress, but then also simpler computer tools such as databases and email.

Currently, it is foreseen that e-Commerce will continue to grow due to the increased familiarity of users with electronic business and commerce possibilities. The development of e-commerce over the last thirty years means that it has moved from meaning of EDI and EFT, which were introduced successfully in the late 60’s and early 70’s.

During the 1980’s, this expanded to the growth and acceptance of credit cards, automated teller machines and telephone banking. From the 1990’s onward, it includes ERP (enterprise resource planning), data mining and data warehousing. Currently it is becoming a wider description, due to the increased presence of web based activities. Basically it is coming more to mean web commerce, in that individuals and enterprises are tending to purchase goods and services over the World Wide Web. This generally occurs with secure connections that provide encryptions and special server protocols. Customers are able to use virtual shopping carts, and pay through electronic means, using credit card authorizations.

The last ten years has seen meteoric growth of electronic transfers and business possibilities. However, this was initially stunted at the beginning of general Internet use in the mid 90’s due to poor security systems. Thus it was not always a wise choice to purchase over the Net at that time. Many industries today are dependent on their electronic frameworks, and so support systems such as backend systems, applications and middleware have also developed. Some of these include broadband and fiber-optic networks, supply-chain management software, customer relationship management software, inventory control systems and financial accounting software. Currently, e-commerce is entranced in so many parts of life, from the ability to order groceries over the Internet to purchasing plane tickets around the world.

E-Commerce and EDI

Although it appears these two systems may not be able to play together, the opposite is true. In this current climate of utilizing all the technologies available to make businesses more accessible and more user friendly, EDI can combine with e-commerce to do just that. While EDI is well entrenched as a major framework in many larger businesses, it is also being adopted by smaller businesses to increase their ability to make trading partners. EDI provides a fast and efficient way to exchange information. Currently, there are standards known as AS2 which govern Internet EDI transactions. The use of EDI through Internet modes is becoming more popular, as it does not require the same amount of set-up, costs or applications as for bigger corporate enterprises.

The advantages of implementing EDI within the Internet environment, is that trading partners can be more efficiently and effectively communicated with, it reduces the amount of errors, and therefore improves cost effectiveness. It allows businesses to trade with larger enterprises that require EDI as a communication medium. Plus Internet EDI is relatively inexpensive, and does not carry with it the ongoing costs of other forms of EDI transmission. This can enable big and small companies to save potentially millions of dollars. Instead of mailing out catalogues and brochures, companies can send emails, and advise clients of discounts, and allow them to download information from the Internet.

This is made possible by EDI, which also allows retailers and distributors to have speedily and reliable communications. Retailers can easily determine product availability of a distributor prior to placing an order. If the distributor is out of stock temporarily, the order can be passed directly to the manufacturer, with the distributor receiving credit for the sale. When products are drop-shipped to retailers and distributors, an automatic requires for their stocking requirements can be generated. Orders are encrypted for Internet transmission and then converted to EDI format for internal processing. Thus EDI has become and integral part of business which has evolved from transactions between businesses, to those between individuals and businesses. It enables a certain level of interactivity, which creates closer relationships between all parties involved.

What is B2B?

B2B is an acronym for a business practice that has been in place for some time called Business-to-Business. B2B transactions are generally between companies, whereas transactions targeting individuals are called currently called B2C. Many organizations may have both components of this system in their corporate schemata; however, it is not unusual for a company to specialize in B2B services or sales. Usually the transactions will occur between mass producers and mass buyers of products within a category. Often, buyers will be cold called by a producer trying to generate more productivity and sales.

Generally, the vast majority of products and services could be seen as B2B transactions. This application provides community management, profile management, and sophisticated security management. It is seen as a marketing strategy which attempts to increase profitability by promoting their products and services to other businesses. B2B marketing communications is to back up the sales effort. This effort can include advertising, public relations, direct mail, trade show support, sales collateral, branding, and interactive services such as Web design and search engine optimization.

The marketing involves various steps of creating a presentation of the company which can be then thrust toward potential trading partner companies. First a positioning statement must be produced to outline what the company offers. Next, the message needs to be developed - this will be the main messages that will most strongly explain to potential customers what the company does, and how it will be beneficial. Then a campaign plan must be created to promote the company, with the best output return potential. Then find an agency and explain what the objectives, target market, target audience, product, campaign description, current product positioning, graphical considerations, corporate guidelines and whatever else is important to the company. Then as with any campaign, the concept must be analyzed to see if it fits with the goals of the company. Then results must be measured, and changes made if necessary.

EDI within B2B

EDI is popular within the scope of B2B, as it enables fast and efficient communication to occur. And that appears to be an essential element of B2B. This marketing and business platform requires that each business is able to contact potential and current customers with ease. The easy transmission of EDI creates a simple and direct form of access to trading partners. When the Internet became more advanced within the business framework, many speculated that EDI would not survive. However, it has evolved to work within the Internet framework, and become further established as a corner stone to business practice. As such, with B2B’s strongly marketing driven approach, EDI cannot be out of the picture.

Many business corporations employ EDI whether in entrenched systems utilizing backend systems, or for smaller users that are able to utilize Internet EDI. The coming of new technology only makes EDI stronger and more flexible. And as such, new businesses must if they wish to participate in many and strong business relationships, employ EDI as a resource rather than as a burden. It can increase inventory turns, decrease inventory, speed flow of information between businesses, improve product and sales forecasting, improve time-to-market, increase customer satisfaction, decrease shipping costs, reduce product returns, improve cash flow, integrate supply chain, and result in improved relationships with trading partners.

With these benefits, it can hardly be ignored. Currently the trend for Internet EDI compatibility is growing rapidly, due to the demand from larger companies for the use of Internet EDI software that adheres to AS2. It allows larger companies to reduce the cost of VANs, while maintaining flexibility of communication. Internet EDI allows smaller businesses that are unable to support traditional EDIs to communicate with larger enterprises.

As Internet EDI expands, and allows for more document types to be transmitted, it is perceivable that a great majority of EDI and non-EDI data will be exchanged through the Internet. And since B2B is a largely Internet based approach, EDI should be a major consideration for any business looking to increase their profitability and create trade relationships that can expand with the vision of the business.