This past year, for the first time ever, online sales in the U.S. surpassed in-store purchases. An annual survey byanalytics firm comScore and UPS found that U.S. consumers are buying more things online than in stores. The survey, now in its fifth year, polled more than 5,000 consumers who made at least two online purchases in a three-month period.
According to its results, shoppers now make 51% of their purchases online, compared to 48% in 2015 and 47% in 2014. Cyber Monday achieved a new record with $3.45 billion spent online, a 12.1 percent increase over 2015. This was the largest online sales day ever in the United States.
Most people have become very comfortable with, and even reliant on, buying products online. For many of us, it is now our preferred method of purchasing goods.
But are you aware of what is working 24/7 “behind the scenes” to streamline and automate the entire process? No, it is not Santa’s Workshop of Elves! It is a technology called Electronic Data Interchange (EDI) that has been deployed by companies for decades, long before the Internet became a household word.
In fact, EDI helps most people without anyone even knowing it! Each time you visit a doctor, when she files a claim with your insurance company for payment, the request is transmitted electronically using EDI. When you use Tax Software to prepare your tax return and hit the Send key to transmit it to the IRS, the software converts your data into an EDI format and delivers it electronically in seconds.
EDI is used to communicate business transactions via documents in standard electronic formats with your Trading Partners. The data generated from each transaction is “mapped” to EDI data segments and then transmitted to the Trading Partner. When it is received by the Trading Partner, the EDI data segments are “mapped” to their application files and the data is processed accordingly. If set up properly, this can all be accomplished without any human intervention.
So how does EDI help with online ordering? Online Retailers rely on numerous suppliers to stock adequate inventories of the items they sell to you, the end consumer. They require their suppliers to ship the items directly to you. Even mighty Amazon does not stock all of their items for sale in their own warehouses.
Suppliers use electronic catalogs (in EDI we call them 832 Catalogs) to post their items online with product descriptions, pictures, and pricing information. This information can be used to populate the item information on websites. The suppliers send their available inventories (via 846 Inventory Inquiries / Advice) to the online retailers so they can communicate, on their websites, how many of each remains for sale.
When you place an order, the website sends it to the supplier via an 850 Purchase Order with codes to indicate that the order should be drop-shipped directly to you. The supplier acknowledges to the retail website system via an 855 Purchase Order Acknowledgement that the order was received and confirms that the item will ship.
When your order is ready to ship, the supplier sends all the shipping information via an 856 Advanced Shipping Notice to the online retailer. It then sends you a “Your Order Has Shipped” e-mail message. The supplier also sends the online retailer a bill for the item shipped via an 810 Invoice.
There is even an EDI document, called an 820 Remittance Advice, that informs the supplier that payment has been made. It can also instruct the retailer’s bank to initiate a funds transfer to the supplier.
Faster than Santa can lay his finger aside of his nose, give a nod, and rise up the chimney, EDI can help to make sure that your orders are processed and delivered in time to place under the tree for Christmas morning.
Learn more about how to thrive in a world full of supply chain challenges in our free eBook: Supply Chain Insights
