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EDI Orders with Shopify. Compliance, automation, inventory and chargebacks.

Learn how to navigate the world of X12 EDI as a retailer and avoid chargebacks. Discover the steps to automate your processes and ensure smooth transactions.


Background

Depending on retailer you may find a retailer telling you that you need to support EDI which is a standard based on X12 standards. EDI is a term used broadly, but it's at its core a set of processes and procedures to receive orders, acknowledge you plan to ship them, actually ship them + provide receipt to the buyer with GS1-128 Barcodes and then finally invoice the retailer for the order.
 
It seems daunting at the outset if you haven't done it before, but rest easy, it's more familiar than you may realize. However, get it wrong and you may be in for some chargebacks


 

Web Portal vs Automated Integration to IMS, OMS, & WMS

Some EDI vendors offer a "web portal" so you can handle EDI via a website UI. This is a great option when you are just starting out and if you have low volumes of orders and low inventory complexity. But be careful, if you miss any steps, you may be in for chargebacks and risk not getting new orders.
 
 
 
There are a few phases to EDI, integration and automation in order of how you should focus on automation:
 
  1. Retailer interest / buyer interest
  2. Inventory Allocation
  3. Fulfillment
  4. Finance
 
 

Step 1: Retailer Interest

Not much to say here, you first have to find someone who wants to buy and sell your goods.

While initially manual, automation can be introduced later. Here's how:

Automate product listings: Integrate your product catalog with B2B marketplaces or retailer portals, automatically updating available items and prices.
Lead nurturing campaigns: Set up automated email series to keep potential retailers engaged and informed about your offerings.
 
 

Step 2: Allocate inventory once a buyer expresses interest

Typically as relationships start, buyers will notify you ahead of time of their expected order and you'll need to allocate some of your inventory to prepare for the order. The order may not come for weeks or months.
 
In this step, you can use ChannelApe's wholesale location and B2B allocation feature to allocate some inventory in your warehouse to wholesale which will then automatically remove it from your eCommerce location with a relevant memo so you know why eCommerce is reduced. As your warehouse receives inventory or ships orders, the allocation remains consistent until you either un-allocate or ship a B2B order against it.
 
 
 

Step 3: Integrate EDI with fulfillment partners

Now that you've allocated inventory up front, you'll want to un-allocate after shipment. You can do this manually or, integrate the fulfillment process direct with your fulfillment warehouse.
 

In the fast-paced world of fulfillment, efficiency and accuracy are king. That's where GS1-128 labels step in, playing a crucial role in streamlining the entire process. These tiny barcodes packed with information act as the DNA of your products, carrying data like Global Trade Item Numbers (GTINs), batch numbers, and expiration dates. This allows for:

    • Automated identification: Scanners quickly read the information, eliminating manual data entry and reducing errors.
    • Faster processing: Warehouses can whiz through receiving, picking and packing, accelerating order fulfillment.
    • Improved inventory management: Real-time tracking of individual items ensures accuracy and reduces stockouts.
    • Enhanced traceability: Recalls and product inquiries become smoother thanks to readily available product details.
    • Seamless supply chain collaboration: Standardized GS1-128 labels ensure smooth information exchange between all partners.

Simply put, GS1-128 labels are not just barcodes; they're the key to unlocking efficiency, accuracy, and transparency in the fulfillment process, benefiting both businesses and consumers alike.

Your retailers will expect them for all of these reasons.

 
Real-time fulfillment data: Integrate your fulfillment system with EDI, automatically updating allocation and sending status updates to retailers as orders progress.

Exception handling: Automate workflows for handling discrepancies, cancellations, or delays, notifying both parties and triggering necessary actions.
 

Step 4: Invoicing and finance

There are a few ways to handle this. 
 
Once the order is shipped, manually create the invoice in an EDI web tool. You'll want to make sure to take the warehouse shipment and multiply the quantities shipped by the price on the Purchase Order
 
Or one of the most common approaches to automate the invoice is to take the 856 - ASN and multiply the quantities shipped by the price on the 850 - Purchase Order to generate an 810 - Invoice to send to the retailer upon shipment. Then send a copy via email, export or other means to your finance team to enter into their financial system. This is the fastest way to get paid and is quite accurate.
 
The last approach is to combine the first two in a variety of ways.
 
You could:
  • Create the invoice manually in your financial system then have that send as an 810 - Invoice to the retailer. (slower to get paid unless you invoice the same day as shipment)
  • Use the automated approach above to create the 810 from the 850+856 then export that to both the retailer and financial system at the same time.
 
 
 

Chargebacks

In the context of retail x12 EDI, a chargeback (also known as an expense offset) refers to a financial penalty imposed by a retailer on a supplier for non-compliance with their trading partner agreements or specific EDI transaction requirements. These penalties are essentially fees that aim to recover the additional costs incurred by the retailer due to the supplier's non-compliance.

Here's a breakdown of how chargebacks work in retail x12 EDI:

Reasons for chargebacks:

    • EDI document errors: This could include missing or incorrect data, invalid formats, or non-adherence to the retailer's specific guidelines.
    • Late or early shipments: Deliveries outside the agreed-upon timeframe can disrupt the retailer's operations and incur additional costs.
    • Shortages or overages: Incorrect product quantities can lead to inventory discrepancies and impact sales.
    • Other compliance issues: Failure to meet other agreed-upon terms, such as labeling requirements or promotional details, can also trigger chargebacks.

Impact of chargebacks:

    • Financial: Chargebacks can significantly impact a supplier's profitability, especially if they occur frequently or for large amounts.
    • Relationship: Frequent chargebacks can strain the relationship between the supplier and retailer, potentially leading to lost business opportunities.

Avoiding chargebacks:

    • Clearly understand the retailer's requirements: Thoroughly review and comply with the retailer's specific EDI guidelines and trading partner agreements.
    • Implement robust data validation: Ensure your EDI system accurately captures and transmits data in the required format.
    • Monitor EDI transactions: Regularly review EDI transaction reports to identify and address any potential issues before they lead to chargebacks.
    • Maintain open communication: Proactively communicate any potential challenges or delays to the retailer.

Remember, avoiding chargebacks is crucial for maintaining a smooth business relationship with your retail partners and safeguarding your profitability. By understanding the triggers and implementing effective compliance measures, you can minimize the risk of incurring these financial penalties.

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