Setting up an online store and selling candy to consumers over the Internet is one thing. Setting up a drop-ship operation, where you take responsibility for fulfilling customer orders received by other retailers, is quite another matter.
For a start, you’ll need a reliable way to communicate with those trading partners – to receive orders, supply them with tracking details for outgoing shipments and send them invoices, for example. And, if you want their business, it’s likely you’ll have to fall in line with the EDI [electronic data interchange] requirements they set for you. These mandates can be pretty strict, and vary enormously from partner to partner, based on the behind-the-scenes systems that they run themselves.
That’s been the experience for Candy.com, which started life in 2009 as a direct-to-consumer operation, but now makes around 90% of its revenues through wholesale and drop-ship deals with other businesses. In just a few years of providing drop-ship services, it has recruited around 70 trading partners. Customers, meanwhile, never know the difference, since they pay the original merchant and receive their goods in a box with that merchant’s labels.
The shift to drop-shipping has been a runaway success for Candy.com, but it’s had to deal with some pretty chewy EDI challenges along the way, according to the company’s CTO Gary Cifatte. The initial trickle of orders from trading partners were easily dealt with using manual data entry methods, he says, but growing order volumes as new trading partners came on board, combined with the human-error risks involved in data entry, meant a new approach was needed.
Using third-party EDI services didn’t work that well for the company. These providers weren’t sufficiently flexible in helping Candy.com to exchange different documents with different partners, Cifatte reports, and on-boarding a new partner could take months. Plus, their services were costed on a per-transaction basis and fees were starting to mount to an unpalatable degree.
In response, Cifatte decided to bring EDI in-house and implement a cloud-based integration layer, Dell Boomi, that could connect it to Candy.com’s NetSuite ERP system, which it uses for order management, order fulfillment, financial accounting and some aspect of HR. When he began researching possible integration products, Dell Boomi’s iPaas [integration-platform-as-a-service] quickly stood out on two fronts, according to Cifatte:
It has a phenomenal front-end, with an interface that allows for very clean mapping between orders and our ERP system, so we were able very quickly to grasp the concept of creating integrations. But even more importantly, Dell Boomi offers an established NetSuite connector, so a great deal of the work was done already. That was a very attractive selling point for me.
It took around six months to bring the whole EDI effort in-house and to migrate away from the existing third-party EDI service, he says. Since going live with Dell Boomi for EDI-to-NetSuite integration, Candy.com has processed in the region of 2 million EDI documents, he reckons.
As a result, Cifatte says, he and his team are able to focus more on business analytics and sales, as opposed to admin and integration development work, because their Dell Boomi-based integrations eliminate the need for customer coding, ongoing maintenance and manual order management.
But perhaps the most important benefit has been a huge reduction in the time it takes to onboard a new trading partner. Using third-party EDI services, it could take as long as six months, he says, as it’s just not the same level of priority for the partner:
But six months is a long, long time in the fast-moving world of e-commerce. What happens now is that, once we’ve filled out the paperwork and got all the partner’s EDI specifications, it takes us about a week – or five business days – to get all the mapping done for the purchase order in Dell Boomi, to receive a test order and then to start work on the fulfillment and invoicing documents, as well as the inventory updates that let trading partners know what we have in stock before they order, to avoid out-of-stock disappointment for them.
On average, we’re achieving a two-week turnaround from the start of implementation to completion of testing where we’re ready to go live pending the trading partner’s sign off. And once that arrives, we’re ready to accept and fulfill their orders – a process taken down from 26 weeks to two, which gives us 24 extra weeks of revenue from a new trading relationship.
Image credit - Candy.com
Disclosure - At time of writing, NetSuite is a premier partner of diginomica.