The rise of data-led decisions in eCommerce

As data-driven decisions become the norm across all industries we can expect more online and multi-channel retailers to increase the use of EDI platforms. Today, a data-driven enterprise has the best chance to succeed, especially in a challenging market.

Considering this, retailers need to consider using their existing EDI infrastructure to redeploy their own data via smart software integration. An integration like this can perform complex automations that improve sales and reduce costs.

But how can we implement this kind of integration without disrupting business, while also delivering a short time-to-value? 

departmental integration

Recent disruptions from the COVID pandemic and shipping industry have given retailers good reason to rethink their methods. 

Technological solutions now promise to solve all the problems of market uncertainty for us. These solutions seemed extravagant before; now they’re starting to look very prudent investment.

The growth of eCommerce and omnichannel shopping is a huge factor in the evolving retail landscape. It was already a big force in the shifting market dynamics. When the COVID pandemic took hold, shoppers moved instantly to online-only shopping for the foreseeable future. Many retailers who were considering an online/omnichannel enterprise have been pushed into its head-first. 

Ecommerce is great, but sales are a lot less predictable than physical retail. Online trends change quickly, and there’s no ability to guide shoppers with the traditional merchandising tricks. There’s also no clear guidance for retailers about where a customer will make a purchase. Shoppers might see an item in-store, but order online, or they may order online but want to pick it up from a physical store. 

This makes it hard to have the right stock in the right place. 

For eCommerce and multi-channel retailers, achieving end-to-end visibility of the supply chain is becoming an essential way to keep the right stock on the shelves. It’s possible to achieve this kind of visibility with a free flow of data.

The trend towards continuous digital transformation is pervasive. Almost every business now recognizes that this is the best hope for survival. Consumers now conduct more shopping via digital avenues, meaning that the balance of retail has shifted too.

Electronic Data Interchange (EDI) offers retailers the big advantage of being able to send and receive data about orders, invoices, advance ship notices, bills of loading, customs documents, and much more. This data is usually handled by automated processes that result in increased efficiencies and reduced errors. If retailers want to use EDIs to their full potential, the next step is to link this with automated decision-making processes about stock replenishment, allocation, and reordering. 

By integrating the EDI data with the inventory management system, it’s possible to gain efficiencies with data-driven automated decisions that are always right. The simple EDI system then becomes the foundation layer of a much more complex mechanism; one that enables powerful automations that can revolutionise retail operations.

Electronic Data Interchange (EDI) offers retailers the big advantage of being able to send and receive data about orders, invoices, advance ship notices, bills of loading, customs documents, and much more. This data is usually handled by automated processes that result in increased efficiencies and reduced errors. If retailers want to use EDIs to their full potential, the next step is to link this with automated decision-making processes about stock replenishment, allocation, and reordering. 

While adopting EDI solutions is greatly beneficial for ecommerce retailers, by integrating the EDI data with the inventory management system, it’s possible to gain efficiencies with data-driven automated decisions that are always right.

The simple EDI system then becomes the foundation layer of a much more complex mechanism; one that enables powerful automations that can revolutionise retail operations. Some of the benefits such integration has are:

  • First, it’s much easier to make the right inventory decisions when data is leading the way. Connecting the data flows between retailers and wholesalers results in a better (more accurate) flow of stock. 
  • The advantages for the retailer are cost reductions in the supply process and more responsiveness to consumer demand. A data-led approach means that real consumer actions are represented by datathat triggers supply and inventory decisions. 
  • Ultimately, this makes it easier for the retailer to have what the consumer wants. Wholesalers also benefit from this unburdening of processes by automated systems. They have a clearer picture of changing demands, and they can feed data back to their suppliers too.
  • Another big advantage is the time saved from automating replenishment and ordering. 

In a nutshell, this integration builds a closer partnership between stakeholders – and retailers achieve more than simple efficiency.

business intelligence for retail

We’ve already the main advantages of EDI integration: faster ordering, accurate (automated) replenishment, lower error rate, reduced administration costs, increased operational agility and responsiveness, and improved relations with partner companies and stakeholders. 

But there is another big advantage that everyone can appreciate – and that’s a massive reduction in waste.

With data taking the lead, operational decisions about stock can be more finely calibrated to actual demand. The result is that what gets delivered is what’s going to be sold. Nothing more and nothing less. 

While Stockouts are a missed opportunity for retailers and suppliers alike, Overstock hurts everyone. It’s bad enough for the retailer who needs to recoup capital via markdowns and clearance events. But overstock doesn’t stop there. Without any data about consumer demand, manufacturers have no reason to reduce production – leading to mountains of waste. 

With data-driven decisions, the retailers will never have significant overstock (outside of a planned, well-defined margin). Furthermore, the data is fed further up the chain to ensure that the flow of stock matches the rate of consumption. With enough transparency and collaboration, this means that manufacturers can receive and act on early demand signals. They can then ensure they don’t overproduce in the first place. This effectively eliminates the ‘need’ for waste in our system altogether.

Of course, there is a huge financial benefit from reduced waste. Much more importantly though, is the fact that mountains of unused clothing and shoes will not need to go into landfill sites – or get incinerated. Everyone’s happier.

And – of course – waste reduction is something all stakeholders can experience in the office too – because less time is wasted on tasks that are better suited to a machine. 

If you’ve already implemented an EDI solution, it’s very easy to move to automated ordering. This saves time on manual order processing and guarantees error-free order processing. The key to unlocking all the efficiencies we have discussed is data. Data brokers play a vital role here, because of the richness of the data they hold. Retailisation has partnered with data brokers to harness the untapped potential of retailer’s data. This is something that all partners can benefit from. With the data leading the way, it’s easier to make the most impactful decisions and actions – automatically.

Robbie Tiesinga , Head of Sales
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