Understanding Dropship EDI and its Pros and Cons in the Fashion Industry

According to industry experts, global retail ecommerce is expected to surpass nearly $2 trillion in 2017, and there is no sign of a slow down. Almost 18% of those sales are apparel related goods including all kinds of clothing like dresses, tops, swimwear, lingerie, pants and shoes. It also includes accessories like belts, hats, and handbags. This represents millions of transactions every day involving a vast, complex maze of manufacturers, suppliers, distributors, logistics companies, retailers and technology players working together to ensure that the product gets to its buyer. For these digital transactions to work, retailers and manufacturers use electronic data interchange (EDI), an automated electronic document that allows two disparate and independent organizations to communicate effectively. Among the documents exchanged are purchase orders, inventory information, advance ship notices and invoices.

For today’s retailers to be successful, they need to keep costs down. Traditional retail involves large big-box outlets supported by a network of warehouses that store goods from manufacturers until they are needed at the retail locations. E-commerce has spun that traditional method of doing business on its head, allowing retailers to eliminate paper and conduct more efficient business online using EDI. An increasing number of retailers from Macy’s, Nordstrom and Bloomingdales, to Cabela’s, Target and Overstock are now using drop shipping strategies that put the onus of warehousing and fulfillment on the manufacturer while they provide marketing and ecommerce services. Dropship allows manufacturers to hold onto their products and then ship them as online orders from customers as they are received.

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AIMS 360’s EDI integration is specifically developed to facilitate dropship programs, allowing manufacturers to take advantage of EDI and easily and efficiently transition to managing their own fulfillment process. The right software can help manufacturers increase shipping accuracy and event tracking, improve communications, automate document processing and reduce charge-backs and manual data entry errors.

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