EDI Moves Mountains For Retail Distributor

Few retailers can avoid implementing electronic data interchange (EDI) if they want to play in the big leagues.

Many large companies insist on receiving orders from resellers electronically. The problem is EDI is out of reach for many smaller businesses.

Peregrine Outfitters, a small wholesale distributor of outdoor products, used a hosted EDI solution from Bac-Tech to send orders to large suppliers such as L.L. Bean.

This is why hosted service provider Bac-Tech Systems set out to fill the EDI gap for smaller businesses, says Mike Dodier, co-founder and vice president of sales and marketing at Bac-Tech, New York. For a relatively small fee,$350 per month to a few thousand per month based on the amount of transaction sets and customers handled,Bac-Tech sets up and hosts a system that takes purchase orders coming out of ERP or legacy systems and translates the data into 12 standard EDI formats such as X-12 and EDIFACT.

Peregrine Outfitters, a wholesale distributor of outdoor products, for example, needed to send orders via EDI to its large suppliers such as L.L. Bean and also wanted to allow its 2,000 retailers to send orders electronically.

But when Bob Olsen, president and CEO of Williston, Vt.-based Peregrine Outfitters, looked at the price tag of a traditional EDI implementation, the investment was more than his small company could handle. "It was a substantial investment in software and staff, and we were not comfortable spending that much money," Olsen says.

Olsen's tale is not uncommon, Dodier says. "Our goal was to make EDI affordable and easy to implement for any and all companies," he says.

In 30 days, Peregrine Outfitters was trading with its first partner on Bac-Tech's Web/ACE hosted EDI offering built on Progress Software's technology. Peregrine Outfitters did not have to hire a staff to maintain the solution or lay out cash for software and hardware.

The real return on investment came when a customer asked Peregrine Outfitters to start shipping orders to its 100 stores separately as opposed to a central warehouse.

"In terms of data entry, the savings [using Bac-Tech's EDI service] is huge in this situation when we went from one central order to hundreds," Olsen says.

The amount of overall orders coming to Peregrine Outfitters went from three to five a day to a hundred a day because the EDI system made it easy for retailers to do business with the distributor, Dodier says.

The potential return on investment for solution providers is significant as well, says Jim Walter, president of ECbridges, an EDI solution provider in Pleasant Hill, Calif.

ECbridges has been showing potential customers a demo of Bac-Tech's hosted EDI solution, with 700 businesses showing interest in the service. ECbridges is putting together quotes for many of its 160 customers, Walter says.

"We are presenting the demo to boards of directors and they look at it likes it's a cool car, with all the bells and whistles, for a very small fee. It's going to take off like gangbusters," Walter says.

The solution transfers data much faster than other products on the market, Walter says.

In one case, Dodier and Robert Bacchi, co-founder of Bac-Tech, had to demonstrate its product against two established vendors for a large customer. Each were asked to transfer 20,000 purchase orders. In the end, it took Bac-Tech's service 18 minutes while it took one competitor six hours and the other four.

Bac-Tech is working with six solution providers now reselling and co-branding its services. ECbridges, for example, works with Bac-Tech on the West Coast.

Solution providers pay Bac-Tech a piece of the recurring revenue based on the amount the partner is charging the customer.