Drop Ship Integration 101: API, EDI, FTP
Retailers have been capitalizing on drop shipping in droves. According to recent reports from the eCommerce Drop Shipping Standards, as many as one-third of merchants are now utilizing drop shippers as a means of offering more goods and bolstering their fulfillment options. However, implementing these partners is no easy task, and in fact, many merchants are not getting as much out of their drop shipping initiatives as they could be, simply because they do not integrate them properly.
One of the common issues faced by retailers is the issue of exchanging data between themselves and suppliers. As Internet Retailer noted, drop shipping is in some ways still in a “wild west” phase, with retailers still growing accustomed to utilizing these third-party fulfillment partners. As a result, everyone seems to have their own way of communicating and exchanging data, which may drive up costs and hinder drop-shipping relationships.
For merchants looking to build out their drop shipping programs, it is not uncommon to run into situations where potential partners are using one drop ship integration type and will want the merchant to switch. Or perhaps the seller has already opted to use a specific integration type and is looking for other drop shippers that use a similar solution or would be willing to bend to the retailer for the sake of making the deal.
Here are three of the most common drop ship integration types and a look at who would use them:
Web API is commonly used by large or high-volume drop shippers, that will provide APIs that can connect to commerce management software. The key advantage of an effective API is that these solutions can more effectively track important details, such as order status, shipments and cancelations.
At the same time, APIs often require a one-time integration, which can cost merchants some money. This may also result in increased time and management. At the end of the day, using a Web API is best suited for large distributors and high-volume drop shippers, or else the integration cost may be severe.
EDI is a specification for sending data electronically and is generally considered to be old or legacy technology. While it is rather archaic compared to other integration types, it is also incredibly common among major brick-and-mortar retailers that have been in operation for a long time and have worked with drop shippers in the past – think sellers such as Walmart, Target and Home Depot.
Many drop shippers and retailers have moved on to new integration types, but EDI specifications are still common in long-standing relationships with big merchants. EDI is effective for sellers that are looking to encourage distributors to follow a set of defined specifications. However, EDI integrations can be difficult to maintain in the long haul without large investments, particularly because these solutions often charge a data fee for information going across these networks.
FTP-based integration is incredibly common, with merchants setting their eCommerce systems up to pull and push files to dedicated FTP servers on a regular schedule. This type of drop ship integration is very straightforward and requires the least support and management of all the different integration types. Initial integration is painless and retailers can easily setup and manage these connections themselves. With the right eCommerce solution, merchants can set up file formats specific to the drop shipper as well.