164. EDI 101: What is EDI and How to Implement It

EDI 101: What is EDI and How to Implement It.

Jordan Buckner: [00:00:00] As you launch in retail, most brands will start by taking orders manually via email, phone call, or even text. But once they start working with larger retailers, they'll usually require you to process orders via EDI. How do you get started with EDI, what is it, and how do you make it work for your brand?

I've invited on Dipti Desai, who is the co founder and CEO of Crstl, which is working to modernize EBI and make it accessible for emerging CPG brands to help answer these questions, provide an overview of what you need to consider, and how it can be most helpful for you. Dipti, welcome. 

Dipti Desai: Thank you, Jordan.

Jordan Buckner: So, I've been really excited to see your platform. I know you've been working kind of within the space a lot. I mean, just even to start the conversation, I would love for you to give an overview of like, what does EDI even mean, and then what is it? 

Dipti Desai: Yeah. Absolutely. EDI stands for Electronic Data Interchange, and really it's a data language that provides a series of rules [00:01:00] following which you can basically help two businesses communicate with each other or share data with each other.

So the analogy that I often use is that it is kind of actually very similar to the English language where there are rules. For how you can construct a sentence or a question. So, for example, if I said, Hey, Jordan, how are you? That's deemed grammatically correct. But if I said or asked, Hey, Jordan, how you are?

You would probably pause for a second, right? And because that doesn't quite sound right. So that's really what EDI is. It's a, it's a data language that helps businesses you know, follow sort of a grammar or a syntax so that they can exchange data or information with each other. Very quickly, what I don't believe it is, because I don't, you know, think that's what it is, is it's not a technology.

It's really a protocol and a means of business communication. 

Jordan Buckner: And I think at a practical level, as it relates to most food and beverage founders, this comes into play, right, when you work in the retailer. They will be submitting orders to you through an [00:02:00] EBI, so that it's electronic, it's all in one place, and it's not pieced together in, like, E mails with PDFs attached to it, right?

Like it allows you to interpret all the orders that come in so you have them in one place. 

Dipti Desai: That's exactly correct. And what it also to your point, what it also then does is allows the mechanism by which you can, as a food and beverage business owner, communicate back and forth with the retailer around.

The status of the shipment and also then be able to invoice the, the retail. 

Jordan Buckner: Yeah, I like that. So it's also a two way communication. So let's kind of take a step forward. You're like working with a new retailer, like a target of the world or anyone like that, and they say, Hey, we need you to, do you have an EDI provider?

If not, we need you to get set up. Do retailers have specific EDI providers that you have to work with, or can you work with any provider? 

Dipti Desai: Yeah. It actually turns out that. For the most part you know, as a food and beverage business owner or really, you know, the business owner of any brand, supplier, manufacturer, co manufacturer, really anyone that has a physical product [00:03:00] looking for distribution you have a choice.

It may seem like retailers might be mandating a specific provider, but actually what in those cases when, when that does happen, what they're really saying is in order to get onboarded to us, the retailer, you have to. Do some testing, right? And for that testing solution, they might have chosen somebody on their end to perform the testing.

What that is not to be confused with is you have to use the same company performing the testing to then also be the company that helps you transact with this retailer on an ongoing basis, right? So once the testing is usually a one and done process. And so your whoever EDI provider whichever EDI provider you decide to go with, They should have the know how to, to test with this company.

But otherwise, it is not also the same company that you need to work with to actually be able to transact with the retailer, say with Target in this case. And to also answer the other question you asked is [00:04:00] you know, some retailers may have a short list of providers, you know, that they have worked with in the past.

That is not to say other providers that are better suited to the business owner's needs may not exist outside of that list. And, and actually some retailers maintain an arm's length distance and they actually don't recommend anyone one way or another. So it's best to, you know, talk to Others in your network, maybe to see who they've worked with or, you know , look up other sources social media, et cetera to 

Jordan Buckner: you've now met, like, gonna know, you know, Your company is relatively new.

Has there been any hurdle with brands that you worked with in getting set up with retailers or has it actually been pretty streamlined? 

Dipti Desai: So one of the things that we did in the very early stages of the company necessarily is figure out how we were going to enable businesses to transact with retailers.

What would that even take from a technical perspective, from a onboarding and testing perspective, etc? Thank you. We did a lot of homework up front and now what we find that we are scaling our business and [00:05:00] scaling the existing businesses on our platform and obviously acquiring new customers is that a lot of that upfront homework that we did is really paying off.

So you know, it would it was sort of an intense understanding process on our end and really being tight with what that onboarding process was going to be and that customer experience ultimately was going to look like. But the customers on our platform, I think have enjoyed really strong success.

Not just being able to successfully onboard with the retailers that they initially came to us for. But since then adding new retailers and marketplaces you know, to Crystal as they continue , to grow their business. 

Jordan Buckner: Yeah. I think that's one of the concerns that a lot of founders will have, right?

Especially if they, this is like one of their first big opportunities of like. Oh, if I don't go with one of the recommended providers, will I be at a disadvantage? 

Dipti Desai: Yeah, I mean, it's the, you know, no one got fired for buying IBM, right? As the seeking cause. So which is not to say that there probably aren't way better solutions you know, better suited , to the [00:06:00] customer need.

But that is a very understandable That they have, but you know, , rest assured that there is a bit more choice on this front than one might initially believe, but yeah, rest assured that there are options that would be a really good solution for the business.

Jordan Buckner: So I know you kind of mentioned that. EDI provides kinda a two-way communication. Can you walk through, so like you go through the process, you're, what does onboarding look like with a retailer? About how long should you expect it to take? I know kind of varies based on your provider, but what's kind of the approximate range.

Dipti Desai: Yeah, you're exactly right. it does vary by provider and at least at Crystal, we. Are very focused on the customer experience as it relates to onboarding, both in terms of the, you know, the experience the customer ultimately has but also internally how we build tools, features processes, automations, et cetera.

So at least I can speak for the Crystal side of things, our SLA is two weeks or less. We often find that customers actually, and I [00:07:00] think there was, you know, some material kind of more publicly available where our customers on their own said how they actually bought. Onboarded to the retailer that they were looking to work with in a week, right?

So, so, but to set expectation, we typically tell customers or we tell customers that the typical onboarding time is two weeks or less. 

Jordan Buckner: Yeah, I think that's big cause I've heard from other founders that, you know, it's taken a month to two months to get set up. Which, of course, you don't want anything to delay the process because everything already takes longer than expected.

So you don't want to throw in more variables there. 

Dipti Desai: Yeah, absolutely. And I think it is yeah, it's definitely an important metric we track occasionally, you know, due to unforeseen reasons. You know, a longer timeline like you described happens, but that at least in our experience has been that outlier case.

So 

Jordan Buckner: then once you're set up, what does that EDI process look like from beginning to end for an order? Right? Like an E, a retailer is submitting a purchase order to you. How does that show up? Is it like [00:08:00] there's a dashboard on the platform typically that you'll see the orders in and what can you do with it?

Dipti Desai: Yeah. Absolutely. So, yeah. So once the business has been the brand has been onboarded to the retailer and Crstl takes care of , the onboarding in this example then it's actually very similar to receiving an email in your Gmail inbox, actually. So Crystal has the Web application and you as the brand will get your own unique instance and log in to Crstl.

And when you log into Crystal you know, when that first purchase order has been sent by the retailer, it will appear in your Crystal application, just like your very first email , in your new Gmail inbox might. And we have built in all of the many business rules that come with being able to fulfill this order right?

So there's a few different examples. I'll just quickly touch on a couple, but there might be a case where, and, and by the way, you know, a purchase order is, they're not all the same, even from the same retailer, they're not all the same, right? So for instance some might [00:09:00] be that they need to be shipped to the warehouse.

Some might be that they actually are drop shipped and will be sent directly to the consumer. In some cases, actually, it's a direct store delivery order. So, you know, knowing which order type it is, is pivotal in the, in the context of being able to work with retailers. And then actually, at least on our platform, we have taken a lot of pain up front to build the custom software workflow you know, layers and the automations, depending on.

the many factors of a purchase order, right? Like, for example, where is it being delivered? And then there are a few other nuances, like some may send one purchase order, and in reality, it contains You know, 25, 30 purchase orders within it, and we unbundle each of those purchase orders and present it as a new role in the SaaS application, almost like if someone sent you one email, but it really contains 30.

We actually do the work to unbundle and show all of those 30 emails, if you will in our SaaS application so that the next steps pertaining to [00:10:00] the. You know, sending the shipment notice and printing the GS1128 labels, sending the invoice back, handling any PO changes, et cetera, become a whole lot easier.

And then there are some other cases as well where, you know, one purchase order comes in, but really it is supposed to ship to 30 different or, you know, 20 different locations, right? So in that case, There are other things to for us as a software provider to consider to make the lives of the customer a lot easier.

For example, we should have the capability capability to support multiple shipment notices associated with the purchase order. And of course, those multiple shipment notices will each have their own invoice, which means we have to be able to support multiple invoices linking back to a single purchase order.

Oh, and PO changes might come in associated with that PO and, you know, other things might happen and we have to be able to be linking and syncing all of that data , in real time or near real time, right at all times. So those are some examples you know, of the workflow, but at a very high level it's [00:11:00] really.

Receiving the order sending back the shipment notice, printing out all of the GS1 128 labels right, that the retailer expects in compliance with their requirements. Sending back an acknowledgement, sometimes that's required, sometimes that isn't. And then sending back an invoice. That is probably the simplified overview of the, of the workflow.

Jordan Buckner: Yeah, that's really helpful. You know, it goes back to, thinking back to my days running my brand, T Squares, where we did not have a EDI provider, even though we were working with retailers like Whole Foods. And we would receive all the emails from UNFI, KE, Whole Foods via email. I had to be very diligent to like, make sure I didn't miss one, if there were like three in a day, I had to make sure I didn't just look at two of them, because they weren't all in one place, and then inputted those into a custom built Google Sheets that we had set up, but that had like limited rules associated with it.

And it was just a mess and like at the smaller level was like manageable, but as soon as anything new was added, like the whole [00:12:00] thing would break. And so there's definitely something that, that would have been really useful , for me to have had doing it. Now, I'm kind of curious then, right? Like when should a brand get set up with an EDI provider?

Is it something that like every brand needs to do today? Should you wait until you have the first retailer that requires it? What should we expect? 

Dipti Desai: Yeah, it's you know, one of the interesting macro trends actually in the last couple of years has been that retailers are asking or mandating suppliers, brands, merchants to get on EDI very early on in the journey.

You know, in part, that is to get on a digital workflow that ultimately is better and manageable for the brand to your previous point. But it is also the case that the retailer themselves need to be able to digitize their own workflows. And be able to wrangle all of these different shipments, right, coming to their warehouse.

Because guess what, if they sent you the purchase order via email and you responded with the shipment updates via email, somebody [00:13:00] at their end is having to keep track of all the very many shipments that are going to appear at their warehouse, right? And so they need to streamline their supply chain as well.

And they work with, you know, often work with thousands of suppliers. , so there is generally a very high need for digitization and automation on this front, which I think explains some of these macro shifts in the last couple of years. But otherwise, there's no sort of single answer, if you will, but what we see commonly happen is depending on a certain retailer or distributor, they will typically give the brand, you know, a month or two, three months of grace period during which they will send the invoice by email.

But during that window, they're also expecting that the brand is also getting onboarded to an EDI provider and about after month three or so can start receiving orders via EDI and managing it. On that, on that workflow. You know, in some cases there isn't necessarily such a mandate. And so then it becomes a function of how many different you know, retailers, marketplaces, or sometimes known as trading partners, [00:14:00] the brand is working with and just how manageable they find their workflow to be.

Another reason that brands end up adopting a system like this is actually more for downstream syncing with. You know, their inventory management systems or accounting systems, right? Because it's one thing to be able to handle the full life cycle of a purchase order via email if the retailer allows it.

But they often then find that it's actually very painful to, you know, keep their inventory records straight or their books cleaned. So that also actually sometimes ends up being the forcing function for a brand deciding that, look, it's actually time for us. To make some of these investments up front because our volumes are really going to grow from here on out.

Jordan Buckner: And then how much, once a brand gets set up with a EDI provider, what's the kind of range they should expect to see for a brand? Maybe they're starting with their first retailer. What's the pricing range for how much they'll typically cost them? 

Dipti Desai: Oh yeah. This part I really think, you know, varies.

By provider, and this is where it's actually [00:15:00] very important for the brand to be understanding a few different things, right, which is any everything from time to on board to are you being presented with a really low price today, only to, you know, see something very egregious happen at the end of your one when contract for your to renews, for instance.

There's also other details around is your solution provider actually. Taking care to simplify the data that is coming from the retailer. So this is a little bit of a jargon, so I apologize, but there's a lot of what they call kind of qualifiers, if you will, in the EDI specification that a retailer provides.

That's totally the job of, I think, a solution provider like us to really understand and simplify for the brand. They shouldn't even really have to understand. What this qualifier thing even means. However, some solution providers, EDS solution providers, actually all they do is and not saying that there is not, you know, some tech involved here, et cetera, but really what they do is they [00:16:00] take the data that came in from the retailer, translate it, right.

And then send it back at the other end. And they haven't done any of the. Enhancement, enrichment, simplification of the data that a business owner needs to actually make sense of this data, right? So if that work hasn't been done up front by your solution provider, it presents a lot of challenges in you just simply even being able to understand in plain English.

What is this even saying? So to give maybe a bit you know, specific example of it. If your solution provider hasn't made the language simpler then you may not understand that. Really, what this code is asking for is what is the shipment address for this, right? Because in the way the EDI specification is written, there are some codes associated with it, which we don't think the business owner should have to understand because they're in business.

to, you know, in the food and beverage context, make the best products, the tastiest, most delicious, healthy, fun products out there, right? That's really what they should be focusing on. And we should then be [00:17:00] enabling them to take care of all this , other stuff. So, so that's actually a, a pretty important part for folks to notice, not to mention other factors like.

You know, customer service and responsiveness and ease of use of the application and the ability to integrate with other critical systems like the WMS system or the accounting system or the inventory system, et cetera. 

Jordan Buckner: Okay. Yeah, so I'm thinking too that like brands should be aware of, usually there's like maybe a monthly fee for the platform.

There could be fees per retailer in some situations, fees kind of per orders. And so while it is variable, I think, you know, it's important to like, make sure you're asking questions on all the different views across the entire life cycle of, of working with that EDI provider so that you can then make sure you have a clear understanding of what the, the fees are.

I know a lot of others are working with even like distributors or there's a whole nother thing. There's a lot of hidden. Costs and variable costs. But it's something important to make sure [00:18:00] you're like asking for a complete look so that you can compare because one provider might say like, Hey, we're only, you know, so and so dollars a month, but then there's all these extra fees that, that aren't included.

And so, you know, doing so to get a clear picture. 

Dipti Desai: Yeah, absolutely. Well said. 

Jordan Buckner: Awesome. Well, Dipti, thanks so much for being on today and sharing about EDI and helping our founders. I'd love for you to share just a You know a minute around some of the areas that makes Crystal unique and different as an EDI provider in supporting emerging food and beverage brands.

Dipti Desai: Yeah, absolutely. We actually have a a very fast growing number of all, all types of food and beverage brands. Many of them you know, came to us when they were entering retail for the first time. And quite a number actually migrated from another provider to us. Nonetheless, we've seen a lot of different type of, types of food and beverage brands at this point on our platform and they transact with a variety of different retailers and distributors, marketplaces, et cetera you know, , through Crstl.

there are about a handful of, you [00:19:00] know, factors that we really focus on because we learned, you know, during our market research process. As something that they'd really care about, right? So in, in no particular order, because, you know, most businesses care about the same things, but maybe a little bit more than others about some factors.

So everything from, you know, time and cost to onboard, to customer service, to how well these integrations work. We have quite a few customers that actually come to us because their existing provider is not able to successfully connect them with an external system, for instance. There's also a pretty significant data access piece.

So beyond you know, being able to complete the workflows and the Crystal application, sometimes it actually makes sense to perform these integrations. Workflows around, you know, sending shipments and printing the labels and invoices, et cetera. And actually, you know, maybe their ERP or in their WMS, right?

And so because we have an extensible product, in other [00:20:00] words, we are able to use our API to link with these external systems, that is something they love that they can, they have the flexibility to start you know, all of their business and their workflows using our SaaS application, but then as their business grows and matures and they bring in ERP You know, into into the fold or have multiple fulfillment providers that they're able to sync and link.

Systems and companies through, through crystal, right. And on the pricing front you know, there is a, a good number of brands. Like I said earlier, that started with us when they were fresh to retail. And in large part, the, you know, it shows crystal because our pricing is, you know, we don't, we don't.

We don't necessarily lead with the lowest price. I don't think that's the idea, but we lead with the best value, right? And a lot of these emerging brands signed up with that because when they saw what we offer, you know, how we charge and that we don't nickel and dime it's a very easy to, you know, what you see is what you get.

And often actually what we sold is. Way less than what [00:21:00] you realized you're getting are, you know, I think some of the reasons why you know, Fluid and Bev brands and, you know, other, other categories and sizes end up gravitating towards us. 

Jordan Buckner: Dipti, thanks so much for being on today and sharing about EBI for our brands.

If there's any questions that you have, I'll also link the information for Deepti and her team in the show notes and you can reach out if you have any questions on getting started. Thanks so much , for joining. 

Dipti Desai: Thank you, Jordan.