eCommerce APIs: Big-Time Inbound and Outbound Benefits

December 11, 2016

Of the many words that have been spoken and written about eCommerce and its impact on the retail supply chain, the following may turn out to be the most profound: Product availability and delivery timeframes, not product price, will be the competitive differentiator.

Success in the digital marketplace depends on retailers’ ensuring that there are no online stockouts. Customers effectively need to know that their product is available, and that it can be delivered—often for free—within an acceptable (and increasingly customized) window. This makes order execution more critical than perhaps at any time in retail history. A product’s price point will remain a factor in a customer’s decision-making. But it will not be as important as it once was.

In fact, a recently release study by DHL reported that …

  • 78% of online shoppers want to control delivery times.
  • 68% of online shoppers want to control the day on which their deliveries show up.
  • 88% of online shoppers want direct access to shipment tracking, 84% wanted to know the name of the delivery company and 85% said that direct links to shipment tracking portals were an essential part of any ecommerce experience

Yet execution could prove a challenge for retailers and providers accustomed to the traditional style of product distribution. Today, orders come from anywhere and at any time, making fulfillment operations more non-linear—and complex–than ever.

In this environment, competitive advantage will accrue to the retailers with the most robust I.T. networks. Real-time connectivity between shipper, retailer, carrier, warehouse and distribution center is essential to ensuring accurate product availability, which is the key to delivery consistency. Just as critical to retailers and providers, who hope to make money in the new environment, is that a solid IT underpinning will help optimize product flows. This will enable fulfillment to take place from the most efficient and profitable starting point possible.

How does this big-picture dovetail into the world of the eCommerce APIs?

For the uninitiated, a definition of API may be in order. To quote programming lingo, APIs represent the “interfaces through which interactions happen between an enterprise and applications that use its assets.” To translate into non-IT prose, API’s are the connectivity layer that enables automated systems to communicate insantly and synchronously without the need to route data through a third-party interface such as Electronic Data Interchange, or EDI.

Big-time Inbound Benefits

APIs provide a wide range of benefits to shippers and brokers in their daily interactions with motor carriers. Because API platforms are cloud-based and typically sold as acess to third party “Software-as-a-Service,” or SaaS, networks, they are easy-to-deploy, flexible and cost effective. With one-to-many network solutions, API set-up process is a relatively inexpensive one-time event that can be finished in less than a week, resulting in access to an entire network of capacity providers. Conversely, point-to-point EDI set-ups that can take months to complete, result in significant blacklogs and usually carry with them hefty set-up fees.

APIs are fast replacing the legacy EDI systems, which are ill suited for the demands of today’s hyper-connected supply chain. Increasingly, we hear from companies that the information exchanged through EDI protocols is unacceptably slow. There’s a reason for that: EDI is set up to accept data in batches, and information doesn’t get transmitted until the batch quota is reached. As an analogy, think of an airport shuttle bus that must wait for all the seats to be filled before the driver can leave the terminal. That, in essence, is what happens with a typical EDI transaction.

Web service technology empowers retailers and their supplier networks to communicate critical data in a synchronous, real-time manner, resulting in end-to-end visibility and agile, real-time inventory management. That means, suppliers can better meet JIT, lean deadlines and must arrive by dates (MABD) and retailers can reduce stockouts without bloating inventory levels. Ultimately, the products consumers want are more readily available at a lower cost.

Big-Time Outbound Benefits

EDI was a functional protocol when distribution was managed in a linear fashion, and at a slower, pre-digital pace. However, omnichannel fulfillment requires lightning-fast transmissions to connect all stakeholders, and to meet the demands of consumers for immediate product availability and delivery status updates. EDI can be a liability in supporting today’s ecommerce consumers. One sure-fire way to get customers to abandon a shopping cart, and to never return to that site, is to not make accurate shipping and delivery information available to them the split second they want it.

Small-package carriers FedEx and UPS have been all-in on API for years. It is no surprise that they—along with the U.S. Postal Service—today move the bulk of e-commerce. But the LTL and truckload industries are finally starting to see the wisdom of converting their platforms to API from EDI. This is a critical step if those carriers want to get a fair share of the action from e-commerce, and to diversify from their traditional industrial markets, which are showing only tepid growth.

Though e-commerce growth remains strong, it still only accounts for 12 percent of total U.S. retail sales. That will undoubtedly increase as large brick-and-mortar retailers migrate more of their sales and marketing efforts from the physical storefront to the digital storefront. And it will significantly kick-start demand for omnichannel fulfillment services to support digital ordering. If LTL and truckload carriers, as well as their freight brokers, want to play with the big parcel boys, they will need the type of technology best suited for the task. That is API.

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