This post is by Christopher Khoo, Sales Director at KhooCommerce.
If you are an Amazon Vendor the question of integration is something you should be considering. What information can be transmitted and received, what does it take to connect, and what are the benefits?
Amazon Vendor has long used Electronic Data Interchange (EDI) to send and receive information about purchase orders, shipments and invoices. In Q2 2020, Amazon Vendor also launched an API, which is particularly suited to Direct Fulfillment Vendors, although the functionality of the two is roughly similar.
In this article we will explore the reasons, methods, limitations and misconceptions about integration to Amazon Vendor.
To learn more about the Amazon Vendor program in general, see Amazon Vendor Central: Everything You Need to Know.
Why integrate with Amazon Vendor?
If you have been an Amazon Vendor for any length of time, you will know that the paperwork burden can be quite large. Typically Mondays and Wednesdays place a large workload on staff to download, process and accept purchase orders.
Most companies dedicate one or two members of staff to handling POs each morning, usually with a time cost of 10-15 hours per week per account. While this varies from vendor to vendor, any account with over $2m/year in sales will likely have a large paper trail associated with it. In fact, even much smaller, growing accounts can feel the squeeze of paperwork, and it is often an overlooked aspect of joining the Vendor program.
For many, integration is the answer. “Get EDI” you are told, or encouraged by Amazon in numerous training sessions to get integrated. We’ve all been in the Amazon webinars where the terms EDI and API are thrown about and integration is seen as the “done thing”. Indeed, Amazon has been known to offer incentives and account rewards to those companies that adhere to their integration standards.
Integrating to Amazon can be a positive step in building a relationship with your vendor account manager. If you have spoken to your account manager about it, they will likely treat integration as almost a necessity if you are serious about growing your account.
Integration is about scalability
You have to assess if your current processes, with people and paper, are able to handle the level of sales that you aim to deliver in the next 12-24 months. Many people will work to grow sales by looking at ACoS (advertising cost of sale) and listing optimization without considering the demands this will place on their admin, warehouse and finance teams.
Sometimes, chargebacks and hidden costs can increase to the point of non-profitability, so increased sales does not necessarily mean increased profits without accurate and scalable processes. Without integration, you will create a bottle-neck in your operations and find yourself needing to hire more people to manage order processing.
That said, integration isn’t a magic bullet. There are limitations – namely you cannot create, upload or edit your catalog through integration, and updating product stock status is limited to once per 24 hours. Moreover, you must consider how you manage stock and inventory on other sales channels, how highly you want to prioritize Amazon compared to other retailers, and so on.
What can and cannot be transmitted over EDI?
There are six main EDI message types that are most commonly used with Amazon Vendor:
- Purchase Order
- Purchase Order Acknowledgement
- Routing Advice Request (ARN)
- Advance Shipping Notice (ASN)
- Cost Inventory Update
At a minimum, most vendors get set up with EDI to download purchase orders to their system (SAP, Microsoft Dynamics, etc.), as well as transmit invoices back to Amazon. There are a number of EDI integrators that can provide this for you, and it is a low investment, quick and reasonably effective option for downloading orders to your system.
Routing advice is typically used in North America, but less so in the EU as this applies to the collection program, which fewer companies use in Europe.
Here are some things you cannot currently transmit to Amazon Vendor:
- Product creation
- Product listing, images and descriptions
- Price change negotiations
Should you use EDI or API?
In summer 2020, Amazon Vendor launched a new Vendor API that offered a lot of similar functionality to the EDI connection. There is a very comprehensive breakdown of the functional differences on the “Getting Started” tab in Vendor Central, but overall they are minimal. EDI has a wider range across the whole Vendor functionality, while the API provides additional access for Direct Fulfillment processes.
The real choice is more about what will work with your systems, setup time, setup cost, and end goals. For example, you might have an existing B2B EDI provider who can add Amazon Vendor for you, or maybe you already have an API setup and want to use that for your Vendor integration.
Some companies have systems that are only compatible with traditional B2B EDI, while others can use RESTful APIs with no problem.
How much does Amazon Vendor integration cost?
The main question! It depends entirely on the system you are integrating with and how sophisticated you need to make it.
If you use a mainstream ERP and just want purchase orders downloading, you will probably be able to get that setup for a 3- to 4-figure amount, while a bespoke setup with more messages might require a 4- or 5-figure budget. For a worldwide, multi-system integration for a large corporation, you can expect a 6-figure quote.
Some providers also have an ongoing service charge as they have servers to maintain etc.
How long does Amazon Vendor integration take?
This is similar to the answer above – it depends on the system, number of messages and level of sophistication.
Integrating to Amazon is actually very fast. It is the interface to your ERP that is the open-ended part of the equation. You could be set up in two weeks, or six months. It really varies, particularly for larger organizations with multiple countries and different systems to integrate. Our own projects typically take four weeks.
Do we really need to integrate with Amazon Vendor?
Probably. If you’re not sure, here are some good questions to help you decide what you need in terms of a solution.
|Problem Being Assessed||Solution|
|POs take a long time to download and import into your ERP.||Get POs downloaded via integration.|
|POs take a long time to confirm in Vendor Central.||Integrate the POA message so that actions you take in your ERP are reflected in Vendor Central.|
|ASNs take a long time to create in Vendor Central.||Integrate the ASN message so that your warehouse operations send carton details to Amazon Vendor.|
|Invoices take a long time to create in Vendor Central.||Integrate Invoices (API or EDI).|
|Carton Information Compliance Chargebacks are very high.||Capture carton-level information and send via EDI in the container code (EDI Only).|
As a rule of thumb, if you answer “Yes” to any of the questions below, then integration could help you. Does your company:
- Spend more than ten hours a week on order processing?
- Spend more than ten hours a week on shipment creation?
- Spend more than five hours a week on invoice creation?
- Have sales in excess of $1 million per year to Amazon Vendor?
- Consider Amazon Vendor a future growth channel for sales and revenue over the next five years?
- Want to automate, streamline and consolidate processes related to order handling?
- Want to reduce paperwork, touch points and handling time for orders to Amazon?
My ERP can’t do either APIs or EDI. What next?
You can use a third-party interface to help with this. Many ERPs are unable to directly interface with an API or EDI but can communicate over CSV or XML, via SFTP or FTP servers.
Have a discussion with your IT team and see what inputs and outputs you can use, and discuss with an EDI/API provider and see if they can provide a middle-man interface for you.
I can’t send PO acknowledgements or ASNs. What can I do?
This is a common problem. You will need to find a way to capture the information in your system and translate it so it can be integrated with Amazon Vendor via EDI or API.
At KhooCommerce, we provide you with a way to quickly accept all orders in line with your stock levels, produce ASNs from the warehouse floor, print shipping labels, and send data back to your ERP. You might find that you are limited by your ERP, particularly if it is well established in your business and not easy to change.
Will integration help with shortage claims?
Yes, if you are capturing carton-level information and sending it via the ASN, and using License Plate* labels. There are of course other causes of shortages that integration and License Plate cannot solve, but this is a great step forward.
As mentioned previously, the challenge here is converting the packing information into an electronic format. Currently, you must use EDI to enable License Plate Receive – it cannot be done through the API. License Plate Receive also enables you to send multiple POs together in the same shipment, which can reduce shipping overheads.
* License Plate Receive (LPR) is a whole topic not covered in depth here. I recommend you see the training in “VC Support / Resource Center / Operations / Express Training / License Plate Receive” in the first instance, or get in touch with me if you would like more information.
Where do I start with Amazon Vendor integration?
First, it’s worth getting together your operations, administration and finance teams to discuss the main problems you are experiencing. Pinpoint the issues you are trying to solve, which steps take the most time, and what you want to achieve. EDI integration can help reduce the time taken to download and accept POs, make ASNs, and make invoices.
Second, gauge your internal level of need, budget and timescale. Is this a must-have or a nice-to-have project? Do you need it before a seasonal peak? Who will benefit the most from this?
Third, do some research. You might want to use an off-the-shelf integration provider, or maybe you need something a bit more tailored to you. When looking into a provider, ask yourself, “does this company really solve my problems?”
Lastly, get some demos, see how their systems work, and see if you could work with the company in question. What level of support do you need?
Is it possible to set up Amazon Vendor integration myself?
You might not need a software partner to get setup with EDI, but you will need some way of consuming and handling EDI or API messages in your internal systems, as well as capturing and exporting the necessary data from your ERP system.
You might have an IT team that is able to set up the integration for you, but typically the main problem with this route is limitations in data export from your ERP, particularly for Purchase Order Acknowledgement messages and ASNs, as carton-level information is not always accurately captured.
Key points on Amazon Vendor integration
- Integration carries a number of benefits related to automation, streamlining and scalability.
- Integration can be achieved either through EDI or API. There are not too many differences, but API suits Direct Fulfillment slightly more, while EDI has a slightly wider range of functions.
- The main choice between EDI and API will likely be determined by the ease of integrating to your current system, although you might have other reasons to choose one over the other.
- EDI integration enables License Plate Receive (LPR), which can reduce shortage claims and improve receive speed at Amazon Fulfillment Centers.
- The first step is to have a clear understanding of your internal processes and what the main problems are.
- Integration costs typically vary from 4-figure to 6-figure amounts, depending on the scale you are operating on and the complexity of the project.
- Integration doesn’t have to be scary or a long drawn-out process.
- The main reasons to integrate are to reduce paperwork, decrease manual intervention and reduce chargeback costs.
Any questions? Feel free to get in touch with me directly, or post in the comments section below.
This post was by Christopher Khoo, Sales Director at KhooCommerce. KhooCommerce is a cloud-based platform for Amazon Vendor PO management and ASN creation, streamlining and automating processes for Amazon Vendors.