How food and beverage retailers can protect profits by streamlining back-office processes.

Online food and beverage shopping has enjoyed a huge surge in popularity during the pandemic as shoppers opt to stay home and stay safe.

Despite the boom, however, food and beverage retailers are still struggling to transform popularity into profit. This is due to ever-increasing downward pressure on grocery delivery margins.

Electronic data interchange (EDI) is proving to be the ace in the pack for many food and beverage retailers looking to streamline their back-office processes. Simplifying supply chain and trading partner management, for example, is unlocking new efficiencies and making it easier to turn a profit.

Find out more: What is EDI?

The meteoric rise of food and beverage home delivery

Ecommerce took two decades to go from zero to around 7% of total UK grocery sales. Due to the pandemic, however, ecommerce’s market share have ballooned from 7% to 13% in just eight weeks.

Even in parts of Europe that have been slow to adopt ecommerce, interest has picked up sharply. Researchers at Bain estimate that both German and Italian online grocery sales doubled during the pandemic and now account for 2.9% and 4.3% of the total, respectively.

The fly in the ointment, however, is the huge commitment in resources home grocery delivery requires. Sainsbury’s chief executive Simon Roberts summed the challenge up recently, saying Covid-19 was “moving sales out of our most profitable convenience channel and driving a huge step-up in online grocery participation, our least profitable channel”.

The profit margins on moving perishable items around the country are relatively slim. They typically account for just 3% to 5% of earnings before interest and tax, meaning that the more online products food & beverage retailers, such as Sainsburys, deliver the greater they will cannibalise their own net profit.

Food and beverage home delivery is the new normal

If anything, the home delivery conundrum is set to intensify. Waitrose and M&S are currently slugging it out online while arch disruptor Amazon is promising free grocery delivery by the end of the year. Meanwhile, recent research by UBS found that 71% of UK respondents said they will shop online “as often or more after the Covid -19 situation improves”. Based on other survey evidence, Bain estimates that between 35% and 45% of the recent increase in online sales will turn out to be permanent.

So, faced with an increasingly entrenched challenge around profitability, what are food and beverage retailers to do?

In a sense, the multiple pressures being felt in the retail sector right now constitute the perfect storm for which modern EDI solutions were designed.

Cloud-based EDI – fast, accurate and cost effective

EDI can transform many of the underlying labour-intensive and error-prone processes that impact profitability. Thanks to process digitisation and automation, EDI solutions take fluctuating workflows and orders in their stride.

Put simply, EDI helps to ensure food and beverage orders are processed as efficiently and cost-effectively as possible through the retailer’s trading partner network. This spans from manufacturer and wholesaler to the store or distribution hub before they go out to the customer.

Cloud-based EDI ensures trading partners’ computer systems (such as ERP) can talk to each other electronically and automatically. This speeds up the document exchanges (such as ASNs and invoices) needed to complete transactions. It also ensures these documents are accurate and provides a real-time view of proceedings.

Find out more: The benefits of EDI

Onboarding trading partners faster with EDI solutions

Cloud-based EDI ensures new trading partners can also be onboarded in a fraction of the time compared to fragmented email and Excel-based processes.

This means retailers and wholesalers can enjoy new levels of supply chain agility as they swiftly chop and change trading partners to ringfence slim profit margins and ensure continuity of supply.

Cloud-based EDI solutions are now within reach of SMEs

Recent advances in technology, and transaction message-free EDI models, mean cloud-based EDI solutions are no longer reserved for the bigger brands. They are now within easy reach of tier two and three suppliers.

Covid and other factors are intensifying the trend to online home delivery. Uncertainty around Brexit continues. In this environment, food and beverage retailers who ignore EDI, risk missing out on competitive advantage at a time when opportunities may be few and far between.

Resetting the way trading relationships work will not be easy. But when it comes to the technology for achieving cost-efficient document processes, Transalis eDI™ remains the go-to solution for supply chain management.


If you feel you would like to Get Started with a cloud-based Transalis eDI™ link to Transalis eDI™ Solutions or you can reach us on 0845 123 3746 (UK) or +44 1978 369 343 (INT).

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