VendorBridge is ostensibly free for HSN, but David's Cookies pays a per-transaction fee to Mercury Commerce that naturally gets baked, as it were, into the cost of the company's products. While none of the parties involved volunteered to disclose the per-transaction cost, Tress does note that Mercury has lowered the fee twice as the cookie company's transaction volume has increased. And he emphasizes that David's Cookies still feels the additional cost is justified, even though the company more recently has set up its own EDI system to trade information with some of its retail store customers, such as Macy's and Linens 'n Things. "It does make a difference to the price," Tress says, "but it's still worth it for us to use them versus using our own at the moment."
Indeed, Tress admits that without a third-party EDI service, David's Cookies simply would not have been able to handle the large volume of orders that a company like HSN can generate. "It would have been impossible," he says. "It's not a luxury. We would not have been able to meet [HSN's] requirements without assistance."
For HSN, the VendorBridge connection has proved fruitful as well. HSN's Weber points to the reduction in time and effort required to start trading with new partners. How significant a reduction? "It really depends on the capabilities of the vendor," he says. "But let's say that generally the people with which we use VendorBridge would not be EDI capable, so in order for them to become EDI compliant and get tested and ready to go, it would take no less than six weeks. With VendorBridge, again, depending on the vendor's capabilities, they could be up and running within a week."
The shopping network currently uses Mercury Commerce to connect to about 100 different companies, or about one-third of the total number of suppliers with which HSN has drop-ship relationships. (Drop-ship accounts for about 12 percent of the company's total units shipped.) Most, though not all, of the companies with which HSN connects through VendorBridge are smaller companies, typically without their own IT shops.
HSN does not mandate that any of its suppliers go with any particular third-party EDI service provider. Asked what distinguishes VendorBridge from the other EDI services, Weber says that Mercury Commerce has differentiated itself by providing a variety of useful services. "For example, we have a requirement that the vendors are to ship within X number of days of receipt of the orders," Weber explains. "Mercury will send out notices to the vendors saying: 'These orders are open. I haven't received a confirmation of shipment from you. You're going to be out of compliance if you don't respond.' That in itself was a big improvement in the process."
Finding the Right Cookie Mix
Both Weber and Tress agree that using a third-party EDI service provider has been largely without challenges, technical or otherwise, to the extent that, in separate interviews, both described the connection process as "straightforward." Good thing, too, since David's Cookies believes that this retail side of its business will be expanding the company already has signed on to sell product through Macy's Web site, also using VendorBridge, and it has signed up with Amazon.com, which will require using Amazon's own site to pull down order information.
Tress acknowledges that as David's Cookies network of distribution channels continues to expand, it could be a challenge to meet a host of different connection requirements imposed by different customers, although as of yet that is not a problem that keeps Tress up at night. "Yes, it's going to be difficult to have to log into 50 different sites every day to pick up orders," he says, "but at the moment it's not something I'm worried about."
For HSN's part, Weber says the company sees drop-ship continuing to be an important component of the company's overall fulfillment process, but not necessarily a growing component. "We're really at a good mix of drop-ship versus HSN fulfillment," he says, adding, "There's a certain percentage that you want to maintain so as not to cannibalize on the capacity of the warehouses, so we really are at the level at which we would like to be."