EDI (Electronic Data Interchange)

What Is EDI?

EDI, or electronic data interchange, is a set of standard formats that lets companies send business documents directly between computer systems. Instead of emailing a PDF purchase order, a retailer sends a structured EDI file that the supplier's system can read automatically.

Large retailers commonly require suppliers to trade documents through EDI before they can sell in their stores.

How It Works

Each EDI document type has a numbered standard. In the United States, the ANSI X12 set is widely used, and a few documents come up again and again in retail:

• EDI 850: the purchase order from the retailer.
• EDI 856: the advance ship notice describing what is being shipped.
• EDI 810: the invoice billing the retailer.
• EDI 997: a functional acknowledgment confirming a document was received.

Why It Matters for Ecommerce Brands

For a brand moving into retail, EDI is often a requirement rather than a choice. A retailer may expect purchase orders, ship notices and invoices to arrive in its exact format, on time, with data that matches what was physically shipped. Errors can lead to delayed payment or compliance fees.

Most brands do not build EDI themselves. They use an EDI provider that translates documents and connects to each retailer, and they work with a 3PL that can receive retail orders and return shipment details.

For example, when a natural foods chain sends a purchase order, the EDI provider passes it along, the warehouse ships the cases, and an advance ship notice goes back to the retailer before the shipment arrives.