What is EDI?
EDI — Electronic Data Interchange — is the standardized electronic exchange of business documents between trading partners. Instead of emailing PDFs or rekeying orders, a retailer’s system and a brand’s system swap structured documents (purchase orders, ship notices, invoices) in a common format. For brands selling into retail, EDI isn’t optional: most large retailers require it.
How EDI works
EDI replaces manual documents with structured messages that computers can read. In North America the dominant standard is ANSI X12, where each document type has a number — an 850 is a purchase order, an 856 is an advance ship notice, an 810 is an invoice. Trading partners agree on which documents they’ll exchange and the exact format (the “mapping”) each one follows.
Documents move over connections like AS2, a VAN (value-added network), SFTP, or a modern API. When a retailer sends an 850, the brand’s system ingests it as an order; when the brand ships, it sends back an 856 and then an 810. A 997 functional acknowledgment confirms each document was received.
Why retailers require EDI
Retailers run on tight, automated supply chains. EDI gives them accurate, machine-readable data at every step, so they can receive, scan, and pay without manual handling. That’s why big-box and grocery retailers mandate EDI — and enforce it with compliance programs and chargebacks for late, missing, or inaccurate documents.
For brands, EDI is the entry ticket to selling into those retailers. Done well, it also speeds up cash flow and cuts errors; done poorly, it generates deductions that eat into margin.
The core EDI documents
Most retail programs revolve around a handful of transaction sets: the 850 (purchase order), 855 (PO acknowledgment), 856 (advance ship notice / ASN), 810 (invoice), and 997 (functional acknowledgment). Warehouse and dropship programs add documents like the 940/945 and 846. See the full breakdown in the EDI transaction-set glossary.
EDI as a feature vs. a separate system
Traditionally, brands bought EDI as a standalone service or network bolted onto their ERP. The downside: EDI lives apart from inventory and orders, so data has to be synced and reconciled across systems. Endless takes a different approach — EndlessEDI is native to the operating system, so trading documents share one source of truth with inventory, orders, and fulfillment, and agents can act on them automatically.
FAQ
What does EDI stand for?
EDI stands for Electronic Data Interchange — the standardized electronic exchange of business documents like purchase orders, ship notices, and invoices between trading partners.
Do I need EDI to sell to retailers?
Usually yes. Most large retailers require EDI and enforce it with compliance programs and chargebacks. The specific documents and rules vary by retailer.
What is the difference between EDI and an API?
EDI uses standardized document formats (like X12) exchanged over AS2, VAN, or SFTP, and is the established standard retailers require. APIs are real-time, developer-friendly interfaces. Many modern platforms use APIs internally while still speaking EDI to retailers.
