A standardized format for exchanging business documents electronically between trading partners.
EDI (Electronic Data Interchange) is the computer-to-computer exchange of standard business documents — purchase orders, invoices, advance shipment notices (ASNs), inventory updates — between trading partners using a standardized format. In logistics, EDI is the primary way that brands communicate with retail buyers (Walmart, Target, Nordstrom) and their 3PLs for wholesale orders.
The most common logistics EDI transactions: EDI 850 (Purchase Order), EDI 856 (Advance Ship Notice/ASN), EDI 810 (Invoice), and EDI 940/943/944 (warehouse shipping order, transfer, and receipt). Retailers require vendors to be EDI-compliant — non-compliance triggers chargebacks that can represent 2-5% of invoice value.
For brands selling into retail wholesale, EDI compliance is non-negotiable. Your 3PL must be EDI-capable and familiar with your retail partner's specific routing guide requirements (timing, label formats, packing standards). Many 3PLs use EDI middleware platforms (SPS Commerce, TrueCommerce, DiCentral) to manage these connections.
No — EDI is primarily for B2B wholesale/retail relationships. DTC eCommerce uses API integrations (Shopify webhooks, Amazon MWS/SP-API) rather than EDI. You only need EDI when selling wholesale to retailers that require it (Walmart, Target, specialty retail chains).
A chargeback is a financial penalty imposed by a retailer when a vendor fails to comply with their EDI or routing guide requirements — wrong label format, incorrect ASN timing, improper packing, missing documentation. Chargebacks typically run 2-5% of the invoice and can be devastating for small brands. Always ask your 3PL for their EDI compliance track record.
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