What EDI Is (and Isn't)
EDI is a structured data format governed by a published standard. Every field, every value, every segment follows rules. When a retailer sends you a purchase order via EDI, their system and your system are speaking exactly the same language — no interpretation required.
EDI stands for Electronic Data Interchange. It is the standardized method businesses use to exchange documents — purchase orders, invoices, shipping notices — electronically, in a format that any computer system can read and process automatically.
EDI was developed in the 1960s to coordinate logistics during the Berlin Airlift, and became the dominant standard for B2B document exchange by the 1980s. It is still the primary way large retailers, grocery chains, automotive manufacturers, healthcare networks, and logistics providers exchange documents today.
If you want to sell to Walmart, Target, Home Depot, Kroger, ACE Hardware, Amazon Vendor Central, or virtually any major 3PL or distributor — you need EDI. It is not optional.
ANSI X12
North American standard. Used by virtually all U.S. and Canadian retailers, distributors, and logistics providers. (Covered in this guide.)
EDIFACT
International standard used in Europe and much of the rest of the world.
Every Business Document Has an EDI Number
The X12 standard assigns a number to every type of business document. These are called transaction set identifiers. A few you'll see constantly:
| 850 | Purchase Order |
| 810 | Invoice |
| 856 | Advance Ship Notice (ASN) |
| 997 | Functional Acknowledgment |
| 855 | Purchase Order Acknowledgment |
When someone says "we need you to send an 856," they mean: send us a structured, standard-format Advance Ship Notice before your shipment arrives.
Before two companies start exchanging EDI documents, they agree on which document types they'll exchange, what fields are required, and what formats and values those fields must contain. This is called a trading partner agreement. Most large retailers formalize this in an implementation guide — a detailed document that specifies every requirement.
Implementation guides vary by retailer. Walmart's requirements are different from Target's, which are different from Home Depot's. Compliance with each retailer's specific guide is mandatory.
See the trading partner directory for retailer-specific EDI requirements.
How EDI Is Transmitted
The EDI document itself (the structured data) is separate from the method used to transmit it. Three transmission methods are in common use:
AS2
Most CommonEncrypted, certificate-based protocol over HTTP. Real-time with delivery receipts (MDNs). Required by Walmart, Target, Home Depot, Lowe's.
SFTP
Secure file-based transfer. Files placed in a designated folder on a schedule. Common with 3PLs and distributors.
VAN
LegacyThird-party EDI network routes documents between partners. Like an EDI post office. Per-transaction fees. Still widely supported.
Modern integration platforms like APIXX abstract all of this. You connect your systems to APIXX; APIXX handles AS2 certificates, SFTP connections, VAN routing, and everything else at the transmission layer. You never deal with it directly.
The Supplier Flow — You Are Selling to a Retailer
This is the most common scenario for mid-market companies new to EDI. Here's how the complete order cycle works, document by document.
EDI 850 — Purchase Order
Retailer → You
- •Contains: PO number, item numbers, quantities, prices, ship-to, requested ship date
- •You must respond within 24–48 hours (varies by retailer)
EDI 997 — Functional Acknowledgment
You → Retailer
- •Confirms receipt and structural validity only — NOT fulfillment ability
- •Sent automatically within seconds in a well-configured system
EDI 855 — Purchase Order Acknowledgment
You → Retailer
- •Your business response: accept, partially accept, or reject
- •Can include line-level substitutions, quantity adjustments, backorder dates
- •Most retailers require within 24 hours of the 850
EDI 860 / 865 — Purchase Order Change (If Needed)
Retailer → You (860) / You → Retailer (865)
- •Retailer sends 860 to modify the order
- •You respond with 865 to accept or reject changes
EDI 856 — Advance Ship Notice (ASN)
You → Retailer
- •Must be sent BEFORE shipment arrives — often within 30 minutes of carrier pickup
- •Contains: carrier, tracking, item-level detail, carton config, GS1-128 label data
- •Must match the physical shipment exactly
EDI 810 — Invoice
You → Retailer
- •Must match the 850 exactly — same items, quantities, prices
- •Any discrepancy = invoice rejection or chargeback
- •Retailer sends 997 back to confirm receipt
EDI 820 — Payment Remittance (If Used)
Retailer → You
- •Retailer's payment notification — which invoices, what amounts, any deductions
- •Enables automated cash application in your ERP
+ Inventory & Replenishment Documents
Inventory Inquiry/Advice
Current stock levels. Required by Amazon Vendor Central and most drop-ship retailers.
Product Activity Data
POS/sales velocity data sent by retailer for forecasting.
Planning Schedule
Forward demand forecast for production planning.
The Buyer/Purchaser Flow — You Are Buying from Suppliers
Same documents, opposite direction. You're a distributor, retailer, or large company purchasing from suppliers.
- 1.
EDI 850You send to your supplier — initiating the purchase order
- 2.
EDI 997Supplier sends back — you know they received it
- 3.
EDI 855Supplier sends — you know whether they can fulfill and on what timeline
- 4.
EDI 860 / 865You send 860 if changes needed; supplier responds with 865
- 5.
EDI 856Supplier sends — you know what's coming; warehouse prepares receiving
- 6.
EDI 810Supplier sends — invoice flows into AP system automatically
- 7.
EDI 820You send — payment remittance closes the loop
+ If You Use a 3PL for Fulfillment
EDI 940 Warehouse Shipping Order — You → 3PL (authorize a shipment)
EDI 945 Warehouse Shipping Advice — 3PL → You (confirms shipment went out; triggers your outbound 856)
+ If You're Managing Freight
EDI 204 Motor Carrier Load Tender — You/3PL → Carrier (request pickup)
EDI 214 Shipment Status Message — Carrier → You (in-transit and delivery status)
EDI Document Reference Table
All 23 common transaction sets, organized by category.
| EDI # | Name | Direction | Used By | Description |
|---|---|---|---|---|
| 850 | Purchase Order | Buyer → Supplier | Retail, B2B, 3PL | Initiates the order cycle. |
| 855 | PO Acknowledgment | Supplier → Buyer | Retail, B2B | Confirms acceptance, partial acceptance, or rejection. |
| 860 | PO Change Request | Buyer → Supplier | Retail, B2B | Buyer requests changes to an existing PO. |
| 865 | PO Change Acknowledgment | Supplier → Buyer | Retail, B2B | Supplier responds to a PO change request. |
| 856 | Advance Ship Notice (ASN) | Supplier → Buyer | Retail, 3PL | Detailed shipment manifest sent before delivery. |
| 753 | Request for Routing Instructions | Supplier → Buyer | Retail | Supplier asks retailer how to ship the order. |
| 754 | Routing Instructions | Buyer → Supplier | Retail | Retailer specifies carrier and routing requirements. |
| 810 | Invoice | Supplier → Buyer | All industries | Electronic invoice requesting payment. |
| 820 | Payment Remittance | Buyer → Supplier | All industries | Payment notification, enables automated cash application. |
| 812 | Credit/Debit Adjustment | Both | Retail, B2B | Chargeback notices, credits, and allowances. |
| 846 | Inventory Inquiry/Advice | Supplier → Buyer | Retail, Drop-ship | Current inventory levels shared with retailer. |
| 852 | Product Activity Data | Buyer → Supplier | Retail | POS and sales velocity data from retailer. |
| 830 | Planning Schedule | Buyer → Supplier | Retail, Manufacturing | Forward demand forecast and release schedule. |
| 862 | Shipping Schedule | Buyer → Supplier | Manufacturing, Retail | JIT shipping schedule with specific release dates. |
| 997 | Functional Acknowledgment | Both | All industries | Confirms receipt and structural validity. |
| 999 | Implementation Acknowledgment | Both | Healthcare, some retail | More detailed acknowledgment than 997. |
| 940 | Warehouse Shipping Order | Buyer → 3PL | 3PL/Fulfillment | Instructs 3PL to ship an order. |
| 945 | Warehouse Shipping Advice | 3PL → Buyer | 3PL/Fulfillment | 3PL confirms shipment was sent. |
| 943 | Warehouse Stock Transfer | Buyer → 3PL | 3PL | Notifies 3PL of incoming inventory transfer. |
| 944 | Warehouse Stock Transfer Receipt | 3PL → Buyer | 3PL | 3PL confirms receipt of inventory transfer. |
| 204 | Motor Carrier Load Tender | Shipper → Carrier | Logistics/TMS | Requests carrier to pick up a shipment. |
| 210 | Motor Carrier Freight Invoice | Carrier → Shipper | Logistics | Carrier's invoice for freight services. |
| 214 | Shipment Status Message | Carrier → Shipper | Logistics | In-transit and delivery status updates. |
Why EDI Compliance Is Hard — Chargebacks Explained
EDI isn't complicated in concept. The challenge is compliance — and the financial cost of getting it wrong.
What Chargebacks Cost
- Flat fee violations
- $50–$500 per incident
- Percentage-based
- 2–3% of invoice value
A supplier with 3 retail partners, 200 orders per month, and a 5% chargeback rate loses $500–$30,000/month.
The fix isn't vigilance. It's automation.
The vast majority of EDI chargebacks are caused by human error — someone forgot to send the ASN, entered the wrong quantity, missed a timing window. Automated EDI eliminates this entire category of error. You can't forget to send a document that your system sends automatically.
What "Managed EDI" Means
In-House
Pros: Full control, deep customization.
Cons: Dedicated EDI team, significant upfront investment, months per new trading partner.
Self-Service Platform
Pros: Faster than in-house, lower cost.
Cons: You own trading partner compliance, exception management, and requirement changes.
Managed EDI — APIWORX
APIWORX owns trading partner onboarding, mapping, compliance testing, transmission, and exception handling. You connect your ERP and APIWORX does the rest.
For mid-market companies whose core business is not EDI operations, managed EDI typically costs less than in-house staffing and goes live faster than building it yourself.
EDI + ERP Integration — The Last Mile
Getting EDI working is only half the equation. Many companies set up EDI and still end up with manual work — because their EDI system isn't connected to their ERP or order management system.
Retailer APIXX Your Systems │ │ │ │── EDI 850 (PO) ──────▶│── Order created ──────▶│ ERP/OMS │ │ │ │ │◀─ Fulfillment ─────────│ Warehouse │ │ │ │◀── EDI 856 (ASN) ────│ │ │ │ │ │◀── EDI 810 (Invoice)─│◀─ Invoice generated ───│ NetSuite/QuickBooks │ │ │ │── EDI 820 (Payment) ─▶│── Cash application ───▶│ Accounting
Zero manual steps. Zero re-keying. Zero missed ASN windows because someone was out sick.
Where to Go From Here
If you've just been told you need EDI by a new retail partner, the first step is understanding what that partner specifically requires — which documents, which transmission method, and what their implementation guide says.
APIWORX works with mid-market suppliers, distributors, and brands who need to get EDI-compliant quickly, stay compliant as requirements change, and connect the whole flow to their existing systems — without building an EDI team.