Basics of Drop-Ship EDI for Retailers,
Suppliers, 3PLs and More

To keep up with consumer demands, more retailers are turning to suppliers, vendors and third-party logistics providers to help them with fulfilling eCommerce orders by automating drop ship EDI. With eCommerce document automation, retailers and their trading partners can make more sales and improve consumer engagement by being able to update the order process in real time – it’s a win-win! Read on to learn what is drop-ship EDI.

Drop-Ship EDI Basics

Unlock more trading partner relationships, profitably ship single parcels and exceed consumer expectations with an EDI drop-ship program.

What is Drop Shipping?

Drop shipping is an inventory and supply chain management method in which the retailer offers a product for sale but does not keep goods in stock. Instead, the order information is sent to the third-party for fulfillment and shipment directly to the customer.

Who Can Benefit from Drop-Ship EDI?

Vendors, suppliers, distributors, logistics providers, retailers and eCommerce stores – Everyone in the supply chain benefits from successful drop shipping programs because it opens up possibilities for more sales and revenue.

How does drop ship EDI work?

To see where drop ship EDI is used, follow the path of a consumer ordering an item to when it’s delivered to their house.


Consumers place orders with the retailer


Retailer sends order to supplier

Supplier will receive an EDI 850 and send an acknowledgement (EDI 855) to let the retailer know of any order discrepancies and their ability to fulfill the request.


Supplier processes the order

The supplier will pick and pack the consumer’s order using shipping documentation with retailer’s brand, including branded packing slips and labels (UCC-128).


Retailer provides order updates

Retailer notifies the consumer with continuous order and shipment information.


Supplier ships to the consumer

Supplier alerts the retailer with shipment information (ASN/EDI 856) and submits an invoice (EDI 810).


Consumer receives product

In the event the consumer doesn’t love the item, supplier and retailer handle returns (EDI 180) as needed based on agreed-upon process.


Constant communication

Suppliers provide detailed item information to the retailer and timely inventory updates so the retailer can set up items within their item system and on their website.

What Is Dropshipping? Learn from Individuals Who Live It Every Day

If you ask any drop-ship supplier, they can recall their first direct-to-consumer order and the anxiety they felt. They can tell you how they prepared, what they’d do different and which investments were worth it. SPS Commerce asked more than one hundred of its experienced drop-ship customers about their first orders, as well as how they’ve evolved and automated their drop-ship fulfillment since that time.