Retail EDI 101: EDI Basics for Retailers, Grocers and E-Commerce, Plus EDI Advantages for Business

Learn how EDI works for retailers, grocers and e-commerce retailers. Discover why companies in the retail industry use it to help automate, improve and speed up order management and other processes. Explore the benefits of EDI for your retail or grocery business, and how it can help you work better with your trading partners.

What is EDI?

EDI Connection Concept

EDI is an abbreviation for electronic data interchange.

Using EDI, retailers, grocers and e-retailers can send information digitally from one business system to another, using a standardized format. Some of the types of business systems that EDI can connect together include e-commerce solutions, CMS, ERP, accounting software and more.

With EDI, you can exchange digital information and transactions with your vendors, distributors, 3PLs and other trading partners for greater accuracy and speed of communication. For example, you can send purchase orders, invoices and other documents digitally via EDI.

EDI digitizes order processes, transactions and communications that have been done for years with paper, fax or email. It’s a vital step to take for automation of business processes.

How does EDI work in retail? Why is it important for today’s retailers?

More and more retailers are turning to EDI to help them manage their business relationships with suppliers, vendors and distributors, and for good reason. EDI eliminates the need for faxing, phoning and emailing about orders and transactions for greater speed and accuracy, which is vital for today’s fast-moving retail world. It also ensures that all of your business systems (and those of your trading partners) are speaking the same language.

EDI Exchange Example

An example of how EDI works for retailers and grocers:

When you want to place an order with a supplier, you would create a digital purchase order in whichever system you usually use. Then, your EDI solution works behind the scenes to create an EDI version of that purchase order (EDI 850) and send it to the supplier.

Even though your supplier is likely using different technology than you, their order system will be able to correctly translate and receive the information automatically since it’s in a standardized format.

The supplier will send back an acknowledgment that the order was received (EDI 997). After the order is ready to ship, the supplier will send the advanced shipping notice (EDI 856). Once the order is completed, the invoice (EDI 810) is sent to request payment.

Benefits of EDI for Retailers, E-Retailers and Grocers

EDI provides the foundation for automated order processing and inventory management. EDI is proven to streamline and improve workflow while enhancing supply chain predictability.

Reduce data entry and errors.

Additional keystroke slows down your processes. Every instance of human intervention is a chance for potentially expensive errors. EDI reduces or eliminates manual data needs. You can even automate your order-to-invoice reconciliation process.

EDI is cheaper, faster.

A paper-based order can cost $70 or more per transaction. That cost multiplies if a decimal was put in the wrong place during data entry. Transactions via EDI can cost less than $1 to process, without the surprise costly mistakes.

More accurate forecasts.

When the documents you’re processing are correct, and the data you’re using for forecasts and inventory decisions closely resembles reality, you can make better business choices and inventory selections.

Improve inventory predictability.

Once you’re able to more accurately analyze inventory needs––thanks to EDI automation––you can reduce stockouts, surpluses and markdowns. Additionally, you may be able to identify new product and category opportunities.

Gain visibility and respond quickly.

EDI gives you better control of on-hand inventory. It can also automate the inventory inquiry process to keep you updated on item availability from your vendors. If there’s a disruption, you’ll know sooner and create a backup plan.

Focus more on your business.

Using¬ EDI solutions to automate processes frees up staff and resources. Instead of performing the same data entry task day after day after day, you can redirect them to more strategic efforts that could help your business grow.

Achieve EDI compliance with your trading partners

“Spencer’s wanted to create an environment for all of our domestic and international vendors to adopt EDI quickly. SPS Commerce helped us to achieve extremely high EDI compliance with our suppliers. Today more than 96% of all our orders are processed via EDI.”

Ann Arena, Director of Merchandise Management Systems, Spencer’s

Getting started with EDI?

If you’re new to EDI, you can either outsource your EDI operations to a provider or invest in your own on-premise system. It’s clear by the table below that outsourcing to the right EDI provider takes most of the work off your shoulders – and much of the costs, too.

Onsite In-House EDI

Q

Requires software installation and updates

Q

Requires hardware installation and updates

Q

Requires knowledgeable staff in-house for maintenance and updates

Q

Requires ongoing support and investment to preserve EDI capabilities as the business evolves

Q

You must develop and maintain maps and requirements for each trading partner connection

Outsourced Cloud-Based EDI

R

Requires no software on your end.

R

Requires no hardware on your end.

R

Dedicated staff maintains the system and updates for you

R

Your managed service provider carries out all ongoing support to preserve your EDI capabilities as your business evolves

R

When your trading partner EDI maps or specifications change, your EDI provider makes all the changes so there’s no disruption to your workflow.

How can SPS Commerce help your supplier, vendor or distributor business reach its goals?

SPS is more than an EDI provider. Our retail supply chain technology solutions can help your business automate, scale and grow with four key components:

Fulfillment EDI

Fulfillment (EDI)

Break down the silos between your different business systems, including e-commerce solution, ERP, WMS, accounting software and more to speed up processes and reduce manual data entry with Fulfillment.

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Assortment

Assortment

Meet customers’ and consumers’ growing demand to access more product information across all shopping channels. Exchange accurate and detailed product information with the SPS Assortment solution.

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Analytics

Analytics

Turn data into meaningful insights so you can win across all your channels. Uncover the insights you need to optimize inventory and trading partner performance with Analytics.

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Sourcing & Retail Network

Sourcing & Retail Network

Easily find, evaluate and onboard high-quality suppliers and brands to grow assortment. Get the right products from EDI-enabled trading partners in the industry’s leading Retail Network community and Sourcing platform.

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Community

Community

Trust your trading partner community maintenance and onboarding process to the experts. Ensure rapid compliance and faster speed to value with our proven Community development strategies.

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Gain a partner in supporting trading partner relationships

“Our vendors are excited about doing EDI with Scheels. They have done electronic fulfillment, such as EDI, with other retailers and SPS Commerce and seen the positive results. SPS Commerce’s delivery and cost model is flipping the standard EDI model on its head. Our relationship with SPS has been very good.”

Byron Snider, Information Services Leader, Scheels

Additional Retailer EDI Resources

Enter a virtual library of information about EDI for retailers, grocers and e-commerce to provide you with the product knowledge you need to power your business.

Ultimate List of EDI Transactions

Here are some of the most common documents and transactions that are supported through EDI automation.

See the Ultimate List

Five Top EDI Documents to Automate

When you automate your most-used EDI documents, it can significantly cut down keystrokes and speed up processes.

Give Me Five

Free EDI RFP Template

Use our EDI request for proposal (RFP) template to identify your company’s requirements for an EDI solution and evaluate potential solution providers.

Get My Free Template

EDI for Retailers

Discover how leading retailers are improving their supply chain efficiency with retail EDI solutions from SPS Commerce.

EDI for Retailers

EDI for E-Commerce

Discover how leading E-commerce Retailers are improving their supply chain efficiency with retail solutions from SPS Commerce.

EDI for E-Commerce

EDI for Grocers and Grocery Retailers

Discover how leading grocers are improving their supply chain efficiency with retail supermarket solutions from SPS Commerce.

EDI for Grocery

Schedule a quick 5-minute tour of our EDI solution today.

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