What is EDI Shipping? A Guide for Ecommerce

Ecommerce businesses today face mounting challenges in managing shipping and logistics. From order delays and data entry errors to disjointed communication between suppliers and carriers, the traditional approach to fulfillment can be slow, costly, and prone to mistakes.

Manual processes, especially those reliant on spreadsheets or emails, introduce opportunities for inaccuracies and miscommunication. And as order volumes grow, so do the complications. These issues not only frustrate internal teams but also damage customer experience through missed delivery windows and poor tracking visibility.

That’s where Electronic Data Interchange (EDI) steps in. EDI streamlines and automates the shipping process by allowing systems to communicate directly—sending and receiving order information, shipping notices, and tracking updates in real time. With tools like ShipAccel, ecommerce businesses can integrate EDI into their workflow seamlessly, eliminating delays and enhancing fulfillment accuracy. In this guide, we'll break down what EDI is, how it works, and why it’s an essential tool for scaling ecommerce operations efficiently.

Table of contents:

What is electronic data interchange (EDI)?
How EDI shipping works: A streamlined process
Benefits of EDI shipping for ecommerce businesses
Challenges of EDI shipping for ecommerce businesses
Best practices for safe and secure EDI transactions
How EDI can connect to shipping software
How ShipAccel™ can help ecommerce businesses with EDI shipping
The future of EDI: Transforming shipping and logistics
Why EDI shipping is essential for your ecommerce success
EDI shipping FAQs

What is electronic data interchange (EDI)?

Electronic Data Interchange (EDI) Definition

Think of EDI as a digital language that lets businesses talk to each other automatically. Instead of sending purchase orders, invoices, or shipping notices via email, phone, or fax (yes, some still use it), EDI lets systems exchange this information directly in standardized formats.Data Interchange (EDI) Definition

A good comparison is how online banking works. You don't call your bank every time you make a payment or deposit a check; the systems behind the scenes handle all the communication and confirmation seamlessly. Similarly, EDI handles business communications—like sending an invoice or confirming a shipment—between companies' systems, without the need for manual input.

For example, imagine a retailer places a bulk order for reusable water bottles from a supplier. Rather than someone having to email a purchase order and wait for a reply, the retailer’s system sends the request directly to the supplier’s system using an EDI 850 document. The supplier’s system acknowledges it with an EDI 855. It's fast, automatic, and error-free.

Across industries, EDI plays a critical role in automating routine document exchanges. Whether it's a supplier confirming a product order or a warehouse receiving shipping instructions, EDI ensures everything moves smoothly and consistently—without human intervention. In short, it turns your supply chain into a well-oiled machine.

What is EDI shipping

Now let’s zero in on shipping. EDI shipping focuses on using these digital document exchanges specifically for logistics. It covers things like purchase orders, invoices, tracking info, and even customs declarations—all sent automatically between your system and your partners'.

For ecommerce businesses, this means you can automate the full lifecycle of a shipment: from placing an order with a supplier to sending your customer a tracking number. The result? Fewer errors, faster fulfillment, and better customer experiences.

Most common EDI shipping and logistics documents

EDI doesn’t just automate one type of document—it streamlines a whole network of them, each playing a crucial role in the ecommerce shipping journey. Let’s look at how they function in real-world scenarios:

Invoice (EDI 810): Sent after the goods have been shipped, this document includes item details, pricing, and payment terms. For example, once a candle company dispatches a wholesale order, an EDI 810 is automatically sent to the buyer’s system, helping them process payment without additional back-and-forth.
Purchase order (EDI 850): This initiates the procurement process. An online pet store might use an EDI 850 to order chew toys from a manufacturer, specifying item SKUs, quantities, and delivery details—all transmitted electronically.
Purchase order acknowledgment (EDI 855): Confirms the PO has been received and accepted. In the pet store example, the supplier’s system instantly replies with an EDI 855, confirming the order is in motion.
Advanced shipping notice (EDI 856): Includes carrier details, tracking info, and item-level data. A skincare brand might rely on this to notify its warehouse of incoming shipments, ensuring inventory is received and logged efficiently.
Bill of lading (BOL): Serves as both a contract and receipt for the transportation of goods. It’s often required by carriers and is used for legal documentation in case of disputes.
Customs declaration: Essential for cross-border ecommerce, this form ensures goods are cleared by customs authorities. It contains key info like product codes and origin, helping to prevent delays at international checkpoints.
Shipping instructions (EDI 850 or 940): These outline how and where goods should be shipped. For instance, an apparel company might use it to direct a warehouse to ship winter jackets to multiple fulfillment centers.
Warehouse shipping order (EDI 940): Directs warehouse teams to pick, pack, and ship items. A tech accessories brand can use this to trigger the release of backordered chargers as soon as stock arrives.
Receipt acknowledgment (EDI 997): Confirms that a trading partner has successfully received a document. Think of it as an electronic read receipt—critical for compliance and auditing purposes.

Each document not only automates communication but also minimizes human errors, speeds up workflows, and enhances visibility across your entire ecommerce logistics chain.

How EDI shipping works: A streamlined process

Let’s bring this to life with a simple example. Imagine you run an online store that sells eco-friendly kitchenware. You receive a large order from a new corporate client. Instead of manually keying in all the order details and emailing the supplier, here’s how EDI takes over:

Order creation and confirmation: Your system automatically sends a purchase order (EDI 850) to your bamboo utensil supplier. The supplier's system receives it, checks inventory, and sends back a confirmation (EDI 855).
Document generation: The supplier prepares the shipment and generates an advanced shipping notice (EDI 856), which includes carrier info, product quantities, and tracking numbers. A bill of lading is also created and shared digitally.
Data transfer: All these documents are instantly transmitted to the warehouse and shipping carrier. The warehouse prepares the order, the carrier picks it up, and your system is updated in real time.
Real-time updates: Your client gets an automatic email update with tracking info. Your inventory adjusts automatically, and the invoice (EDI 810) is created and sent—all without you lifting a finger.

This seamless handoff between systems and partners is what makes EDI so powerful. There’s no back-and-forth phone tag, no misplaced emails, and no delays due to data entry mistakes. Just fast, efficient fulfillment.

Benefits of EDI shipping for ecommerce businesses

Let’s dive deeper into the real-world advantages of EDI shipping and why it’s becoming a must-have for ecommerce brands looking to grow efficiently and intelligently.

Increased efficiency and speed

By automating document exchanges, EDI dramatically reduces the time it takes to process, pack, and ship orders. It’s like switching from walking to riding a high-speed train—you just get there faster.

Reduced errors and improved accuracy

Ever had a customer call because their package went to the wrong address? Manual data entry is usually to blame. With EDI, the system handles the data exchange, meaning fewer typos and happier customers.

Cost savings

Fewer errors and less paperwork equal lower operational costs. With streamlined workflows, your team can focus on strategy instead of chasing down missing documents.

Real-time tracking and visibility

With EDI, every party involved knows exactly where a shipment is at any point. This makes inventory management and customer communication much easier.

Improved communication with partners

Suppliers, warehouses, and carriers all operate more efficiently when they’re working from the same data. EDI makes sure they are.

Enhanced compliance with industry standards

EDI platforms are designed to align with regulatory standards, making compliance easier and reducing legal risks.

Challenges of EDI shipping for ecommerce businesses

Of course, no technology is without its hurdles. While EDI offers big advantages, implementation does come with its own set of challenges.

Integration with existing systems

Getting EDI to work with your current ecommerce platform or ERP system can be tricky. It often requires custom development or middleware. For instance, one midsize apparel retailer struggled to sync EDI with its legacy warehouse management system. By investing in a third-party integration layer, they reduced order processing time by 40% and eliminated frequent mismatches.

Initial setup costs

Software, infrastructure, and training add up quickly. Smaller businesses may find the initial investment intimidating. A small organic skincare brand, for example, faced this very challenge. They overcame it by adopting a cloud-based EDI solution with a subscription model that scaled with their order volume—avoiding hefty upfront costs.

Vendor and partner adoption

Your EDI system is only as good as your partners’. If your suppliers or carriers aren’t on board, it can limit effectiveness. One ecommerce electronics company shared that only 60% of its vendors used EDI at first. By offering onboarding assistance and incentivizing participation, they brought that number up to 90% within six months.

Security and compliance concerns

EDI involves exchanging sensitive business data, so security is critical. Ensuring encrypted transfers and access control is essential. For example, a home décor brand using EDI experienced a close call when a partner failed to follow secure transmission protocols. After switching to AS2 communication and enforcing strict access control, they avoided further compliance issues and strengthened vendor trust.

Maintaining EDI software and systems

Like any tech, EDI systems require ongoing maintenance to stay functional and secure. This can involve updates, monitoring, and support staff. A global health products supplier shared that outsourcing EDI maintenance to a managed services provider allowed them to focus on customer experience without sacrificing technical oversight.

Best practices for safe and secure EDI transactions

Making sure your EDI system is secure and efficient isn't just a nice-to-have—it’s vital for maintaining trust, meeting compliance standards, and avoiding costly disruptions. Here are some foundational practices ecommerce businesses should follow to keep their EDI operations running smoothly and safely:

Encryption and secure communication protocols

Using secure communication protocols like AS2 (Applicability Statement 2) or SFTP (Secure File Transfer Protocol) ensures that business-critical data—such as order details, invoices, and shipping instructions—is encrypted during transmission. This reduces the risk of interception by unauthorized third parties. For example, a midsize electronics retailer saw a significant drop in data breaches after moving from plain FTP to AS2, improving customer confidence and compliance with data protection regulations.

Authentication and authorization

Strong authentication and clearly defined user roles help prevent unauthorized access. Use multi-factor authentication and unique credentials for every partner system. Role-based access controls ensure that only approved users can view or manipulate sensitive documents. For instance, a global health brand limited access to customs documentation to senior logistics personnel, drastically reducing internal security incidents and improving audit readiness.

How EDI can connect to shipping software

The real magic happens when EDI is fully integrated with your shipping platform. For example, when a customer places an order, your system can automatically:

Send the order to the supplier
Generate shipping labels
Track inventory changes
Update the customer—all without a single manual step

Integration with order management systems

When your order management system talks to your EDI setup, order data flows seamlessly. That means real-time label generation, tracking, and fulfillment.

Streamlining communication with shipping carriers

EDI can automatically relay package info—size, weight, destination—to your carrier, so you don’t have to manually key it in.

How ShipAccel™ can help ecommerce businesses with EDI shipping

Let’s face it: implementing EDI can feel overwhelming. That’s where ShipAccel™ comes in. Built specifically for ecommerce, it simplifies every part of the EDI process—from setup to daily operations.

With ShipAccel™, you can:

Automate exchanges with suppliers and carriers
Eliminate manual data entry and reduce errors
Gain real-time visibility into your shipments
Stay compliant with evolving standards
Access powerful analytics for smarter decisions

The future of EDI: Transforming shipping and logistics

EDI isn’t standing still. In fact, the market for EDI solutions is projected to reach $2.3 billion by 2028, growing at a CAGR of nearly 10%, according to a recent report by MarketsandMarkets. This growth is driven by the need for real-time visibility, seamless integrations, and the increasing complexity of global ecommerce logistics.

Here's what the future holds:

AI and machine learning: These technologies will be embedded into EDI platforms to help predict shipping delays, optimize route planning, and identify workflow bottlenecks before they impact the customer.
IoT integration: With more smart devices tracking packages and freight conditions, EDI will tap into this data to offer granular visibility—such as real-time temperature monitoring for perishable goods.
Blockchain: Experts predict blockchain could be the next big leap in ensuring trust and transparency across supply chain transactions. By storing shipping documents on a distributed ledger, businesses can ensure data integrity and combat fraud.
Cloud-based platforms: The rise of cloud-native EDI solutions is making this technology more accessible for small and midsize ecommerce businesses. These platforms eliminate the need for extensive on-prem infrastructure while offering scalability and better disaster recovery.

As these technologies converge, EDI will no longer be seen as a back-office utility but a strategic enabler for smart, connected, and future-ready ecommerce logistics.

Why EDI shipping is essential for your ecommerce success

If your ecommerce business is looking to scale, streamline operations, or simply reduce errors, EDI isn’t optional—it’s essential. From automating shipping notices to syncing with carriers, EDI empowers your business to do more, faster.

Ready to transform your ecommerce logistics?

Elevate your ecommerce shipping with ShipAccel™, the ultimate ecommerce fulfillment software designed to streamline EDI shipping. Our platform simplifies, accelerates, and ensures reliable shipping solutions for your business. Say goodbye to inefficient systems and embrace a smarter approach with ShipAccel™.

EDI shipping FAQs

What is EDI in shipping?

EDI in shipping is the electronic exchange of logistics-related documents such as purchase orders, bills of lading, invoices, and tracking data between ecommerce businesses and their suppliers or carriers. This automation eliminates the need for manual input, reduces errors, and accelerates the entire shipping process.

What does EDI stand for?

EDI stands for Electronic Data Interchange. It refers to the standardized digital transfer of business documents between organizations. These documents may include purchase orders, invoices, shipping notices, and more.

What is EDI compliance?

EDI compliance means adhering to the specific formatting, security, and communication standards required by trading partners or regulatory agencies. Compliance ensures that data shared through EDI is accurate, secure, and structured according to recognized protocols.

What are some examples of EDI documents?

Some common EDI documents include:

EDI 810: Invoice
EDI 850: Purchase Order
EDI 855: Purchase Order Acknowledgment
EDI 856: Advanced Shipping Notice
EDI 940: Warehouse Shipping Order
EDI 997: Functional Acknowledgment

Is EDI only for large businesses?

Not at all. Cloud-based EDI platforms like ShipAccel™ make it accessible for small and midsize businesses. These solutions scale with your business and reduce the upfront costs traditionally associated with EDI implementation.