AIEDI for small business: what it is and how to get ready
EDI (electronic data interchange) is how larger retailers exchange purchase orders, delivery details and invoices with suppliers as structured data, sent system to system instead of by email or PDF. For a small business, the usual way in is the retailer's web EDI portal: you log in, read the purchase order, and send your despatch advice and invoice on screen. This guide covers EDI for small business in plain terms: what it is, the documents involved, web EDI versus EDI software, and what to have ready before you supply a retailer that uses it.
1. What is EDI?
EDI is a way for two businesses' systems to send each other documents in an agreed format, so the receiving system can read them without anyone retyping. A retailer's system sends you a purchase order as data. You send back a despatch advice and an invoice as data, and their system checks them against the order automatically.
The format follows a standard. UK grocery retailers commonly use TRADACOMS and EDIFACT. You don't need to learn either: the portal or EDI provider you use translates between the standard and something you can read. The retailer decides which standard and which documents it uses, and tells you in its supplier pack.
You'll usually meet EDI when a larger retailer lists your products. Wildfire Chilli Co, a chilli sauce maker in Bristol, might find its first regional grocery chain sends orders this way. Kindred Skin, a skincare brand in Leeds, might find the same when a chain of pharmacies takes on its range.
2. The EDI documents you'll deal with
Three documents do most of the work in EDI trading. Each one has to agree with the others.
| Document | Sent by | What it contains | What you do |
|---|---|---|---|
| Purchase order | The retailer | Products, usually by barcode or the retailer's own code, with quantities, prices, delivery location and date | Check it against your stock and prices, then plan picking |
| Despatch advice (advance shipping notice, ASN) | You | What you're sending, how it's packed, and when it will arrive | Send it when the goods leave. It must match what's on the vehicle. |
| Invoice | You | What you delivered, at the agreed prices, quoting the purchase order number | Send it after despatch, with lines that match the order and the despatch advice |
Some retailers use other messages as well, and their supplier pack lists which ones you must send. The principle is the same as with paper: the retailer pays when the order, what arrived and the invoice agree. The difference is that a system does the checking, so a small mismatch, such as a wrong product code, can stop an invoice before a person ever sees it.
3. Web EDI vs EDI software for small business
There are two ways to trade by EDI. Many retailers offer a web EDI portal so that small suppliers can trade without their own EDI system. The alternative is EDI software from a provider, which connects to your own systems.
| Web EDI portal | EDI software or provider | |
|---|---|---|
| How it works | You log in to a website and read and send documents on screen | Documents pass between the retailer and your own systems |
| Setup | Usually quick: an account, a login and the retailer's instructions | Longer: the provider sets up each retailer's requirements and tests them |
| Daily work | Manual. Check for new orders, then key or upload despatch advice and invoices. | Less retyping. Someone still checks orders and fixes rejected documents. |
| Cost | Varies by retailer. Ask whether there's a charge and who it's paid to. | Usually a setup charge plus ongoing fees, which vary by provider |
| Suits | One or two EDI customers with a manageable number of orders | Several EDI customers, or enough orders that retyping causes errors |
Start with the portal if the retailer offers one. It costs least to set up and teaches you how the retailer's orders work. Look at EDI software when keying documents takes hours each week, when typing mistakes start delaying payment, or when you're logging in to several portals for several retailers.
Questions to ask an EDI software provider
- Do you already connect to the retailers I supply, using the standard they use?
- Does it link to my accounting software, such as Xero, QuickBooks or Sage?
- How are charges worked out: setup, monthly, per document, per retailer?
- Who handles testing with the retailer before I go live?
- What support do I get when a document is rejected?
- How long is the contract, and what happens to my data if I leave?
4. What you need before supplying a retailer that uses EDI
EDI only works if your product data is right before the first order arrives. Get these in place as soon as a listing looks likely.
GS1 barcodes
Retailers using EDI usually need GS1 barcodes on your products, because orders and invoices identify each item by its barcode. GS1 UK issues them. Each distinct product needs its own barcode, so a 50ml and a 100ml night cream, or a medium and a hot chilli sauce, each get one. Join before your next packaging print run, and ask the retailer whether it also needs barcodes on outer cases.
Product data
Keep one master spreadsheet with a row per product: name, barcode, your product code, the retailer's code once they assign it, unit size, case size, case dimensions and weight, price, and for food, shelf life, ingredients and allergens. The retailer will ask for most of this when it sets you up, and your EDI documents will draw on it for every order.
If you sell food, prepacked food sold to shops needs full labelling: name, ingredients list with the 14 allergens emphasised, net quantity, best before or use by, storage conditions, and your business name and address. Skincare and other categories have their own labelling rules, so check which apply to your products.
The retailer's supplier pack
Requirements differ by retailer, so ask for the supplier pack early and read it before you agree delivery dates. Look for answers to these questions:
- Which EDI standard and which documents do you use?
- Do you provide a web portal, or should I use an EDI provider?
- Do you need barcodes on outer cases or pallet labels?
- How do deliveries get booked, and where do they go?
- What must every invoice show, and what are your payment terms?
- Do you need test documents before the first live order?
5. EDI for small business: what it costs
EDI costs vary by retailer, by provider and by how many orders you handle, so ask each party for their current charges rather than relying on a typical figure. The costs fall into a few groups:
- Barcodes. GS1 UK charges a membership fee. Check its website for current fees.
- Portal access. Some portals carry a charge for suppliers. Ask the retailer whether there is one and who it's paid to.
- EDI software. Providers usually charge to set up each retailer and then charge on an ongoing basis, for example monthly or per document.
- Packaging and labels. Reprinting packaging to add barcodes, and printing case or pallet labels if the retailer needs them.
- Time. Someone has to check the portal, key documents and fix rejections. Count it alongside any fees.
Example: estimating the time cost of a portal
Kindred Skin expects 8 purchase orders a month from a pharmacy chain's portal. Keying the despatch advice and invoice for each takes about 20 minutes.
8 orders × 20 minutes = 160 minutes, or about 2 hours 40 minutes a month.
Time your first few orders and use your own figures. Compare the result with what an EDI provider would charge for the same retailer.
6. Running EDI orders day to day
Once you're live, a simple routine keeps orders flowing and invoices paid:
- Check for new orders at the same time every day. Retailer orders often come with fixed delivery slots, so an order spotted late can mean a missed slot.
- Check each order against your stock. If you can't fill it, tell the retailer the way its supplier pack asks you to.
- Send the despatch advice when the goods leave, and make sure it matches what's on the vehicle.
- Invoice exactly what you delivered, at the prices on the order, quoting the order number.
- Watch for rejected documents. Fix and resend the same day. A rejected invoice won't be in the next payment run.
Keep EDI orders alongside your other wholesale orders rather than in a separate system you only check now and then. Our guide to wholesale order management covers how to set that up, and our integrations page lists the accounting, inventory and fulfilment tools DELLI AI connects to.
Questions about EDI
What is EDI in simple terms?
EDI, or electronic data interchange, is a way for businesses to send each other orders, delivery details and invoices as structured data between their systems, so nobody has to retype them.
Do small businesses need EDI?
Only if a customer requires it, which usually happens when a larger retailer lists your products. Many retailers offer a web EDI portal so small suppliers can trade without buying their own EDI system.
What is web EDI?
Web EDI is a website, usually provided by or for the retailer, where a supplier logs in to read purchase orders and send despatch advice and invoices on screen. It suits suppliers with one or two EDI customers.
How much does EDI cost for a small business?
It varies by retailer, provider and order volume. Costs can include GS1 barcode membership, any portal charge, EDI software fees, and the time spent keying documents, so ask each party for current charges.
Do I need GS1 barcodes to sell to supermarkets?
Retailers that use EDI usually need GS1 barcodes on products, and GS1 UK issues them in the UK. Requirements differ by retailer, so check the retailer's supplier pack.
What is an ASN in EDI?
An ASN, or advance shipping notice, is the despatch advice a supplier sends to tell the retailer what is being delivered, how it is packed and when it will arrive. It must match the goods on the vehicle.
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