Drop Shipping EDI: What is Drop Ship EDI and How Does it Work

Drop shipping is a retail fulfilment method where a store doesn’t carry any inventory it sells in stock. Instead, it transfers the orders and their shipment details to either the fulfilment house, a wholesaler, another retailer, or a manufacturer, which then ships the products directly to the customer. Drop Ship eliminates the need for the stores to handle the goods.

EDI (Electronic Data Interchange) makes drop shipping fulfilment methods easy and cost-effective by transferring the particulars for each order. Most large retailers like Amazon.com, Costco.com, Cabelas.com and others are increasing the pressure to use an EDI solution. A cloud-based EDI integration connects your eCommerce store and enables complete drop ship automation between you and your trading partners. Implementing an EDI provider is useful for suppliers or retailers looking to drop ship. EDI enables the communication between trading partners and makes drop shipping an easy process.

How does Drop Shipping EDI work?

• The customer places an order for a product on the retailer's website.
• The retailer sends the order and customer details (address and delivery expectations) to the drop ship supplier via purchase order (EDI 850).
• The drop ship supplier acknowledges the order (EDI 855) and prepares the order under the retailer’s branded packing slip.
• The drop ship supplier packages and ships the order directly to the customer in the retailer’s name and sends an advanced shipping notice (EDI 856) with the shipment details.
• The drop ship supplier sends an invoice (EDI 810) to the retailer.

To streamline the end to end exchange of order, inventory, and shipping data, you need to choose and invest in the right EDI solution and also make sure that your EDI providers and ERP are capable of handling drop shipping. Full EDI integration with your ERP in drop shipping systems reduces drop shipping process cost and makes it more efficient.

To learn more about how Infocon Systems can take care of your EDI needs for Drop Shipping, please don’t hesitate to give us a call at +1 888-339-0722 or email sales@infoconn.com. We’d love to hear from you.