This post is by Katherine Khoo, Managing Director at ecommerce software development company Khoo Systems.
If you’re an Amazon Vendor (or a seller considering the Vendor program) the question of how to integrate with the system is likely to have come up. What does it take to connect with Amazon Vendor? And how does it work?
Amazon Vendor uses an interface called EDI (electronic data interchange) which allows you to extract order management data from Amazon Vendor. Unlike the Amazon marketplace and other common sales channels, Amazon Vendor does not have an API (application programming interface) so EDI is your only option.
In this post we’ll explore what EDI means, how it works for Vendors, and what it looks like technically.
To learn more about the Amazon Vendor program in general, see Amazon Vendor Central: Everything You Need to Know.
What is EDI?
EDI (electronic data interchange) is a form of data exchange between a client and a server. In the case of Amazon Vendor, the EDI messages relate to the processing of purchase orders and invoices.
In Amazon’s own words, the use of EDI is:
Designed to take the normal business to business processes and accelerate and automate them to help reduce costs and improve efficiency as our companies interact.
In layman’s terms, EDI can be thought of as asking two servers to exchange packages of data, rather like emailing each other with attachments. These attachments (EDI messages) can then be decoded and processed by the receiving system.
Being a global standard, EDI is used by many large retailers including Walmart, Wayfair and Tesco. It is generally associated with wholesale order management. Some see EDI as a slightly archaic form of data transfer.
For Amazon Vendor, there are four main EDI messages which can be implemented, all relating to core order management functions:
- Purchase Order (EDI 850)
- Purchase Order Acknowledgment (EDI 855)
- Invoice (EDI 810)
- Advance Shipping Notice (EDI 856)
A communication standard called AS2 (Applicability Statement 2) is used to transfer EDI messages in a secure, efficient way.
How do Amazon Vendors use EDI?
Among Amazon Vendors there is a great deal of variety in whether EDI is implemented, and how they go about doing it. Vendors tend to take one of the following routes:
- No EDI connection
- EDI connection for a single message
- EDI connection into an ERP system (enterprise resource planning)
- EDI connection into an OMS (order management system)
1. No EDI connection
Many Vendors process orders without an EDI connection, using the Amazon Vendor portal to accept and fulfill orders. This route tends to be highly manual, often taking 15-20 hours per week for businesses with large order volumes.
2. EDI connection for a single message type
Some Vendors will implement an EDI connection for just one of the messages available. For example, the Purchase Order (EDI 850) or Invoice (EDI 810) message.
They will generate an invoice in their accounting or ERP system and send it via EDI. All other order management activities are handled within the Amazon Vendor portal.
3. EDI connection into an ERP system
If you’re a Vendor with a heavyweight ERP such as NetSuite or SAP, you can integrate all your EDI messages into there and process orders within the ERP instead of the Vendor portal.
EDI providers such as TrueCommerce work with ERP companies to enable this.
4. EDI connection into an OMS
Vendors who do not have an ERP, or who manage multiple sales channels, may choose to use an EDI connection into their order management system.
My company’s solution KhooCommerce is one OMS which allows you to do this.
What are the benefits of EDI for Amazon Vendors?
If implemented correctly, your EDI connection can:
- Ease the burden of manual order processing.
- Remove the possibility of late or changed Purchase Order Acknowledgements (POAs). Chargebacks for POA changes are 1% of the cost.
- Reduce human error when creating Advance Shipping Notices (ASNs). Vendors are charged between $5 and $150 for a late ASN.
- Create License Plate Receive (LPR) compliant labels and shipments.
- Automate sending invoices and order acknowledgement messages.
- Link your Amazon Vendor stock decisions with the rest of your business.
Overall, an EDI connection benefits your activities through streamlining your operations, and freeing up your team to focus on product strategy rather than just fulfilling orders.
For Vendors who spend a lot of time processing orders, or who deal with high volumes of POs, an EDI connection becomes a valuable investment to avoid hefty chargebacks.
Amazon do not require Vendors to implement EDI. But with compliance areas such as LPR becoming a “soft requirement”, there are more reasons than ever for Vendors to automate their interactions with Amazon.
How do you set up EDI as an Amazon Vendor?
Within Amazon Vendor Central, there is a section labeled “EDI → Self Service Setup”.
Your EDI provider will walk you through the steps to implement your EDI connection. It typically follows this pattern:
1. Enable global settings
This is to get your system to speak to Amazon’s server, and usually involves downloading a certificate to authenticate your server. This creates a secure, encrypted connection for your messages to pass through.
2. Set up each message
Once you’re connected, your EDI provider will then go through the process of testing and enabling each EDI message. If you are using all messages, this usually starts with Purchase Order (EDI 850) and ends with Invoice (EDI 810).
Can Amazon Vendors use EDI in other areas?
There are many other activities that you need to do as an Amazon Vendor, such as uploading new products or managing your account statement. Can those actions be integrated with your own systems using EDI? The short answer is no, sadly not.
There is an EDI message to update your inventory list prices (Product Activity Report – EDI 852) but this has limited use when managing your stock.
What do you need to consider when setting up an EDI connection with Amazon Vendor?
The benefits of EDI for high-volume Vendors are clear, so it’s crucial that your connection is successful. To make sure that your EDI solution meets your business objectives, it is useful to consider:
1. What are your business objectives for implementing EDI?
Where so you see the value in your EDI connection? Is it in saving time, reducing chargebacks, removing human error? By setting specific goals, your EDI provider has clear targets to achieve for you.
2. How is your stock managed?
You need to consider stock management when implementing EDI, as you’ll gain the most value when your solution connects seamlessly into your other systems including your core stock management tool.
3. What intricacies are there in your Amazon Vendor relationship?
Every Vendor runs their account slightly differently, so it is good to share the intricacies of your arrangement with your EDI provider to help them cater for your setup.
What fulfillment company do you use? Are you on the Direct Fulfillment program? Do you receive bulk orders? Do you use the European Fulfillment Network?
These details could make the difference between an EDI connection that brings value to your business and one that does not.
- Electronic data interchange (EDI) is the standard for communicating with the Amazon Vendor platform, as well as other retailers.
- A successful EDI implementation can reduce chargebacks and manual order processing.
- EDI is implemented through an initial server connection and then each EDI message is set live.
- Not all Amazon Vendor activities can be completed over EDI.
- An Amazon Vendor EDI solution must be considered as part of your multi-channel sales operations.
- To ensure your EDI connection is successful it is wise to set clear goals and spend time analyzing your needs prior to committing to a provider.
This post was by Katherine Khoo, Managing Director at ecommerce software development company Khoo Systems. Khoo Systems is one of the U.K.’s most advanced SaaS development companies, building and maintaining an array of highly innovative ecommerce website platforms.