Wal-Mart is the only U.S. retailer that sells Mary-kateandashley One, a new fragrance branded by twin teenage entertainment moguls Mary-Kate and Ashley Olsen. Behind the scenes, fragrance and cosmetics manufacturer Coty depends on a hybrid business-to-business system that combines new standards and old technology - older than the Olsen twins, in fact - to keep Wal-Mart's shelves adequately stocked with the fragrance.

The old part of the technology hybrid is the data format: Coty uses the electronic data interchange standard to process orders electronically with Wal-Mart. An e-commerce staple, EDI has been around for more than 20 years as a standardized way for trading partners to transmit business documents and forms such as purchase orders, invoices and shipping notices.

What's new in Coty's setup is the transport mechanism: Coty is swapping EDI messages with Wal-Mart over the Internet, rather than using a value-added network (VAN). Traditional EDI goes hand in hand with a VAN; retailers and suppliers typically depend on a VAN provider's private network services, which assure the secure transmission of documents.

The Internet has made that dependence fade. Companies are looking to move some or all of their EDI transactions to the Internet because the technology costs less than VANs and is relatively simple to implement. While VAN-based EDI traffic is roughly flat, Internet EDI transactions are growing at an annual rate of 50% to 60%, according Meta Group.

The primary appeal of Internet EDI is that it reduces companies' reliance on VANs and their associated fees. Internet EDI also makes it easier for companies to conduct business electronically with smaller partners that don't have sophisticated IT infrastructures. Although traditional EDI requires each trading partner to install complex, proprietary software, Internet-based EDI lets companies conduct EDI through a Web browser or by installing basic client software.

Another advantage of Internet EDI is it lets a company migrate some of its partners to the Web while maintaining other proprietary connections in situations that demand it.

In response to demand, a number of vendors - start-ups and established VAN providers looking to expand their portfolio - offer software and hosted services for Internet EDI, including ADX,  bTrade, Cyclone Commerce, GXS, iSoft and Sterling Commerce.

Driving the trend to Internet EDI are mandates from influential companies - including Wal-Mart. As of the end of 2003, Wal-Mart requires many of its suppliers to send and receive EDI data via the Web. Specifically, Wal-Mart requires the use of Internet EDI software that adheres to Applicability Statement 2 (AS2).

AS2 is a draft specification that describes how to create a connection and securely transport an EDI file over the Internet. AS2 provides security for the transport of HTTP packets through digital signatures and data encryption. AS2 also provides for non-repudiation - proof that a transaction was performed at a certain time and by legitimate parties - through the use of receipts.

The AS2 specification was developed by the IETF's EDI over the Internet (EDIINT) working group, which was formed in 1996 to create a set of secure standards for sending EDI data over the Internet. Its predecessor is the AS1 specification, which details how vendor applications should securely exchange business messages over the Internet using Simple Mail Transfer Protocol (SMTP). The AS2 specification references AS1 packaging and security standards and defines how to use HTTP instead of SMTP to transport this data.

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