The "Fast Lane" Answer
RDI stands for "Residential Delivery Indicator". It tells you if a mailing address location is a residential or business location.
The USPS keeps track of addresses that are registered specifically for commercial use, and they've set up their database so businesses with authorized programs and software can access that data. There are a number of businesses and organizations (such as SmartyStreets) that offer RDI data as either a primary service, or as information supplemental to a broader product.
The "Scenic Route" Answer
Residential Address vs. Commercial Address
Shipping can be a funny business sometimes. Mail carriers, be they private or otherwise, sometimes make decisions or take actions that seem...strange to the rest of us. The residential vs. commercial issue is one such topic.
Here's what we mean: Most private mail carriers charge one rate for shipping to a commercial address, and another for shipping to residential. The residential rates, typically, are higher. And, seeing as there's no way to tell intuitively from an address if it's a home or an office, you're as likely as not to be blindsided by an unexpected increase in fees from private carriers if you ship something to 221B Baker Street, expecting it to be a business address, only to find out it’s a residential one.
The reasoning is this: private carriers primarily service business locations; the vast majority of their work takes them to commercial and industrial districts of municipalities. They do deliver to residential, sure, but it's outside their normal routes. So if they're going to drive over the river and through the woods just to bring you cookies from your grandma's house, they’re more likely to ask for a little something extra to compensate for it.
Obviously that's a bit of a rock in the shoe, but what are you going to do? It's not like there's some magical way to determine whether an address is residential or commercial, right?
Ready for RDI
Since the USPS is the organization that manages the authoritative address database for the US, they thought it would be neat to share some additional information with people: namely, whether or not a place is worked at or lived in. They already had the data, it was just a matter of sharing it.
That’s where RDI comes in.
The Residential Delivery Indicator indicates whether or not the delivery address is residential. Pretty simple, right? But you're thinking "That's a tad altruistic; why would they just give me free information?"" Well, they're not. You have to go through a "vendor" that's using software certified for accessing the USPS database (or you have to become a certified user yourself).
Second, the USPS has got an ulterior motive. You see, unlike the private carriers, the USPS doesn't charge different rates depending on whether or not an address is residential. They figure, if you know that UPS and FedEx are going to charge you extra to ship something to an address, just because it's residential, you might prefer to go through the USPS instead. It's not a bad option, especially if your primary issue is the additional cost non-USPS couriers would charge you.
RDIng Between the Lines
Then again, USPS's RDI may not be the perfect solution you were looking for. First of all, you were probably shopping around the private carriers for a reason, whether that be speed of delivery, or more relaxed restrictions on prohibited goods, for example.
Second, what RDI tells you may not be exactly what you want to hear.
When private carriers like UPS and FedEx classify locations as "commercial" or "residential," it's dependant largely on location. Cities are built with "zones," like residential, industrial, or commercial. These zones often restrict what can be built where, and overall they cause things to be built in their respective zones (i.e. residential structures in residential zones, etc.). Private carriers organize their deliveries along these lines.
In other words, for private carriers, an address in a residential zone is a residential address, regardless of the structure's actual use. All other addresses are considered "commercial", and pay the lower rates. That means that, according to the likes of UPS or FedEx, if your good buddy Greg chases his dream and builds a poodle salon in his home garage, that business is still classified by the zone it's in: residential. So, sending anything to him will require you to pay the higher rate when shipping via private carriers, even though you may be mailing something to his business, and not to his personal residence.
By contrast, the USPS RDI tells you what the use of a location is, rather than what zone it's in. So, if your buddy Greg's poodle salon is a commercial use even though it's located in a residential zone, the USPS will tell you that your parcel will be going to a business location. Accordingly, the USPS RDI may not be a reliable indicator of whether or not an address will cost you more to send something via private carrier like FedEx. The only way to know for sure is to call the carrier and ask.
In any case, we want you to know that we're here to help. SmartyStreets offers the RDI info on addresses for free—you can try us out to make sure. You can run as many addresses as you want that way, so knock yourself out. If you have larger demands, we have some downright agreeable prices on our services (which provide blindingly-fast address validation, geocoding, and of course, RDI, among other things).
If you're wanting to know where to find this fun little bit of information, here's what our output looks like on a demo:
And here it is again in the raw output:
We'd show you the CSV output from our Web Interface and our Command-Line Interface, but until you open it in an excel file, it pretty much looks like gobbledy-goop. Once you do open it in a spreadsheet, you're looking at a setup not unlike what the pictures above give you, with a column labeled "RDI", and either a "commercial" or "residential" verdict in the box below.
Need more clarification? Feel free to get in touch with us personally. We can shoot the breeze about our services, RDI, where to find RDI in our output, or even whether RDI is actually telling you what you want to know. We're happy to answer any of your questions, help you figure out which term to classify your address as, and ultimately get you into the right "zone." We're fully prepared to make the work of determining "residential" or "commercial" easier.