Significance of SMEs
EDI was originally developed to reduce administration costs for large companies particularly through the Purchasing cycle. 80% of a company’s purchases may be from 20% of your suppliers. However the cost of producing an invoice for $ 100 is the same as an invoice for $ 1,000,000.
Thus 80% of companies purchasing administration costs is spent on the 80% Small and Medium Businesses that produce 20% of the sales items and 20% of the purchasing items. Hence to reduce the administration costs these SMEs have to adopt Electronic Commerce.
Electronic Commerce now encompasses Electronic Catalogues hence the move towards multi-media and electronic marketing.