Digitalization has transformed commerce, communication, entertainment, and other facets of human life. Not only did the recent shift towards digital speed up innovation, but it also drove economic change.
At the forefront of this change is the emergence of a distinct economy – the digital economy. This new economic landscape is fueled by the Internet, cloud computing, big data, and other technological advancements driving unprecedented waves of growth.
With the global economy making a digital pivot, enterprises must navigate the pace of change and meet modern customer demands.
First, What Is a Digital Economy?
At its simplest, a digital economy is any economic activity occurring online. It results from everyday commercial transactions and business interactions enabled by the Internet, mobile technologies, and the Internet of Things (IoT).
Here are a few characteristics that distinguish the digital economy from the regular economy:
Data-driven. Businesses rely on cloud computing technologies and other infrastructures for easier, accessible consumer data storage. Such a solution allows them to collect data on anyone who visits their site and deliver personalized experiences.
Internet-powered. The Internet is one of the main drivers of this newly emerging economy. It has made information immediately available to the public and changed how companies operate.
Mobile connectivity. Smartphones and mobile applications have encouraged the growth of the digital economy. More consumers are now engaging with businesses through their mobile devices to inquire and shop for products or services.
Collaborative intelligence. The fusion of humans and machines (i.e., artificial intelligence) enables companies to work more effectively while saving time and money. Machines assisting humans and vice versa reimagine the traditional work processes and manage customer journeys in the digital era.
4 Advantages of a Digital Economy
1. Expand Business Reach
In the traditional economy, businesses face constraints tied to geographic limitations, limiting market expansion. There are instances where products are available only in particular stores or select countries.
Conversely, a digital economy allows consumers to access an array of retailers, compare prices, and shop at their convenience. Likewise, it lets businesses transcend traditional geographic boundaries, catering to a global audience, which results in greater business resilience and growth opportunities.
2. Fuel Work Opportunities
The digital landscape, especially during the pandemic, has been a lifeline for businesses. Beyond facilitating remote work, it has opened up new work opportunities.
Thanks to digitization, machine learning, data management, and other skills have grown more importance. Digital roles, such as support technicians, software developers, and business analysts, have become more relevant and in demand today.
The rise of the digital economy has also enabled a more flexible work environment, promoting a better work-life balance.
3. Boost Overall Productivity
The digital economy has increased organizational productivity—with technology adoption playing a pivotal role. Advanced tech, including automation and artificial intelligence (AI), replaced routine manual tasks, helping employees focus on more value-adding work.
Take chatbots, for instance—these AI-driven conversational agents handle customers’ queries on behalf of a live person. They significantly reduce the administrative burden for sales professionals, freeing up their time for prospecting and other duties.
4. Lower Costs and Save Time
Digital platforms and technologies revolutionized commerce and transformed how brands interact with potential customers. By digitizing in-store experiences and running most of the business online, companies can save on rental and labor costs.
From AI chatbots to product suggestions based on previous purchases, online payment schemes, and click-and-collect, embracing digitalization enables businesses to engage modern buyers and deliver seamless experiences faster than ever.
Challenges in the Digital Economy
1. Navigate Rapid Technological Changes
Technology evolves rapidly in the digital economy. Businesses face the constant challenge of staying abreast of new technologies to remain competitive. This demands agility, adaptability, and a willingness to embrace innovative working methods.
2. Digital Skill Gap in the Workforce
As technology continues to advance, there's a growing gap between the skills required and the skills available in the workforce. Bridging this gap is essential for individuals and organizations to ensure that the workforce is equipped with the skills needed to navigate the complexities of the digital era.
3. Cybersecurity and Data Privacy Concerns
With the increasing reliance on digital platforms, cybersecurity and data privacy have become paramount. Protecting sensitive information and defending against cyber threats are complex challenges that demand constant vigilance. Robust security strategies are essential to maintain trust in the digital realm.
Tips for Succeeding in the Digital Economy
1. Build and Optimize Digital Assets
To win in the digital-first economy, there’s one critical step that businesses of all sizes should take—establish an online presence.
Nowadays, people traverse the web to find information quickly, shop for products, or stay entertained. If online assets (i.e., eCommerce sites, mobile apps, social profiles, etc.) are non-existent or not used effectively, it’s hardly impossible to reach leads and acquire customers.
Here are a few ways to leverage these digital assets:
2. Prioritize Customer Experience
When organizations understand their customers at a granular level, delivering consistent, tailored online experiences becomes easier.
Thankfully, marketing platforms, customer relationship management (CRM), and digital analytics tools can provide crucial insights that aid businesses in nurturing better customer relationships.
Salesforce 360, for example, is an integrated CRM platform that offers a single, shared view of every customer. Every step of the customer journey is stored in one place, enabling teams to collaborate efficiently and deliver consistent, personalized experiences across every touchpoint.
3. Create a Healthy Innovation Ecosystem
Built on hyperconnectivity, the digital economy requires companies to ensure everyone in the business has access to relevant digital tools. However, technologies aren’t the only essential element of the innovation ecosystem—but also employees’ digital skills.
According to a PWC Future of Work and Skills survey, organizations should prioritize upskilling the workforce to prepare for the most pressing challenges and the future of work.
The research identified the most significant inhibitors that enable companies to progress and take action, including cost pressures, leadership capability, and organizational culture.
Win in the Digital Economy
The digitally driven economy opens a world of opportunities, from tapping into previously inaccessible markets to boosting overall productivity and reducing costs, among many other things.
While the digital era offers many possibilities, it has a fair share of challenges—and engaging customers at every stage of the purchase journey is one.
If your business struggles to deliver a seamless shopping experience across all touchpoints, Globant Commerce Studio is ready to assist!
Learn more about how we empowered brands like you to deliver future-ready digital commerce ecosystems at https://www.globant.com/studio/commerce.
