What is a Digital Business?
With 74% of organizations placing a priority on digital transformation and as many as 90% of organizations having some form of digital initiative in place, it is clear that digital is here to stay.
But what is a digital business?
If you're interested in going digital with your business or simply want to learn more about it, you better read this article.
What is a Digital Business?
A digital business leverages digital technology as a core component of its operations, allowing it to streamline processes, enhance efficiency, and reach a wider audience.
By embracing digital tools and platforms, it can adapt to fast-changing market dynamics and seize opportunities that traditional businesses may overlook.
What are the Benefits of Going Digital?
Most businesses are now opting to go digital, either by moving their entire business model online or by incorporating online marketing and websites to help improve their online presence and expand their customer base.
But why go through all the effort of integrating digital strategies into existing business models?
Here are some of the reasons:
1. Meeting Customer Expectations
35% of business executives have reported that the use of digital technology has made it easier to meet customer expectations more effectively.
Tools like Google Analytics and social media allow businesses to identify and understand their ideal customers better.
2. Improved Internal Productivity
Using digital technology to automate certain business processes can save your business plenty of time and resources. This can lead to improved operational efficiency and higher revenue.
3. Reduced Operational Costs
Digital technology's automation capabilities reduce the need for additional staff and equipment, resulting in significant cost savings for businesses. By eliminating manual processes, businesses can lower their operational expenses.
4. Expanded Customer Interaction Channels
Digital marketing methods like social media marketing, email marketing, and online advertising are just some of the ways that businesses are able to directly connect with their customers.
5. Identifying New Revenue Sources
Digital technology empowers businesses to identify and explore new growth opportunities and revenue streams. By using data analytics and techniques like A/B testing, businesses gain valuable insights that inform decision-making and drive future success.
Examples of Digital Business Models
There are many options to consider if you want to start a digital online business.
Here are some of the most well-known digital business models:
1. eCommerce
eCommerce is a huge industry, with eCommerce businesses taking up 22.3% of total global retail sales.
An eCommerce business model is fairly straightforward.
You decide on the products that you want to offer to your customers, list them on your website, and market them to your target audience.
Most e-commerce stores use Shopify, and a lot of e-commerce store owners take advantage of email marketing for repeat business and generating sales via Facebook advertising.
2. On-Demand
An "on-demand" business model refers to a business that provides products or services at the moment of customer demand.
This model is popular among businesses that offer online services, like Fiverr, Uber, Foodpanda, and Doordash.
3. Free
The "free" business model refers to a company that gives away its product or service for free.
This could include software, apps, and digital content like podcasts and videos.
The goal of this type of business is to generate revenue through other methods, such as advertising or in-app purchases.
Big businesses that do this include Alphabet with Google Search and Meta’s Facebook.
People can use the product for free, and the business makes money via online advertising.
4. Freemium
A "freemium" business model is a hybrid of the free and subscription business models.
It offers customers a basic version of the product or service for free, with additional features available as part of a paid subscription.
This business model is popular among software companies that want to give users an incentive to upgrade to their premium version.
Examples include businesses such as Slack, Spotify, Zoom, and Canva.
5. Subscription
A subscription business model occurs when customers pay a monthly or annual fee for access to products or services.
Popular businesses that use this model include Dollar Shave Club, Netflix, and Hello Fresh.
Examples of Digital Tools in Traditional Businesses
Offline businesses now embrace online digital tools to expand and reach more customers.
Here are some digital tools they use:
1. Social Media
Twitter and Instagram enable businesses to connect with their target audience and existing customers. Social media offers cost-effective marketing and ensures consistent brand exposure through creative content.
2. Websites
Building a website with WordPress, Wix, or Squarespace establishes an online presence, increases brand awareness, and fosters customer trust.
3. Online Communication
Zoom and Slack simplify customer service, marketing, sales, and team collaboration for businesses.
4. Applications
Some examples of this are bakeries and restaurants that use Uber Eats and Doordash to sell their food to their customers, or stores that give out-of-state customers the option to buy their products online via their Amazon storefront.
5. Google Search Console and Google Analytics
These tools optimize websites for higher visibility in Google search results and track user activity.
This data provides valuable insights into target audience preferences by analyzing page clicks and time on site.
Wrapping Up: What is a Digital Business?
A digital business integrates digital technology into its operations, enabling streamlined processes, improved efficiency, and expanded audience reach.
Going digital offers benefits like meeting customer expectations, increasing internal productivity, reducing costs, and creating new revenue sources.
There are many different types of digital business models, such as subscriptions, on-demand services, free and freemium models, and e-commerce.
Traditional businesses also use digital tools to expand their reach and operations, such as social media, websites, online communication, and applications.
Embracing digital transformation is essential for businesses to stay competitive and succeed in the digital era, unlocking new opportunities and deeper customer connections.
