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Understanding the digital economy: a quick breakdown

Whether you know it as the new economy, the web economy, the internet economy or the digital economy, the new way of doing business is here and it is becoming more prolific each year. But what is this new economy and how does one participate in it?

According to Deloitte, the digital economy is the economic activity that results from billions of everyday online connections between people, businesses, devices, data, and processes. The economy is supported by the hyperconnectivity between people, organisations and machines because of the Internet, mobile technology, and the Internet of Things (IoT).

The internet has allowed people to rethink how they do business and has disrupted many industries. Airbnb, Uber and Alibaba are just a few examples of businesses that have disrupted the traditional business model by using technology to connect their offering to their customers.

The digital economy is characterised by five traits

1. Digitizing and tracking

With the prices of sensors decreasing, the ability to track different assets from your mobile phone or computer has become more viable. This information has helped to keep you informed about the state of your equipment and tracking helps you to take data-backed decisions when working on your business.

2. Connecting

Assets, workers, customers, and suppliers are all connected with the internet, mobile technology and IoT. This leads to a more transparent work experience and better decisions can be made.

3. Sharing

The digital economy allows for limited resources to be shared. It also allows those who may not have the capability to buy an asset to rent it. This sharing economy helps to bring opportunities to everyone.

4. Personalizing

With the ease in which you can learn a lot about your customer, they expect you to give them a personalized offering that resonates with their specific needs.

5. Direct

The digital economy has started to rule out the middleman. Making it easier for businesses to sell directly to their clients.

The digital economy has three drawbacks

The digital economy has three drawbacks that need to be addressed so that it can continue to prosper in the future.

Less manual labour needed

With automation taking over menial tasks, there will be less need for people to do these. This may cause an employment problem in the future.

Not enough experts or skilled workers available

The digital economy involves complex processes and technologies. At the moment, there are not enough people with the expertise to navigate business through them.

Large investment needed

For a digital economy to work optimally, you need to ensure that the internet functions well. There must be a strong infrastructure in place to ensure mobile networks and telecommunication works well. This can be a tedious and costly process in some countries.

By understanding how the digital economy works, small businesses are agile enough to take advantage of this new economy. By improving your digital skills through free online courses, you can see how to bring innovative digital ideas in to disrupt your industry.

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