Digital Economy: What is it? Advantages and Disadvantages

When talking about the digital economy, it is common to associate it with benefits such as innovation and better performance. However, it also has some obstacles that should be reviewed. 

If you want to know more about this trend that is changing the world, read this article until the end!

What is the Digital Economy?

Digital Economy

You surely carry out daily tasks such as reading and sending emails, following your favorite content creators on social networks, watching videos on the internet for fun or learning, buying online what you used to buy in physical stores and even paying for the public services through an online platform: all this, among other actions, is possible thanks to the digital economy that is currently a fundamental part of our daily lives. 

The digital economy is a recent market model that is present in almost all countries and allows us to communicate, consume content, and carry out commercial transactions, passing the territorial and temporal barriers that we commonly knew. 

Today we are experiencing great reforms and one of them is the digital transformation, which has caused the digital economy to be stimulated even more. 

In other words, companies that did not offer their services through digital platforms have seen the need to quickly adapt to this new landscape, while those that already offered digital solutions increased their sales volume considerably. 

What makes the digital economy special?

It is a fact that the internet has taken over the way we live our lives, so much so that new subcultures have even been created from the social interactions that take place there, which also involve people from any latitude as long as they have access to network. 

A large part of the people who have access to the Internet do so through the use of mobile devices, that is, everything is done in an even more immediate and comfortable way. 

The current information age has opened up many opportunities for us, even in the workplace, integrating the physical and the digital to make work more profitable and efficient

How to define the digital economy?

We can define the digital economy as a branch of the economy that merges the benefits of the internet with the commercialization and even the manufacture of products and services. 

The key that defines the digital economy is the use of information technologies, which make it possible for transactions to be carried out successfully on digital platforms.  

Main features of the digital economy

Some of the outstanding features of the digital economy include:

  • Immediate information: Since the information is in digital format, it can be processed and shared immediately.
  • Broad accessAccess to knowledge in the digital economy moves away from the traditional way, since it is based on globalization, thus expanding its borders and making it accessible to more people, producers and companies.
  • Greater connectivity: It favors the connection between companies and users in a more direct and sustained way over time, improving loyalty towards brands.
  • Accurate data: Allows companies to obtain accurate data about people’s lifestyle and consumption habits, which can be used to improve the products, services, and experiences offered to customers. 

Digital economy in practice

Some cases that exemplify this concept very well are: 

  • Virtual stores: Also known as e-commerce and stores for the sale of items. 
  • Digital products: Such as ebooks and educational platforms that offer courses. 
  • Collaborative economy: Which is supported by applications to share services or knowledge.
  • Work platforms: In which someone requests or offers their services and someone else hires or takes the job. 
  • Internet of things: It consists of improving the functions of everyday objects thanks to the Internet.

Advantages of the digital economy

The digital economy has changed consumer and business behavior and will continue to do so. As a result, the following successes can be observed:

1. Profitability

It allows real problems to be addressed with profitable performance, that is, in the digital economy, better prices can be accessed, which is positive both for the client and for business investment. 

2. Consumer research

It supports market research and audience segmentation using digital marketing tools: thus, user preferences can be analyzed and strategic decisions can be made regarding launches and improvements to products and services. 

3. Simplifying sales

The digital economy is an optimal terrain for consumers to be the ones looking for the products and services with the specific characteristics they want, which not only opens up a much wider range of possibilities for the consumer, but also makes the process of purchasing easier. search, buy and sell

4. Greater reach

Products and services in the era of the digital economy have reached places and people that would not have been possible before. Thanks to the internet and the technological tools available, it is possible to lower production costs, innovate and reach more and more people. 

Disadvantages of the digital economy

Just as there are benefits, there are also other not so positive aspects of this economic model, such as:

1. Mistrust

Although progress has been made in cybersecurity issues to make electronic commerce more and more secure, there is still some distrust of many users due to fraud that can occur with banking issues or with the quality of the products and the veracity of the seller. 

2. Waiting time

One of the advantages of shopping in a physical store is the great disadvantage of online shopping: in some cases, waiting times can be long without counting setbacks with customs and the logistics of parcel companies. 

3. Credibility

Tactics to engage the customer and maintain their loyalty have had to change: this represents a challenge for companies and many have fallen behind in the path of gaining the trust of their new or existing customers. 

4. Knowledge gap

Although it seems that now we are all connected, the reality is that there are still people who do not master technology because they do not have access to knowledge or devices, which makes it difficult for a good part of the population to join the dynamics of the economy. digital. 

That’s all! As you can see, the digital economy is a great space where people come together to offer solutions with the help of the internet.

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