What is Digital Economy? Here is Advantages and Disadvantages

When talking about the digital economy, it is usually associated with benefits such as innovation and better performance. However, it also has several obstacles that must be reviewed.

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

What is Digital Economy?

digital economy

You must perform everyday tasks such as reading and sending email, following your favorite content creators on social networks, watching videos on the internet for fun or learning, buying online what you normally buy in physical stores and even paying for public services through online platforms: all of these, among other actions, are made possible thanks to the digital economy which is now a fundamental part of our daily lives.

The digital economy is the latest market model that is present in almost all countries and allows us to communicate, consume content and carry out commercial transactions, bypassing the territorial and temporal boundaries that we are used to.

We are currently undergoing major reforms and one of them is digital transformation which has stimulated the digital economy.

In other words, companies that do not offer their services via digital platforms have seen the need to adapt to this new landscape quickly, while those that already offer digital solutions are increasing their sales volumes significantly.

Why digital economy is 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 the network.

Most people who have access to the Internet do so through the use of mobile devices, that is, everything is done in a faster and more convenient way.

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

The Advantages of 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

This allows real problems to be addressed with profitable performance, i.e., in the digital economy, better prices are accessible, which is positive both for the client and for the 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 the launch and improvement of products and services.

3. Simplify selling

The digital economy is an optimal field for consumers to search for products and services with the specific characteristics they want, which not only opens up wider possibilities for consumers, but also makes the buying process easier. search, buy and sell.

4. Greater reach

Products and services in the digital economy have reached places and people that were previously impossible to reach. Thanks to the internet and available technological tools, it is possible to lower production costs, innovate and reach more people.

Disadvantages of the digital economy

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

1. Unbelief

Although progress has been made on cybersecurity issues to make electronic commerce even more secure, there is still distrust by many users because of the fraud that can occur with banking issues or with the quality of the product and the veracity of the seller.

2. Waiting time

One of the advantages of shopping in a physical store is a major disadvantage of online shopping: in some cases, waiting times can be long without taking into account customs and parcel company logistics barriers.

3. Credibility

The tactics of engaging customers and retaining their loyalty must change: it is a challenge for companies and many are left on track to earn the trust of new or existing customers.

4. Knowledge gap

Even though it seems that we are all connected now, the reality is that there are still people who are not tech-savvy because they do not have access to knowledge or tools, which makes it difficult for a large part of the population to join the dynamics of the world. economy. digital.

Digital economy in practice

Some cases that demonstrate this concept very well are:

  • Virtual shop: Also known as e-commerce and shop for selling goods.
  • Digital products: Such as ebooks and educational platforms that offer courses.
  • Collaborative economy: Supported by applications for sharing services or knowledge.
  • Job platforms: Where someone requests or offers their services and someone else hires or takes the job.
  • Internet of things: It consists of increasing the functionality of everyday objects thanks to the Internet.

Main features of the digital economy

Some of the outstanding features of the digital economy include:

  • Immediate information: Because information is in a digital format, it can be processed and shared immediately.
  • Broad access: Access to knowledge in the digital economy moves away from the traditional way, as it is based on globalization, thereby expanding its borders and making it accessible to more people, producers and companies.
  • Greater connectivity: This supports the relationship between companies and users in a more direct and sustainable way over time, increasing brand loyalty.
  • Accurate data: Enables companies to obtain accurate data about people’s lifestyles and consumption habits, which can be used to improve the products, services and experiences offered to customers.

How to define the digital economy?

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

The key that defines the digital economy is the use of information technology, which allows transactions to be carried out successfully on digital platforms.

Just that! As you can see, the digital economy is a huge space where people come together to offer solutions with the help of the internet.

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