Advantages Of The Digital Economy

The digitisation of the traditional economy has led to the following

advantages:

• Increased productivity: The digital economy has increased

the productivity of businesses as they can now use
technology to automate their operations and processes.
• Increased competitiveness: Businesses today are able to
use the internet to reach new markets and customers.
Moreover, they can also use technology to improve their
products and services. This has increased the
competitiveness of businesses.
• Increased employment opportunities: The digital economy
has generated new job opportunities as new businesses
are springing up. It has also created new job roles spread
all over the world.
• Improved living standards: Today, digitised businesses
can offer their customers better products and services at
lower prices. Moreover, offerings are now available on-
demand, which has improved people’s living standards.
• Better quality of life: The digital economy has made it
possible for people to work from anywhere in the world.
This has improved the quality of life of people as they can
now balance their work and personal life. On the consumer
front, the digital economy has made it possible for people
to access a wide range of products and services with just
a few clicks. Not just products and services, but people
can also now access information and knowledge and
connect with others with the help of the internet.
• Reduced costs: Digitisation has helped businesses replace
manual tasks with automated processes. This has reduced
the costs of businesses and has led to lower prices of
products and services for consumers.
• Faster transactions: The digital economy has made it
possible for businesses to conduct transactions faster as
they can now use online payment methods. This is not just
restricted to businesses but extends to individuals as well,
who can now transfer money online with just a few clicks.
 • Improved efficiency: Digitisation of processes has helped
businesses become more efficient by removing error-
prone manual tasks. Moreover, businesses now have
access to better tools and technologies that help them get
the best results.
• Innovation: The digitisation of businesses and business
processes leads to innovation with respect to not just
offerings but also the way businesses operate.
• More personalisation: As more data is collected about
customers, businesses are now able to offer them more
personalised products and services.
• Greater convenience: Customers today can buy products
and services from the comfort of their homes. New
business models like e-commerce and m-commerce have
made it possible for customers to shop anytime,
anywhere.
• Increased transparency: The digital economy has
increased the transparency of businesses as they can now
use technology to share information with their customers.
• Improved communication: Increased connectedness in the
digital economy has made it possible for businesses to
communicate with their customers more effectively. They
now have a number of channels through which they can
reach their customers including social media, email, and
SMS.
Disadvantages Of Digital Economy
Even though the digital economy has a number of advantages, it also
has some disadvantages which are listed below:

• The digital divide: One of the biggest disadvantages of the

digital economy is the digital divide. This is the gap
between those who have access to technology and those
who don’t. This divide exists not just between countries
but also within countries. This has created a new form of
inequality in the world.
• Cybercrime: The increased use of technology has also led
to an increase in cybercrime. This is because criminals can
 now use technology to commit crimes like identity theft,
fraud, and money laundering.
• Data security: With businesses collecting more and more
data about their customers, there is a risk of this data
being leaked or stolen. This can lead to a loss of trust
between businesses and their customers.
• Unemployment: The digitisation of the economy has led to
job losses in some sectors as businesses have replaced
human workers with technology. This has increased
unemployment in these sectors.
• Privacy concerns: As businesses collect more data about
their customers, there are concerns about the misuse of
this data.
• Heavy investments: The digitisation of businesses
requires heavy investments in technology. This is a
challenge for small businesses which might not have the
resources to invest in technology.
• Monopoly: The digitisation of the economy has led to the
rise of a few big companies which have become very
powerful. This has created a monopoly in some sectors.
• Addictive nature: The digital economy is very addictive in
nature. This is because it is designed to keep people
hooked on their devices. This can lead to a number of
problems like addiction, anxiety, and depression.
• Potential environmental impact: The increased use of
technology in the digital economy has led to an increase in
the number of e-waste and heavy carbon footprint. This is
a concern as it can have a negative impact on the
environment.
Digital Economy Vs Traditional
Economy
The new digital economy is a lot similar to the traditional economy but
there are some key differences between the two which are listed
below:

In the traditional economy, businesses used paper records and

manual processes to carry out their operations. This is no longer the
case in the digital economy as businesses now use technology to
store data and carry out their operations.

In the traditional economy, businesses sell physical products to their

customers. In the digital economy, businesses can sell physical as
well as digital products.

Moreover, the channels through which they sell these products have
also changed. In the traditional economy, businesses would sell their
products through brick-and-mortar stores. In the digital economy,
businesses can sell their products online through e-commerce
platforms.

Even the mode of payment has changed in the digital economy. In the
traditional economy, businesses would accept cash as a mode of
payment. In the digital economy, businesses can accept various
modes of payment including credit cards, debit cards, ewallets, and
mobile payments.

Examples Of Digital Economy

Several businesses have disrupted their respective industries giving
rise to the digital transformation of the existing economy. Some of the
most notable examples are listed below:

Netflix
Netflix is a streaming service that offers its users a wide range of TV
shows, movies, and documentaries over the internet. The company
started out as a DVD rental service but soon switched to streaming
when it realised the potential of the internet.

Today, Netflix has over 222 million subscribers and is available in 190
countries. The company has also produced its own content which has
been very successful.

Uber
Uber is a ride-hailing service that allows its users to book a ride with
the tap of a button. The company uses technology to connect riders
with drivers. Uber was founded in 2009 and is available in 71
countries and more than 890 cities.

The company disrupted the traditional taxi industry by incorporating

technology into the usual taxi booking scenario. Doing so, it created
an entirely new business model called the aggregator business
model.

Airbnb
Airbnb is an online marketplace that allows people to list, find, and
rent vacation homes. The company was founded in 2008 and is
available in 220 countries and more than 100,000 cities.

The platform gave rise to the sharing economy and disrupted the
traditional hotel industry by just being available online.

Amazon
Amazon brought marketplaces and commerce to the web and
pioneered the concept of e-commerce. The company started as an
online bookstore but soon diversified into other areas such as selling
electronics, clothing, food, and more.

Amazon is now the world’s largest e-commerce platform with around

600 million monthly active users. The company has also developed its
own line of products which are very popular among its users.

Google
Google is one company that gets its roots right in the digital economy.
The company started as a search engine but soon expanded into
other areas such as advertising, cloud computing, and more.
Google is now the world’s largest internet company with a wide range
of products and services. The company has also ventured into
hardware with its line of Pixel smartphones.