Over the past decade, types of businesses have evolved. Before embarking on a new business venture, one must contemplate whether one should start a traditional or digital business.
Traditional businesses are usually brick and mortar stores that offer products and services to their customers. Customers must visit these stores physically to purchase the product or service. Some examples of what traditional businesses typically do are direct sales, franchising, and logistics.
A traditional business incurs a high cost for infrastructure, rent, hiring floor staff, and stock maintenance. Besides cost, traditional businesses are also limited to their location. Visibility of the storefront can be crucial to attracting traffic to the store itself. With that, they are also restricted to operate along standard shopping hours. The high cost associated with starting a business often deters many from going into a business venture. More often than not, companies that are unsuccessful leave aspiring entrepreneurs in debt instead.
Today, traditional businesses that can generate enough income to keep themselves up and running find that they cannot stick to their ways. Their conventional business playbook may not be relevant anymore. Businesses once resistant to digital transformation have shifted their mindsets to overcome challenges that arose, especially from the recent COVID-19 pandemic.
What is digital business?
Decades ago, entrepreneurs had a standard way to start a new pursuit – open a traditional business. There was no way to build a business online that can reach a global target audience. In today’s world, starting your business online is the way to go. We are all aware of e-commerce businesses and online marketplaces like Lazada and Shopee. This type of business is the strategy of selling products online through sites. We are probably familiar with price-cutting techniques and monthly promotions with generous discounts (i.e., 9/9, 10/10, 11/11) that these businesses use to entice us to make purchases on their sites.
Though we easily associate online businesses with an e-commerce business, different kinds of online businesses exist out there. Some of them include drop shipping, website marketing, providing digital marketing services and even running an online blog.
Consumers are shifting from traditional businesses to online businesses due to the wider adoption of smartphones. With the rise of the Generation Z demographic, we can expect this group of consumers to drive this trend further. With that, online businesses like e-commerce have become a necessity in our everyday lives.
It is now much easier to start your own business, and anyone can do it from their home. The capital required is much less as well. Take an e-commerce business, for example. You can save on rent space, hiring floor staff, initial stock inventory, reducing the overall cost. Instead, lots of effort goes into the website design, user interface, digital marketing, coordinating courier arrangements and online payments. Furthermore, it is simple to expand to other markets and even globally with an attractive online business offering. Online stores are also one click away and you can visit them anywhere and anytime.
Nobody can enjoy too much convenience. There have been many new products and services introduced to the market to provide us with greater convenience. Businesses pursue new ideas to serve customers more seamlessly, making it as easy as a few taps on their phones.
A couple of years ago, we could only order food delivery from prominent industry players and franchises. Smaller establishments had to rely on walk-in customers to dine in as the primary way to keep their business going. Today, customers are spoilt for choice when ordering food delivery thanks to the rise of services like Foodpanda and GrabFood that have changed how we order food.
The digital space has become so competitive. Businesses compete in terms of price, level of convenience, quality customer service, etc. They are now looking to engage their audience using more entertaining mediums. Many have sought gamification by using rewards and points to enhance the overall customer experience and in hopes of growing their brand loyalty in the long term.
The key for businesses today is to be differentiated and stay relevant. To so do, they must evolve and adapt, which means finding new ways to disrupt the industry and grow their market share. Business leaders have to spot trends, anticipate consumer demands and explore innovative ideas that can be the answers.
As the digital space continues to grow, one region where we can expect to see an accelerated growth would be in Latin America. This market has become the fastest-growing regional e-commerce market in the world. Despite this, there are still many untapped e-commerce markets and penetration levels remain low. Untapped markets mean there is still room for growth in this industry despite its success thus far.
Along with this trend, we can expect complementing services to continue with an increase in its demand. With the expected growth of e-commerce, we can predict the rise in the demand for digital payment systems as payments for online purchases have to be completed remotely. Besides, we can also anticipate the need for effective cybersecurity management to grow as well. With the need to digitalise data for such businesses, strengthening our cybersecurity systems would be crucial.
We can probably agree that a digital business is perhaps the preferred choice since it is better to capture more markets. Expanding a traditional business is much harder overall than with a digital business. One has to take into account the huge risks and investments that come along. Even with that said, let us not let technology take over every aspect of our world. Would you please support our local neighbourhood stores and hawkers and preserve our local heritage?