DIGITAL ECONOMY: How is digitization impacting business models

As the fourth industrial revolution continues to take shape and the boundaries between physical and digital worlds continue to blur, business models are being impacted in unprecedented ways. Businesses are established to create value and value comes from being steps ahead of competition through riding on competitive advantage and leading the pack through innovation. Change, in this case, becomes the only constant. To keep up with a changing environment, businesses need to be proactive in understanding and embracing technological advancements. Technology is rapidly evolving and so is consumer behavior and the general business landscape. The digital age has brought with it changes that have seen some conventional ways of conducting business and some businesses become obsolete.

Technology is transforming how we interact with products, how we purchase products and how we consume products. With the rise of automation, smartphones, 3D printing, robotics, artificial intelligence, machine learning, virtual reality and digital assistants, the globe has been shrunk into a small sphere were interaction, production and consumption is as efficient as never experienced before. The trade-off between scale and customization will soon become irrelevant. Information is at consumers’ fingertips and purchasing decisions are well informed and rational.

Businesses that are investing or have invested in technology are ripping the benefits through reduced overhead costs. For instance, operating online means being accessible from wherever at any time. Virtual stores enable consumers to order products from the comfort of their homes and interact, in real time, with company representatives. Digital payment platforms complement online stores and are part of the value chain. This synergy between virtual stores and digital payment improves a company’s bottom line. Connectivity and e-commerce are making it easier to bridge sellers and buyers across the globe.

Artificial intelligence and machine learning are boosting sales and marketing efforts through chatbots that can attend to customers 24/7 – 365. The ability to monitor online consumer behavior, gather information and make customized recommendations enhances consumer engagement. Research has shown that most consumers prefer interacting with a chatbot than a human representative since bots enhance user experience through self-service.

Technology is enabling businesses to access markets that were previously deemed inaccessible due to geographical constraints. Exploiting new markets is a strategy that increases revenues and market share for enterprises. For businesses to create sustainable value, business models need to adapt to changing times. Technology is shifting the ground beneath the foundation of most business models thus understanding the zeitgeist and being proactive is a necessity.

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