What is digital business? It is one of the most frequently asked questions on the internet. Digitalization means transforming any business into a digital business using digital technologies. The main purpose of digitalization is to generate higher revenue and create new value-added opportunities. At present, many companies are in the process of digitization. Top businesses have already done this technique and are very successful in economic, financial, and customer satisfaction.

Keeping up with the latest updates and facts regarding digitalization is very important for anyone who would want to start their own business or change their business into a digital one. Some of the most popular digital technologies are Artificial Intelligence, Machine Learning, Virtual Reality and Augmented Reality, Robotic Process Automation (RPA), Quantum Computing, Edge Computing, Blockchain, 5G, Internet of Things (IoT), etc.

There are more than 2 billion websites in the world. The Internet is a huge thing, so it isn't easy to measure its actual size. However, IT giants, namely Microsoft, Amazon, Google, and Facebook alone, store around1.5 million terabytes of data.

In this informative article, let us see what is digital business and discuss everything related to it and the process of digitization.

What Is a Digital Business?

In today’s work-from-home world, it feels like everyone is running a digital business. But the reality is that top business leaders have different definitions of what it means to go digital. As a result, priorities vary when it comes to technology adoption and transformation. 

Generally speaking, digital businesses rely on technology to operate and grow. Depending on your industry, that might look like:

  • Using productivity apps and task management systems to automate workflows
  • Leveraging AI to improve customer experience
  • Capturing data to improve business intelligence
  • Or, for online-only companies, doing 100 percent of your work via digital platforms

But just downloading a few apps doesn’t make you a digital business. True digital transformation is the slow process of shifting away from manual processes and toward a customer-centric, technology-focused business model.

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Becoming a digital business impacts every part of your organization, from employee experience to customer service to back-end maintenance and management.

Examples of Digital Business

One example of a digital business is Amazon.com. Amazon.com started as an online bookstore, but they have since expanded to become a powerful e-commerce platform. Amazon.com uses digital technology to connect buyers and sellers and to facilitate transactions. Another example of a digital business is Uber.

Digital Business Benefits

What is digital business and what are its benefits? To answer this question: there are numerous advantages of transforming a business into a digital business. It improves the effectiveness and efficiency of organizations. Apart from that, it also boosts productivity. Below given are some of the pros of digital business:

1. Enhances Productivity

Automating manual processes has a huge impact. For example, imagine you automate an assembly sector inside your industry. Now, there is zero to the minimum need for manual labor to work in that particular sector because everything will be done with the help of robots. Therefore, there will only be minimal mistakes. Apart from that, the process is also faster.

2. Lower Operational Costs

The main objectives of every business are to save time and money. Doing manual processes and tasks is extremely time-consuming and relatively slower than automated techniques. In addition, you also need to pay the laborers on a monthly or hourly basis, which would involve a lot of money. 

It has been proven that inefficient processes can cost companies up to 25 % of their revenue. When the processes are done manually, there are higher chances of mistakes. In such cases, digitalizing the organization will be more efficient and less expensive. 

An interesting fact about digitalization is that it can save up to 90 % of the companies’ operational costs.

3. High Quality and Consistency

A major advantage of having a digital business is that it can guarantee that all the operations are made consistently. It provides high-quality outputs. 

For instance, automating a customer service sector will provide the consumers of that sector with high-quality information and support. 

4. Governance and Reliability

The automated services are very consistent, enabling the user to rely on them. It will help in the following way:

  • Run your business.
  • It helps in giving reliable procedures and methods to the clients.

5. Better Decision Making

Information management and digitization work very closely. When the information is analyzed, it will help transform it into knowledge. Knowledge helps in making better decisions.

4 Concepts of Digital Business

Becoming a digital business is a foundational shift, so it’s important to consider the key concepts guiding your transformation.

What are businesses looking to achieve by going digital? Most organizations cite the following four concepts:

1. Flexibility

Our world is constantly changing, and companies are looking for a business model that allows them to be more flexible. During the COVID-19 pandemic, for instance, businesses realized that technology could help them pivot from on-site to work-from-home and back again without creating a logistical nightmare. Going digital allows you to adapt to change quickly without the dead weight of time-consuming manual processes. 

2. Scalability

With scalability, processes match fluctuations in your workload. Digital businesses can quickly scale up or down to meet the needs of the organization. As an example, a scalable business can efficiently onboard new employees during periods of growth or expand their data storage when taking on a large client. 

3. Culture

Digital business requires changing how you operate, and this starts with changing how you think. To truly become a digital business, you need your staff to be on board. Though tech leaders in your organization may be at the forefront of this work, building a philosophy of productivity, efficiency, and automation into every department's mission is vital to success.

4. Quality 

Our final digital business concept seems straightforward, but it’s important to keep in mind that quality is key as you make big changes. Often, we become swept up in innovation for innovation’s sake. But this won’t add value to your business. If your new processes aren’t enhancing quality, you need to rethink your strategy. 

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Components of Digital Business

To digitize a business, there are some essential components that the business should possess. Let us see what they are:

1. Artificial Intelligence

The other name for Artificial Intelligence is AI. It is considered one of the most efficient methods in digital businesses. It helps the organizations anticipate customers' desires, faster forecasting outputs, etc. It can detect what is happening and calculate the reasons for it. It also provides the most appropriate solutions for any problem that occurs. 

2. Internet of Things

Another name for the Internet of Things is IoT. It can help develop smart products. Also, the arrival of 5G internet will help businesses reach their goals faster. It will also help increase the productivity of the processes. 

3. Digital Engineering

This technology plays a vital role in transforming customers' journeys. It also enables rapid innovation, which will help launch new brands and technologies.

Digital business isn’t just a transformative trend for major companies like Home Depot and GE. Many digital businesses start online (and remain online) with 100 percent of their operations existing in a digital space. Online-only digital businesses often have low startup costs and can quickly scale to meet the demands of the market, making them a popular choice for both experienced and fledgling entrepreneurs.

Sellers on Etsy, the popular ecommerce platform offering handmade goods, are a common example of the digital business trend. Etsy reported in 2017 that 97 percent of the business owners selling on their platform ran their business from home, and more than 75 percent were one-person operations. Despite being considered a “microbusiness,” many successful digital business owners on Etsy said it was their sole occupation – about 32 percent of sellers. 

Other popular digital businesses include:

  • Social media and content marketing 
  • Web design 
  • Online retail (clothing companies, online bakeries, bookstores, etc.)
  • Drop-shipping
  • Industry consulting 
  • Wedding planning 
  • Virtual assistants

As we have discussed everything related to digitalization and digital business, let us see some examples to understand this concept clearly:

Netflix: It is an excellent example of digital business, which has switched from e-business to digital business. Back in the day, Netflix used to supply DVDs to retail stores, and people used to buy them. However, with the commencement of new technologies, Netflix can transform itself into a digital business. People find it more convenient because they are allowed to stream videos online without having to purchase CDs or DVDs. Now, they can watch any movie or TV show very conveniently.

Uber: Uber is a transportation technology that allows its users to ride from one place to another. Uber uses GPS technology to locate the users and gives them their ride to any place they need, up to a certain distance. Taxis, autos, etc., are being operated under uber. Mostly, vehicle owners can tie themselves up to provide uber service to their passengers. Even delivering food is possible through uber. Uber has an enormous customer base and is very successful in many countries.

Disney: Disney used to be a traditional business that has recently switched to a digital one. It improves the experience of the users. Disney provides many services. It is a streaming site, a theme park, a movie production company, etc. Children have enjoyed Disney since the olden days and will still improve due to digitalization. 

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Growth of the Digital Economy

The digital economy is growing at an unprecedented rate. In 2016, it was estimated that the global economy was worth $11.5 trillion, which is expected to increase to $19 trillion by 2025. This growth is driven by several factors, including the increasing popularity of online shopping, the proliferation of mobile devices, and the rise of the sharing economy. As more and more businesses move online, it is becoming increasingly important for companies to have a solid digital presence.

The digital economy has increased in recent years as more and more businesses move their operations online. This trend is driven by several factors, including the increasing accessibility of the Internet, the growing number of consumers who are shopping online, and the ease with which businesses can set up and operate a digital presence. The result is that the digital economy is now worth trillions of dollars and is expected to grow in the coming years. This growth has a profound impact on how businesses operate and is transforming how the economy functions.

Common Elements of a Digital Business

A digital business is a company that uses digital technologies as an integral part of its business model and operations. Many digital businesses are born-digital companies, but even traditional businesses use digital technologies to create new value for their customers and shareholders. The critical elements of a digital business are: 

1. A customer-centric business model that delivers value to customers in a new or different way.

2. An agile organization that can rapidly respond to market or customer needs changes.

3. A data-driven culture that uses data to drive decision-making.

4. A focus on creating a great customer experience.

Digital Business vs. E-Business

In the 21st century, many businesses have turned to digital methods to expand their customer base and remain competitive. By definition, digital business is the creation of new business designs by blurring the digital and physical worlds. In contrast, e-business uses the Internet to conduct business transactions between companies and customers. E-business includes marketing, sales, customer service, and collaboration with business partners.

How to Build a Successful Digital Business

With so many benefits to starting a digital business, you might be wondering: how do I get started? 

Whether you’re taking your traditional business into the digital world or starting a company from scratch, here are five tips to help you build a successful digital business. 

1. Automate 

Digital businesses have one thing in common: they automate everything. Why waste time doing mundane tasks that AI can do for you when you could be spending that time growing your business? Examine your processes and start automating wherever possible. 

2. Train Your Team

People are the foundation of everything you do. Invest in upskilling your team so they feel confident using new technology. They’ll help you find new ways to embrace tech as your business grows. 

3. Stay Agile 

Digital transformation takes time, and staying agile is one of the foundational digital business concepts. By making micro-adjustments to your digital business strategy as you go forward, you’ll have a more satisfactory end-product. Evaluate your transformation frequently and gather as much data as you can to help you make the right long-term decisions. 

4. Invest in Digital Marketing 

You can have the most efficient organization in the world, but it won’t do you any good if you don’t have any customers. Invest in a smart digital marketing strategy for your organization. Train your marketing team on the best digital marketing strategies for today’s market, from SEO optimization to social media management and beyond. 

5. Don’t Be Afraid to Go Big 

Digital businesses have huge room for growth, so don’t set your sights too low. There’s no telling where this new technology could take you.

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Best Approach to Create a Digital Business

Digital business is a term that refers to businesses that rely on electronic technologies to conduct their day-to-day operations. This can include using social media to advertise their products and services, completing transactions, and managing their finances online. In recent years, there has been a shift towards digital businesses, as more and more consumers are turning to the Internet to purchase goods and services. This trend will only continue as the Internet becomes more accessible and user-friendly.


1. What are the challenges of digitalization?

Below mentioned are some of the biggest barriers to digitalization:

  • Lack of vision of corporate
  • Change in management capabilities
  • Legacy systems
  • Inability to experiment quickly
  • Risk-aversive culture
  • Inadequate and improper collaboration between lines of business and IT.
  • Lack of talent

2. What are the advantages of digitalization?

Following are the benefits of digitalization:

  • Lesser error or mistake
  • Enhanced agility
  • Streamline processes
  • Decreased operational expenses
  • Higher productivity
  • Enhanced transparency
  • Reliability and governance

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