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What is Digital Business? A Beginner's Guide

05th Sep, 2023
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    What is Digital Business? A Beginner's Guide

    What is a "digital business"? It is one of the most requested queries on the internet. So, what does it mean to digitize your business? Business digitalization is the application of digital technologies to alter a business model and create new revenue and value-generating opportunities. Any firm can be "digitalized" by adopting digital technologies to become a digital business. Higher-income generation and creation of new opportunities for value addition are the major goals of the digitalization of business. Currently, digitalization is a process that many businesses are going through. Leading companies have already used this strategy with great results in terms of revenue, profits, and customer happiness.

    Anyone who wants to start their own business or convert their current firm into a digital one must stay up to date on the latest information and statistics regarding digitalization. Let's look at what digital business is and talk about everything related to it and the digitization process in this informative article. You can try a Full-Stack Certification course to gain knowledge of the business world. 

    What is Digital Business?

    A digital business is one that, both internally and externally, leverages technology. 

    Since the Internet became widely accessible to businesses and individuals, information technology has altered the architecture and operation of businesses. The way organizations operate daily has undergone a significant transformation. This has increased the advantages of data assets and efforts with a focus on technology.

    Businesses have experienced a significant impact from this digital revolution, which has accelerated company activities and procedures to take advantage of opportunities in a strategic approach fully. A digital firm makes the most of this to succeed in this age and avoid disruption. C-Level personnel must assist their organizations in maximizing possibilities and minimizing risks.

    Global digital business has also seen a change in purchasing power; instead of depending on IT to drive change, different departments now seek the apps that will best suit their needs. A digital business product is an intangible asset or piece of media that can be sold and distributed online repeatedly without the need for inventory replenishment. 

    Concept of Digital Business

    Let's check the core concepts in digital business. The following are some of the best concepts:  

    1. Flexibility

    Flexibility can help you develop an agile strategy and be prepared to deal with any situation. It is among the important digital business concepts. Nobody obsesses over the finer points of what they wish to see; instead, they focus on what works. It is okay if your initial hypothesis about what might work does not turn out to be successful. What matters most is how you handle that unsatisfactory rollout. 

    2. Scalability

    As you steadily add the required resources to fulfill the growing demand for your offerings, scalability is the capacity to create, sell, and deliver more goods and services without compromising on quality or price. 

    3. Culture

    A digital culture encourages workers to collaborate with partners and customers to develop fresh ideas. The emphasis on the customer journey is a prime example of external orientation; employees impact product development and enhance the customer experience by placing themselves in the customer's shoes. 

    4. Quality

    Our final idea looks simple, but as you make significant changes, it's critical to remember that quality is paramount. We frequently get caught up in innovation for its own sake. But your company won't benefit from this in any way. If your new procedures aren't improving quality, your approach must be reconsidered. 

    Benefits of Digital Business
    Benefits of Digital Business

    Cutting-edge technology like 5G, the Internet of Things (IoT), and artificial intelligence will greatly impact how things are done in the future. 

    What significant benefits does digitization bring to your company? Digital business advantages include:  

    1. Enhances Productivity

    Productivity has always been fueled by technology. And with the landscape of digital technology evolving so quickly, it's more crucial than ever for businesses to make sure that their systems and processes are created to allow employees to work more efficiently.

    Utilizing innovative technology, such as the cloud, mobile devices, big data, and analytics, can help businesses increase their productivity and efficiency. 

    2. Lower Operational Costs

    Every company wants to save time and money as its primary goal. Manual processes and tasks take a long time to complete and move much more slowly than automated ones. The laborers must also be paid monthly or hourly, which will cost a lot of money.

    Process inefficiency has been shown to cost businesses up to 25% of their income, and error rates are higher when processes are carried out manually. In these situations, digitizing the business will be more effective and less expensive. 

    3. High Quality and Consistency

    One of the most significant benefits of digitization is that it ensures that each activity is carried out consistently, producing high-quality and reliable output.

    4. Governance and Reliability

    You may rely on automated processes because they are reliable for running your company. The dependability of workflow automation ensures that the law always performs crucial corporate governance processes.

    5. Better Decision-making

    Information analysis turns data into knowledge, and knowledge helps people make better decisions; therefore, digitalization and information management go hand in hand.

    Components Required to Create a Digital Business

    The following are some of the main components required to create an online digital business: 

    1. Digital Engineering

    Customer journeys are transformed by digital engineering, which enables quick innovation that launches new brands and market-leading technology that reframes customer expectations. 

    2. Digital Strategy

    Customer demands and internal pressure to offer digitally ready goods and services are increasing along with the proliferation of digital tools. It is essential to implement an efficient digital strategy across front-, middle-, and back-office IT environments to remain relevant. 

    3. Interactive

    A method based on the belief that every human experience must be guided by what people feel and need. These experiences begin by integrating a company's systems and narrative. 

    4. Internet of Things

    The Internet of Things is also referred to as IoT. The introduction of the 5G internet will also assist businesses in achieving their objectives more quickly. It will also help in boosting the processes' productivity. 

    5. Artificial Intelligence (AI)

    Artificial intelligence (AI) is essential for digital online business transformation because it may supplement or automate decisions and actions now carried out by people. Organizations can use AI to lower labor costs, create new business models, and enhance workflows and customer service.

    Models of Digital Business

    A digital business model is essentially how your company generates revenue online or how you use the internet to exchange goods and services for cash. To motivate your online efforts, let's have a look at some of the most successful models.: 

    1. Free Model

    A free business model relies on and is financed by advertisements from websites like Facebook and Google. The objective behind this business strategy is to provide a service without charge, making the customer the product. 

    2. Freemium Model

    Companies develop a simplified version of their product and offer it for free to customers. Slack, Asana, Dropbox, Evernote, and other well-known businesses that employ the freemium digital business model are a few examples. 

    3. On-demand Model

    The analog framework, in which customers had to utilize a service by the source's schedule and format, has been replaced by the on-demand model, which is particularly popular with media and content providers. Spotify and Netflix are the two most popular and well-known on-demand services. 

    4. E-commerce model

    E-Commerce is a well-known digital business concept. It is simple to implement by organizations beginning from nothing online and offline companies looking to embrace a digital transformation. Customers from all over the world prefer Amazon, the most popular E-Commerce platform. 

    5. Marketplace Model

    In this concept, buyers and sellers trade goods and services on a two-sided marketplace run by a third party. Examples of this business strategy include product-based eBay, Etsy, and service-based Uber. 

    6. Ecosystem Model

    The ecosystem is one of the most promising models. To offer an all-inclusive experience, the company starts with one major product and progressively introduces additional related products. Google is one of the most prosperous ecosystem businesses. 

    7. Sharing Model

    The sharing model is often referred to as the access-over-ownership model. Customers can utilize a product using this model without purchasing it. Airbnb, Uber, Zipcar, and Lyft are some of the most prosperous businesses that employ the sharing model. 

    8. Experience Model

    Adding worth to things that would be impossible without the use of digital technologies. For instance, Tesla transformed the auto industry by integrating digital services and even a digital ecosystem into its automobiles, which is now the main driver of its economic model. 

    9. Subscription Model

    The subscription-based business model enables organizations to lower the cost of their clients' access to their goods and services. This concept may be applied to virtually any service and a wide range of products, but it works best with digital publishers, SaaS products, and streaming services. 

    10. Open-source Model

    Firefox is one of the most popular open-source examples. The program is accessible for download, use, and community contribution worldwide. Business spreads swiftly since Firefox is free and has a large community of contributors. It typically draws a lot of (free) resources to enhance the software. The financial model of Firefox depends on partnerships and royalties from search engines. 

    11. Hidden Revenue Generation Model

    Hidden revenue is a business model in which corporations do not charge clients for utilizing their products and instead make revenue from other parties. While Google and Facebook offer their users free services, they generate revenue from advertising based on user information.

    Digital Business Example/Applications

    Several organizations have served as positive examples of digital technology by utilizing the most up-to-date technology to accomplish their business objectives. See how businesses used digital transformation strategies to approach the process and how they succeeded in achieving their goals. Web Development Certificates provide full courses in front-end development. 

    1. Implementation of Domino's Chatbot

    Chatbots powered by artificial intelligence (AI) assist businesses in achieving high-standards of food safety, enhancing traceability, and lowering costs throughout the various phases of food processing. By utilizing the advantages of digital business, the food and beverage sector can reach its full potential. 

    2. Nike's Digital Sales Strategy

    In the retail sector, digital transformation entails disruption, new offerings, and technologically enhanced system performance. To develop a linked customer interaction strategy leveraging technology, retailers will need to look beyond minor improvements and reimagine procedures.

    3. Disney Application

    Disney World parks appear to offer the most "traditional" entertainment. Unexpectedly, the brand has increased visitor experience and emerged as one of the best instances of digital transformation. 

    The parks now allow visitors to make payments, manage reservations, and enter their hotel rooms using the MagicBand. Each visitor is uniquely identified by their My Magic straps, giving them personalized experiences. Personalized interactive screens are displayed in the park as part of the system. 

    4. AUDI

    It is difficult to find an industry that is more "analog" than the automotive sector. Nevertheless, AUDI decided to embrace the digital age with its new offerings and has since emerged as one of the most successful examples of digital transformation. 

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    How to Build a Digital Business?

    Here are five suggestions to assist you in creating a successful digital business, whether you are expanding your current firm online or establishing one from new. 

    • Automate 
    • Prepare Your Group 
    • Be flexible 
    • Spend money on online advertising 
    • Go Big, Don't Be Afraid 


    The growing buzz around modern technologies and business models, digital offerings, and out-of-the-box management approaches provide meaningful insight into how digital business leaders think and work. It also helps us have a fair idea of what to expect in the future and how to plan for it strategically. Enroll yourself in the KnowledgeHut’s Full-Stack Certification course to learn about these technical insights.

    Frequently Asked Questions (FAQs)

    1What are the challenges of digital business?

    The following are some of the challenges of digital business: 

    • Staff pushback 
    • Insufficient knowledge to oversee digitization initiatives 
    • Organization structure 
    • Absence of a comprehensive digital strategy 
    • Low budget 
    2How do I start a successful digital business?

    The following are the tips for starting a successful digital business: 

    • Prepare a plan 
    • Create a digital strategy 
    • Use the right tech tools 
    • Hire digital talent 
    • Measure the success 
    3What is an online digital business?

    The term "digital business" describes the application of digital technologies and resources to manage daily business operations, increase revenue and performance, and provide customers with individualized, relevant experiences.


    Bala Krishna Ragala

    Blog Author

    Bala Krishna Ragala, Head of Engineering at upGrad, is a seasoned writer and captivating storyteller. With a background in EdTech, E-commerce, and LXP, he excels in building B2C and B2B products at scale. With over 15 years of experience in the industry, Bala has held key roles as CTO/Co-Founder at O2Labs and Head of Business (Web Technologies) at Zeolearn LLC. His passion for learning, sharing, and teaching is evident through his extensive training and mentoring endeavors, where he has delivered over 80 online and 50+ onsite trainings. Bala's strengths as a trainer lie in his extensive knowledge of software applications, excellent communication skills, and engaging presentation style.

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