The Internet is Changing the Way We Do Business

Digital is changing everything. I’m sure you’ve heard it countless times. Maybe you are tired of hearing it. Maybe you wouldn’t be if commentators and fortunetellers were a bit more concrete about their presentiments. 

I’ll cut to the chase. In this article I cover three facets of a multi-faceted trend:

• What are digital platforms and how are they affecting business?
• How are digital platforms changing the way the world does business?
• How has the average consumer’s behavior changed to adapt to data flows?

No platitudes, no hyperbole, just facts and figures.

Now, when someone talks to you about digital, you’ll have a clear sense of what that looks like in the real world. I did my best to make this information palatable and digestible. 

Data Flows Carry More than Information

At the end of 2015, it was estimated that some 3.2 billion people worldwide were online. That’s 43.4 percent of the global population. The level of connectivity has changed the way businesses operate, people share and communicate, and the bevy of resources available to us all.

One conspicuous trend is that customers can now order products online, track them using RFID codes, and pay for them via digital payment methods. Global online platforms such as Alibaba, Amazon, eBay, and Facebook have linked businesses and customers from around the world and eased business between them. This has reduced the cost of transactions, the time involved in transacting, and created hyper-connected and hyper-speed global flows. 

The spillover into the economic sector has prompted countries and companies alike to expand bandwidths across the globe. In the past decade alone it has expanded over 45 times. In objective terms that represents growth from 4.7 terabits per second (Tbps) in 2005, to 211.3 Tbps in 2014, which amounts to an annual growth rate of 52 percent. At that rate, forecasts put total Internet Protocol (IP) traffic at triple what it is now, and cross-border bandwidth at 9 times more than it is now. 

An interesting fact about bandwidth that many people don’t know is that Internet traffic travels via a vast cable network spread across the world’s ocean floors. It runs along coastlines and between continents.

From 2007 to 2014, new submarine cables were invented and old ones upgraded, which enhanced cross-border capacity by 38 percent. This allowed more emerging economies to integrate themselves to the network. In 2005, 75 countries used more than 1 gigabit per second (Gbps) of cross-border bandwidth. By 2014, that number was up to 165 Gbps. 

As the Internet spreads its tendrils farther and farther around the Earth, how we interact, what we can find on the Internet, and how businesses and governments treat us will change. 

No More Business as Usual 

Digital platforms have forced companies and governments alike to be more transparent. For example, businesses with built-in customer-bases and effective ways to reach them often make that information available publicly. This nourishes the marketplace and helps customers get what they want faster and more pointedly. 

More and more the data flows between countries are made up of useful consumer data, interactions with suppliers, and the oversight of operations. As a result, the 1:1 correspondence between the real world and the virtual world is tightening. In the future, businesses will have enormous stockpiles of information compiled by monitors, sensors, and tracking devices that record their physical assets into data that can be analyzed. This phenomenon is referred to as the “Internet of Things” (IoT). 

Cisco estimates that machine-to-machine connections will account for more than 40 percent of global devices and connections by 2019. If that were to happen, it could easily and quickly account for more than half. 

What’s more, machine-to-machine connections take up a nominal share of IP traffic—they are speaking the same language after all. And yet, those flows represent disproportionately larger economic value since they aid machine processes and supply chain efficiency. 

At the human-to-machine level of complexity, there are digital platforms that allow businesses and people to connect and exchange services like never before.

Digital platforms subsume e-commerce marketplaces, operation systems (such as Google’s Android and Apple’s iOS); social networks (such as Facebook, Instagram, Twitter, WeChat, and QQ); and media sites (such as YouTube, Uvideos, Spotify, Hulu, and Netflix). 

Digital platforms also subsume virtual global marketplaces that match job seekers with employers (LinkedIn); freelancers with assignments (Upwork); borrowers with lenders (Kiva); creative projects with funders (Kickstarter); travelers with accommodations (Airbnb); and students with education (Khan Academy). 

Corporations can capitalize on this traffic and breadth of virtual geography by creating their own digital platforms. However, the most successful digital platforms are open ecosystems that put a roof over legions of diverse participants. Amazon, Alibaba, eBay, Flipkart, and Rakuten are just vessels for millions of vendors who create enough product variety and price competition to attract enormous global customer bases. What the digital platforms do is lend the vendors their payment infrastructure, logistics support, machine learning, and global visibility.

On the topic of e-commerce marketplaces, its effects on international trade are staggering.

About 16 percent of current B2C e-commerce transactions are cross-border, and some estimates project that by 2020, they’ll be up to almost 30 percent. In 2014 it was an estimated $1.8 trillion to $2 trillion market. This is equal to around 12 percent of global goods trade.   

For many companies transacting online and making their processes, resources, and company information available publicly will become not so much an alternative as a prerequisite for market success. This changes the way consumers perceive them and the way businesses are structured. Many legacy companies are struggling with these changes, as it is contrary to their ethos. Newer companies, however, are already built from the bottom up with these imperatives in mind.

Why have these imperatives arisen? Because consumers demand them.

The Average Buyer is on Steroids 

From a consumer standpoint, shopping on these digital platforms is not only simple but also cost-effective and time-efficient. The size of the platform, the variety of vendors, consumer feedback, and research availability, in combination with automated processes enhanced by smart algorithms, all make purchasing easy and confident.

The average buyer no longer falls for cheap gimmicks and pretty words. The quality of the product or service, as attested to by fellow buyers, is central to company success. Many companies spend considerable resources trying to build their online reputation through reviews, blogs posts, influencer marketing, and other such means. It’s a fine line to walk though. 

At any point that could all blow up in a company’s face because consumers are constitutionally wary of manipulation. This skepticism has revealed itself in other areas, like politics. 

Therefore, companies must work hard to present themselves genuinely and transparently, while listening to their consumers. The newer generation of companies understands this, which is why they often put customer service at the fore of their business models. Zappos, for one, is an excellent example of customer service that wins hearts.

This is an interesting dynamic that I believe over time will change social perceptions of companies. People will come to think of them less so as abstract entities and more so as abstract personalities with relatable traits.

So Much Left Unsaid

I quickly covered three critical changes that have arisen in tandem with the proliferation of digital technology. This is a vignette of a much larger portrait—and a mercurial one at that! The dynamics, trends, and behaviors are constantly changing. 

A few things are clear, however.

Consumers are on the winning side of this change. Companies are being forced to listen more and more, and to act more and more like leaders, and less so like magicians. Global citizens are gaining the opportunity to easily compete in the market. And our dependence on the Internet grows everyday.

Thank you for reading. I have written hundreds of articles here on LinkedIn and am also a columnist for Forbes & HuffPost. If any of my articles help you and you'd like to consider nominating me for the LinkedIN Top Voices List then kindly fill out this short form. With immense gratitude.