Digital Business: Advantages, Disadvantages, and Models

This report discusses the concept of digital business, its advantages, and disadvantages. It explores various emerging models of digital business and their implications on companies like Amazon. The report also examines the impact of collaborative relationships and strategic alliances in the digital era. Additionally, it covers the principles and concepts of e-commerce.

DIGITAL BUSINESS

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
Digital business and its advantages and disadvantages...............................................................4
New, emerging digital model and their implication on Amazon.................................................6
Impact of collaborative relationship and strategic alliances through digital technology.............9
E-commerce and its principles...................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES................................................................................................................................1

EXECUTIVE SUMMARY
Digital business or digitalization of business refers to converting the physical form of
business into digital or online mode. It is one of the emerging and trending form of business.
This report will study about digital business and its importance that it will provide to companies
who operate their business in digital mode. In addition, of this various models associated with
digital business along with the strategic and collaborative alliances would also be included in this
report. Principles and concept of e-commerce should be a part of report which is being discussed
in the last section of this report.

INTRODUCTION
The main aim of this report is to discuss the concept of digital business along with its
advantages and disadvantage that companies could grab through the implementation of this
concept. This report also deals and discuss the various new and emerging models of digital
business that can be implemented and adopted by Amazon which is one of the famous e-
commerce company that operate its business through digital mode. This report will also discuss
the concept of strategic and collaborative alliances along with various e-commerce principles
that are being highlighted at the end of the report.
MAIN BODY
Digital business and its advantages and disadvantages
Digital business:
It refers to performance of business along with the involvement of technology. In simple
words it refers to use of technology in the working operation of business so that along with
raising efficiency and accomplishment of objective, customer's experience can also be raised at
the same rate. It can also be said that if any business will convert its physical form into
digitalized mode then it would also be categorized under the category of digital business (Sousa
and Rocha, 2019). Thus, it would be right to said that dealing and operation of business through
the use of technology and make the business appear on digital platform is said be as digital
business and digitalization of business of the company.
Advantages:
There are many advantages that can be grabbed by the companies who will implement
digitalization and digital technology in the working operation. The very first advantage is raising
the scope and coverage of the company in the market place. Through the adoption of
digitalization companies can raises their coverage over many more market in comparison of
dealing in physical forms. This means that digitalization will raise company's presence in the
competitive market (What are the Benefits of Digital Transformation?, 2020). Along with raising
coverage the sales and revenue of the companies will also raise if they adopt digitalization in
their business.

Likewise, companies will also raise the experience of their customers through the
implementation of digital technology in their operations. Digitalization also plays one more
advantageous role in the form of raising product quality of the company. This means that through
digital mode companies can have better interaction with their customers and as a result they can
have better choice to raise the quality of their product through the involvement of customer's
feedback. This will have dual advantage to the company in the form of meeting customer
demand and raising their share (Singh, Gaur and Agarwal, 2017). Along with that company's
share of profit will also raise. Through the use of digital technology and converting the business
into digital mode will also lead the company to move and meet the need of global environment
and technological environment. Thus, it would not be would not be wrong to said that digital
business will make the company more accessible and profitable.
Disadvantages:
Apart from its advantages, there are some disadvantages regarding the concept of digital
business. These disadvantages broadly includes raising of cost. Though it raises sales and
revenue of the companies but at the same time it also raises cost of operation too. This is because
a lot of cost is being required in the implement-ion of digitalization and technologies in the
company. Another disadvantage includes raising dependency of the business towards the
technology. Those companies who adopt and follows this digital business concept will face an
issue of dependency. Along with that rapid changes and up-gradation in technology is also a
major disadvantage and issue associated with digitalization (Veleva and Tsvetanova, 2020). In
order to meet these changes again a lot of expenses has to be incurred by the companies. One
more and major issue related with this concept is privacy concern.
Along with raising cyber crimes, privacy issue become more active and as a result could
affect severely the companies in terms of depriving and creating bad image in the market. As it
includes price transparency so it also becomes a disadvantage for the company. This means due
to transparency in pricing it becomes very difficult for companies to determine the prices of their
product because of high price competition (Vironen and Kah, 2019). And as a result of such
competition any small variation in prices from company's side may leads to loosing of a big
share of customers.
Application of advantages and disadvantage of digital business in contrast of Amazon:

As per the association of advantages and disadvantages with digital business there is also
a similar implementation of those pros and cons on Amazon too. Through the mode of digital
business the scope of Amazon has also raised. It has lifted its coverage in the form of dealing and
meeting the needs of customer from all around the world through this digital mode (Holotiuk and
Beimborn, 2017). Digitalization of business by Amazon also leads to raising of its sales to a
substantial percentage. Along with rising sales percentages the profit proportion of Amazon also
raised. Digital move of Amazon has lead the company to become the market player.
As due to digital working its coverage and scope raised which as a result also increase its
global appearance. Through this mode it is not only able to sale its product in the home country
but is also availing its product across the globe.
However on the other hand, in comparison of pros, Amazon has also dealt with some
cons also including raising of cost of operation or data security issue. But the intensity of these
cons are much lower as compared to advantages that it got through this digital move.
New, emerging digital model and their implication on Amazon
Key business issue:
While operating business by companies in digital mode many issues arise in the form of
cyber security, ethical issues and various other. However, through the adequate implementation
of various digital model these issues can be mitigated along with lowering their intensity. It is
usually seen that digital operation of business mainly deals with cyber security or data leakage
issues but with adequate selection of appropriate model these issues can be reduced.
Digital models:
There are many emerging and new models regarding digital business of the company. Out of
them some are:
Freemium model:
As per this model some and basic services of the company are available at free of cost
while customers have to pay additional charges to avail its premium services.
This is one of the best digital business model which will not only helps the company to
sale its products and services but at the same time also helps to grab more customer share
through the development of interest in them towards its services. As per this model companies
will raise its sales and customer's share through making availability of both basic and specialized

services (Holm and Günzel-Jensen, 2017). For example: This model is generally used by Spotify
which is one of the famous music company who provides its customer's a choice to listen normal
songs at free of cost while exclusive and new songs are availed at certain additional prices.
Peer to peer (P2P) model:
As per this model services and products are exchanged. This means that P2P model
connect those people who are in need of product and service which is being possessed by some
other person. This services will be exchanged in terms of payment for service or it will avail for
some period (Piscicelli, Ludden and Cooper, 2018). This model is not only useful for meeting the
needs but implication of this model is also guided by ethical consideration. This means that P2P
model always ensures that the ethical code of conduct will be maintained and clients information
will never be leaked.
This could be understood with an example of Linked In. It is one of the famous company
which helps the people to get their dream job. This means that, this company possess those
services which is being required by some other people who don't have it. Thus, people by paying
a certain amount of money can make avail these services.
On demand model:
As per this model instead of owing the product and service it is being accessed on
demand. This means that this model meet the needs of those people who want to use the services
but can't own by themselves so this model will avail those services on the demand of customers
(Wirtz, 2019).
This is one of the best model which not only helps the companies to raises their sales but
it also helps the customers to give access of such exclusive services which they can't own. For
example: Uber. It is a famous company which offers rides to its customer on their demand. This
model is fully applicable over this company because it makes the availability of cars which some
people can't access it by own.
Subscription based:
This model is based on the fact of availing the services on the basis of getting revenue
either monthly or quarterly. As per this model services and subscription is being given to
customers who can use the services and on behalf of that pay subscription fee (Viglietta, 2019).
This model is generally followed by those companies who have capability to make avail
the services for certain period and on behalf of that charge adequate amount from them. For

example: Netflix, which provide entertainment services to its customers on making and availing
a subscription of it.
E-commerce model:
This model avails the sale and purchase of products of the companies through the use of
internet. This means that through this model companies can sale their product online or through
the use of internet (Chen, Tang and Yang, 2018). Similarly, customers can also buy those
products over the internet. This is one of the best model because it not only meet the needs of
companies but at the same time due to its security features it can reduce the chances of cyber
crime and data leakage issue.
In addition, this model further be categorized into different forms including business to
customers where products are directly sold by companies to its customers. Likewise, some
business follows B2B (business to business) model where instead of selling products to the
customers it is being sold to some other business which make the final availability of products to
customers.
This model is usually followed and implemented by those companies who deal with
commercial services which could either be retailing, or any other. For example: E bay, Flip-cart.
Implication of model on Amazon:
Out of the above discussed model the main model that it usually uses is e-commerce
mode. Through this model it makes avail its products to its customers over internet. This is one
of the best and suitable model for Amazon because this model helps it to sale and interact with
its customers from all over the world. Apart from sales this model also helps it to accomplish its
goal in the form of raising profit along with sales.
In addition, of e-commerce model it also follows one of the emerging model that includes
subscription model where it allows the customers to take subscription of it and avail extra benefit
in the form of fast delivery, early access to sales, extra discounts and many more. It charges
certain amount of fee for its subscription which is being provided in the form of prime
membership. This model also helps it to raise its customer attraction along with earning high
revenue.

Impact of collaborative relationship and strategic alliances through digital technology
New collaborative relationship:
It refers to a relationship when two or more than two people agree to work together for
the accomplishment of common goal. It is one of the best method of working with different
individual whereby common objective is being achieved by them (Richards, 2017). It is a
common practice but with the involvement of digital technology this relationship has been
shifted to online mode whereby through the use of online software they collaborate their business
and accomplish common goal.
Strategic alliances:
It refers to an agreement or alliance under which by remaining separate entity two
companies will agrees to undertake mutually beneficial project (Gundolf, Jaouen and Gast,
2018). Under this alliance two companies will not combine their business but work for mutually
agreed project and goal.
Advantages of Collaborative relationship:
Implementation of this concept includes many advantages in the form of raising
interaction or raising team spirit. Along with that it also broaden up the access of getting
information and knowledge (Cheng and Chang, 2020). This concept also raises the productivity
level along with reducing the level of competition.
Disadvantage of collaborative relationship:
Along with advantages it also bears certain disadvantages in the form of creating
misunderstanding or communication errors. As digital collaboration lessen physical contact so it
creates communication as well as understanding issues. One of the major disadvantage of this
relationship also includes decision-making issues and problems (Esposito De Falco, 2017).
Sometime it also creates situation of confusion due to difference of opinions. Raising cost is also
considered as major issue for digital collaboration.
Pros of strategic alliances:
There are many advantages associated with strategic alliances. Out of them some
includes: sharing of knowledge and expertise because of the different perspective, grabbing and
easy access over new market, high innovation, increased productivity and production level, helps
in dividing cost are all included in its advantages (Serrat, 2017).
Cons of strategic alliances:

Bad management, communication issues, unequal distribution of benefits, risk towards
brand reputation, difference in culture and working practices are all included under the cons of
strategic alliances through digital technology (Abraha and Hyder, 2021).
Applicability of strategic alliance on Amazon:
Out of the above alliances, Amazon usually follow and implement strategic alliance
tactic. As per this it makes alliances with local traders and companies to whom it either sale or
purchase products and services. Applicability of this tactic will helps the Amazon to access the
product of local traders and suppliers at low cost. Similarly, through this alliance with local
companies and trader it sales its products to them and thereby raises it sales and revenue
percentages too. Thus, it would not be wrong to said that this strategic alliance helps the Amazon
in getting benefit in the form of lowering its cost of production due to accessibility of raw
material at low cost. Similarly, this strategy also helps it to raise its profit percentage too.
However, in addition of this Amazon can also plan its collaborative alliance with some
other companies whereby without merging the business entity it can achieve its objective.
Adoption of this mode would also be beneficial for it because it will not only able to achieve its
objective but at the same time it can operate its own business entity separately without having an
impact over its brand image.
E-commerce and its principles
E-commerce:
It can also be called as electronic commerce where buying and selling of goods is being
performed using the internet or through the use of internet. It can also be said as
commercialization of activity along with the involvement of internet (Kwilinski, 2019). It is also
one of the important digital business model which helps the companies to sale their products and
avail their services over the internet.
E-commerce principles:
There are certain principles which is very required to be followed in the concept of e-commerce.
These principles are:
User friendly:
It is very essential that business over e-commerce should be user-friendly. This means
that it should not be too much complex to operate. If it will be complex then customer would be

interested in accessing those business. Thus, the working and operation should be as per user and
easy.
Unique elements:
This principle is also very important for those companies who use e-commerce concept.
Since with ever rising competition it is very essential to make the business of the company
unique and different. So application of this principle along with the implementation of some
additional elements and features will clearly justify the importance of this principle.
High security:
This is also an important principle regarding e-commerce. As per this principle there
should be a proper arrangement of security. Since it involves personal interaction of customers
along with their private details so it is very essential that it should be safe and secure
(Leshchynskyi and Leshchynska, 2020). If this principle will not be implemented then no
customer will show interest towards such company and business.
Knowledge of target audience:
Adoption and implementation of this principle is also very important before moving with
the concept of e-commerce. This is important because if companies will not have knowledge of
their target customers then they would not being able to grab them and run their business. So
moulting the e-commerce or designing the e-commerce considering the targeted customers will
lead to success of this concept as well as companies.
Availability of search column:
This principle is essentially to be followed by every company who is pursuing their
business through e-commerce. In-fact it is one of the most important principle of e-commerce.
This principle enables the customers to search their desired item just by writing in search bar or
speaking through the option of mike. Search option will not only raise the efficiency of e-
commerce concept but it will also raise the experience of customers too.
Efficient action:
Like other, this principle also plays a major role in the functioning of e-commerce
concept. This principle helps in raising satisfaction among customers that their views and
feedbacks are being given proper consideration from company's side (Top 10 e-commerce
Design Principles for a Successful Website, 2020). This principle enables the companies about

the customer's views and their problems too which will again assist the companies to take
appropriate corrective actions.
Application of e-commerce principles on Amazon:
From the above discussed principles almost every principle is being followed by Amazon
in its organization. It always ensures that all the principles are given dual consideration and
strictly followed by company. As Amazon has made its website and mobile application which is
based on the concept of customer- friendly. Thus, it would be right to said that targeting
customer principle is fully implemented in the working operation of Amazon. Similarly, it also
gives an option of search bar over the front page of its website and mobile application whereby
customers just by entering the name of their desired product can avail the access towards it. In
addition, of this other similar products are also being shown simultaneously by which customer
can have a better experience. Likewise, it is very particular towards the compliance of quick
action principle. This means that it promptly and quickly take actions towards customer's
problems and their issues.
In addition, of this, Amazon has designed its e-commerce website in such a manner that it
is very easy to handle it and explore it. Likewise, it has also given option regarding special
features in its website by which customer's experience will raise. Special option in the form of
filter or sorting is given, whereby using this feature customer can easily execute their choice and
buy the product.
Well adequate security measure in the form of strict rules and cyber security are also
being taken by Amazon over its internal operations. This means that its customers no need to
worry about security purpose, and they can freely perform their purchasing.
CONCLUSION
From the above report it is being understood that digital business is one of the most
important term in the emerging economy. Digitalization of business by companies will not only
raise their coverage but it also enhances their sales and profitability percentages. Models of
digital business including freemium, peer to peer, on demand and various others are also being
understood in this report. Collaborative and strategic alliances and their impacts in the form of

easing the business operations are also analysed and studied. Lastly, concept of e-commerce and
its associated principles are also being summarized in this report that how and what role they
play in the business of company.

REFERENCES
Books and journals
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Cheng, Q. and Chang, Y., 2020. Influencing factors of knowledge collaboration effects in
knowledge alliances. Knowledge Management Research & Practice.18(4). pp.380-393.
Esposito De Falco, and et.al., 2017. Open collaborative innovation and digital
platforms. Production Planning & Control.28(16). pp.1344-1353.
Gundolf, K., Jaouen, A. and Gast, J., 2018. Motives for strategic alliances in cultural and creative
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