UNITED STATES—The digital age has completely changed the face of businesses worldwide, impacting how and where they operate and how they sell to, and engage with customers. Companies no longer need a physical office to operate, reducing overheads that eat into profits. Digitization has also given many people the opportunity to become entrepreneurs, working flexibly, ditching the 9 to 5 and becoming their own boss. Online investment in this global digital transformation is expected to reach over $2 trillion dollars by 2020.
The benefits of trading online are huge, and in the digital era if a business is not online it loses credibility and is risking and being overtaken by competitors with a prominent digital presence. Research has shown how profitable e-commerce can be. A survey by Gartner demonstrated 30% of organizations with under 20 staff achieve at least ¼ revenue online. Research from Harris Interactive showed 81% of small businesses reached new customers online during the holiday periods, meaning increased sales and profit.
Trading online is more cost effective than having a bricks and mortar retail space. It enables businesses to get started with little initial outlay, and low ongoing running costs. A website can be built cheaply, and with clever digital marketing and SEO strategies, can become profitable quickly. An online presence also enables businesses to have further income streams from advertising space and affiliate marketing, while also facilitating transactions all over the world, 24 hours a day, 365 days a year.
There is such a variety of digital marketing tools available, from podcasts and email marketing to blogging, vlogging and eBooks. Creating great engaging content that draws in target customers is the key to growing a profitable online business. Video in particular draws audiences in, accounting for 80% share of global internet traffic. Having a strong digital presence also facilitates good customer relations, enabling companies to respond to queries quickly and improving customer satisfaction.
So attached are we to the digital world these days that research showed 61% of smartphone users sleep with their phone! With such a highly engaged audience at their disposal, brands would be mad not to invest in digital, and interest in online businesses as an area for investment is increasing.
There are myriad ways to start up an online business, from self-publishing eBooks to monetized blogs, and even selling all manner of products, from mass market goods to niche items like collectible trainers. There are equally a range of options when it comes to investing in online enterprises. The main three are:
- Ownership Investment – This means investing in physical assets such as real estate or valuable objects, as well as stocks
- Lending investment – where you become the banker and lend to a business that is anticipated to become profitable in the future, by purchasing bonds or TIPS (Treasury Inflation Protected Securities)
- Cash Equivalents – e.g. money-market funds, which can be an attractive investment as they are so simple to liquidate.
If you are planning to invest in online businesses, it may be wise to reduce exposure to risk by holding a combination of all three types. It is a massively burgeoning market, with no signs of slowing down. In fact, 56% of CEOs said advancement in their digital offering has boosted revenue so it could be worth considering as an addition to your existing portfolio.