Beware, the Digital Economy is Coming Fast

The digital economy was once just a simple term introduced by Don Tapscott's 1995 book The Digital Economy: Promise and Peril in the Age of Networked Intelligence. The growth of digital economy is also supported by the growth and adoption of the Internet among other things. As such, barriers are broken down and many new business models were formed. Now, more than two decades later, it caused a huge revolution in the business world. Some experts have even called it the third industrial revolution.


The growth of internet and technology has also helped boost the growth of the digital economy. By taking advantage of technology, many startup companies managed to reach high levels of market penetration and valuation. One of these examples is the hospitality tech business, Airbnb. Airbnb which was launched in 2008, has built a value of $31 billion for itself with only around 3,100 employees. As a comparison, one of the current largest hospitality company, Hilton, employs 169,000 employees, but only achieves an $18.7 billion value as of May 2017. This shows that small companies like Airbnb, with fewer employees, can beat larger companies by a wide margin through the help of technology.

The growth of digital economy is also accompanied by the growth of other components. Those components are e-business, infrastructure, and e-commerce (Mesenbourg, 2001). The infrastructure refers to hardware, software, internet and other aspects that are foundations to the digital economy. While e-business is how a business runs, the process of trading goods is e-commerce.

An integral part of the digital economy is known as e-business. E-business is different than conventional businesses, and some people have argued that a business being conducted electronically is not always an e-business. Instead, an e-business is a business that exists solely online (Khurana, 2017). Modern e-businesses can take many forms and one of it is e-commerce. However, it should be noted that e-commerce is a narrower term, since it only applies to the process of buying and selling online. One form of e-business is those that provide services. We can say that many companies today fit this model, including Uber, Airbnb, Grab, Traveloka and many other service companies that make use of the internet. These companies have achieved tremendous growth over the past few years. Uber especially has become a household name and shown strong growth since it first launched. During 2017, Uber managed to reach 40 million customers monthly, and has a market share of 77% in the ride-hailing market (Dogtiev, 2017).

E-commerce, which is probably the most well-known part of the digital economy has experienced massive growth in the last couple of years.  In the United States alone, e-commerce sales consist of 15.8% of sales, reaching an amount of $452.8 billion (Kaplan, 2018). Meanwhile, according to research firm eMarketer (2017), e-commerce sales worldwide experienced large gains in 2017, rising 23.2% to $2.290 trillion. In terms of e-commerce sales share distribution, by 2021, regional share of Asia Pacific will increase to become two-thirds of global e-commerce, and will become the leading e-commerce market (International Post Corporation, 2017).

So, it has been shown that the digital economy is fast approaching and without us realizing it many aspects of our life has been integrated to the digital economy whether we want it or not. It has influence the way we even do business, where new innovative business-like Airbnb managed to outperform larger companies by a large margin through the use the use of technology. Seeing this it is time for us to start adapting to this new environment to remain competitive and stay in the market.


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International Post Corporation. (2017). State of e-commerce: global outlook 2016-21 - International Post Corporation. [online] Available at: [Accessed 24 Dec. 2017].

Kaplan, M. (2018). 2017 Ecommerce Round-up: 16 Percent Growth; ’Retail Apocalypse’?. [online] Practical Ecommerce. Available at: [Accessed 19 Jan. 2018].

Khurana, A. (2017). Here's a Look at the Differences Between E-business vs. E-commerce. [online] The Balance. Available at: [Accessed 24 Dec. 2017].

Mesenbourg, T.L. (2001). Measuring the Digital Economy. U.S. Bureau of the Census.



24 January 2018 Joshua AdinugrahaWijaya