The growth in accessibility of the internet has had a massive impact on traditional business sectors. In 2020, over two billion people used the internet to purchase goods and services. This trend is only set to continue, with e-commerce sales in the United States alone predicted to surpass $740 billion as early as 2023.
The availability and ease of this commercial modality makes it the first choice among consumers, especially young people. Globally in 2020, over 4.2 trillion dollars of online product sales have been recorded. Businesses that have been slow to catch on to this shift in orientation should explore how to future-proof their enterprise by getting up to scratch on the fundamentals of this new economic reality.
Entertainment Sectors
The shift away from brick-and-mortar isn’t just reflected in the retail sector either. The world gaming market, which is worth $227 billion globally now draws 25% of its revenue from online gaming. In fact the online gaming sector is projected to grow over 11% year on year towards the end of the decade.
Young professionals are favoring accessing games through this method due to the non-local nature of the product, as its on-demand nature fits better with their busy lifestyles. Services are looking at novel ways to respond to this trend. Epic Games’ popular multiplayer title Fortnite monetizes its services by promoting a sense of individual expression among its 70 million players by offering users the ability to customize their unique character’s appearance, and online casino gaming platforms are able to present bespoke offers such as free spins and welcome bonuses for new players.
Generation Z are the first cohort of people to have grown up with the internet as a part of their daily lives and as such they are more accustomed to online market sectors than other demographics. A recent study identified that 40% of US consumers are part of Gen Z as of 2020, and that 98% of Generation Z members now own a smartphone. Accordingly, brands are pivoting to accommodate the discretionary spending of the on-demand economy.
If you can’t beat them, join them
Increasingly the modern internet resembles retail parks with large department stores serving as stockists for smaller brands and enterprises. In fact the largest three stores on the internet, Amazon and Chinese equivalents Jingdong and Alibaba, collectively account for over half a trillion dollars in yearly revenue.
Other large centers of e-commerce are traditional brick-and-mortar operations that have successfully reoriented themselves to the new online business landscape including American brands Walmart and Target. The unprecedented scale of these organizations means it’s wiser for most small businesses aiming to increase online sales to consider listing their products on these platforms, rather than hope to compete on a level footing.
This follows the same logic as placing a physical store location in an area with a large consumer footfall. Other online marketplaces cater for specific product niches, such as Etsy which is oriented towards the sale of handcrafted goods and vintage items. Ebay and even Facebook’s own marketplace are also good options to work through if your business is directed towards second-hand reselling.
Social graph marketing
The social graph is a term devised by Facebook CEO Mark Zuckerberg to describe the net of relationships, preferences, interests and browsing habits of its 2.7 billion users. Facebook, which owns Instagram and WhatsApp, generates 97.7% of its $86 billion yearly revenue by enabling third parties to leverage this data in order to send targeted adverts to their users. Search giant Google, which has a diverse portfolio of products, still makes 70% of its income through the same method of advertising.
Collectively this amounts to a curated pool of advertising data that represents over 4 billion people, or over 50% of the entire global population. Accordingly, paying for advertising on these platforms is the most efficient and effective way to promote your business in the new global economy.
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