Digital market threatens traditional sales channels

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By: Wise Marketer Staff |

Posted on August 10, 2006

Although a digital marketplace has emerged in the past few years that both expands upon and threatens traditional sales channels, there are still opportunities for companies that link the digital and physical worlds, according to a study by market intelligence firm IDC.

The study explains that the digital marketplace (comprising "gateways", "nodes", and "hubs") is growing rapidly due to a confluence of demand, technologies, customers, and changes in consumer lifestyles. But while such a marketplace apparently threatens existing business models for advertising, technology use, and distribution, IDC noted that it also creates significant opportunities for software, services, and hardware vendors.

According to Susan Feldman, a research vice president for IDC, and lead author of the study, "The digital marketplace presents a series of paradoxes. It expands our reach from local to global, and yet shrinks the world so that it is more tightly knit. Our old familiar world of places, stores, and neighbourhoods is now paralleled by a cyber-world that offers similar goods and services."

Gold rush opportunity?
Indeed, neither marketplace replaces the other - nor are they likely to, Feldman asserts. Instead, the tools and services that make sense of and connect these two marketplaces represent business opportunities for companies that can identify the gaps and fill them. Indeed, it's often been suggested that those who stand to make the most money from a gold rush are traders who sell shovels.

The study found that, on a typical day, some 19 million people go online to find products, and 83 million people have purchased products online at some point. The study credits Google - and its talent for creating 'buzz' - as being the catalyst for this new online economy. Like a stone being dropped into a pond, IDC notes that the "Google Effect" creates large reactions from seemingly small actions.

Local businesses involved too
According to Feldman, businesses of all sizes are now realising that they must understand the digital marketplace, even if their business is only local. They will need the technical infrastructure to support the commerce, communities, networks and supply chains that this marketplace requires.

Of course, vendors of the software, hardware, and services needed by these businesses also need to seize these new opportunities, as well as understand the threats that lurk if they are not prepared for the profound changes that are taking place.

The study, entitled The Google Effect: How Web 2.0, Long Tail Marketing, Buzz and eCommerce Accelerate the Digital Marketplace, examines the factors that have combined to make the digital marketplace successful to-date, and describes roles and requirements for participating in the new economy.

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