How businesses operate and customers consume goods has changed substantially over the last 20 years. Moreover, the seismic changes caused by the internet have reverberated across society, the globe and the economic landscape.
With online businesses becoming the go-to organizations for an array of services and goods, are we witnessing the death of the high-street store? Of course, there’ll always be a requirement for some physical stores, such as barbers, clubs, restaurants and sports venues. However, more and more businesses are making the jump into digital services only.
Why are so many businesses launching online?
If you’re just starting a business, you want to keep costs to a minimum. Unless there’s an essential requirement, like some industries we discussed in our intro, physical buildings are purely an overhead cost. They come with maintenance issues, rent payments, security costs and energy bills.
In an age in which inflationary pressures and other economic issues are causing businesses to approach long-term business plans with caution, it isn’t an ideal time to launch a business in a physical building.
Due to the high levels of inflation, some economists are expecting deflation. However, no central banks have predicted this. What is deflation? Well, it can be just as damaging as inflation, if not worse. It could become a serious concern if you have a lot of business overheads.
Businesses that launch online do not need to worry about any of the overheads we have mentioned. Apart from lower energy bills, this is one of many huge positives.
Low advertising costs
Before the internet, traditional advertisement methods included radio, newspaper and television. However, if you are launching a business on social media, you can operate by word of mouth. While it is true that social media companies offer paid advertisement services, a word-of-mouth approach is sometimes much more effective.
With the internet, you are advertising your services to a global marketplace. If your skill is transferable across the vastness of the internet, such as copywriting, coding or digital advertising, then you can start your venture with much smaller overheads.
Although some of these industries have been threatened by the rise of AI, a human touch is still vital for companies that want quality content and not information churned out by an automated computer. However, AI has its advantages and can also help your business.
The power of social media
Despite the numerous advantages of using social media to advertise your product directly, there are also many indirect ways. For example, you can see a viral video’s impact when a celebrity comments indirectly about a specific product or service. As a result, the brand will immediately receive thousands more likes or followers on social media and expand organically.
A big following on Instagram alone can bring people into your business and stoke interest. With enough hysteria on social media, your business can automatically advertise its products without you having to do anything else. With over half the world’s population on social media, the advertising base is gigantic.
The case for physical businesses
As we discussed in our introduction, there will always be a demand for physical businesses. However, the number that we see is beginning to diminish. If a business can operate in the online space, it is far easier and more cost-effective to do so.
Due to the widescale accessibility of the internet and smartphones, it is the natural progression for businesses to operate primarily via this platform.
Whether internet businesses ultimately reach a tipping point where the trend begins to move back to physical locations remains to be seen. In a global economy that is lingering on the brink of a recession, economic variables like inflation still threaten to disrupt any otherwise sound business.
Conclusion
In these conditions and with society becoming ever more reliant on smartphones and the internet, it would have to take a steep reversal to see physical business ventures beginning as startups and thriving.
Unless, of course, they are businesses that can only operate in a physical location due to the nature of their operations, new business ventures seem to be online only and it looks like it will remain that way.
It boils down to a simple question – is it more cost-effective for my business to launch online or in a physical shop with considerable overhead costs? In today’s society, the answer, most of the time, will be online. Unless this trend reverses, don’t expect any change in the current outlook.
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