Developing and Calibrating Digital Business Model

 Digital business is thriving nowadays with companies like Amazon and Alibaba leading the digital business wave. Amazon made USD 232 billion in sales in 2018, a big jump from USD 107 billion in sales in 2015 which accounted for more than 100% CAGR (Compounded Annual Growth Rate) from 2015.

Moreover, Amazon profits, too, made a big leap from USD 596 million in 2015 to USD 10 billion in 2018 (https://www.stock-analysis-on.net/NASDAQ/Company/Amazoncom-Inc/Financial-Statement/Income-Statement). Such figures portrayed the amount of growth witnessed by digital business through the world’s largest online company i.e. Amazon. Another success story of digital business is Alibaba, an online behemoth from China which now spreads its wings across the world including the United States of America. Alibaba has multiple digital business models focusing in all aspects of e-commerce such B2B (Business 2 Business), B2C (Business 2 Consumer), and C2C (Consumer 2 Consumer).

Alibaba developed self-resilient digital business models through which it makes billions in sales and profits. It also spread its wings to different offline and online business models including operating taxi like UBER in China and Ali Pay. Recently, the company witnessed the handover of the baton from Mr. Jack Ma, Founder and CEO of Alibaba Group to Mr. Daniel Zang. It is imperative to analyze the digital business models used by the aforementioned companies, primarily taking the example of Amazon which has well documented history of its growth since its inception in 1995. While analyzing digital business models used by Amazon, it is vital to state the effect of dependency theory model of business. Dependency theory model of business is different from original dependency theory of economics which was widely discussed and deliberated. However, the dependency theory model of business focuses on adopting or creating dependency among the stakeholders of business which reflects the help and support required for the business from the stakeholders.

It is important to understand that each business would require the help and support from stakeholders during the initial stage and later it needs to develop its own eco-system to stabilize and sustain the business in the long run in order to become independent of stakeholders. Such is the case applicable for digital business model in order to stabilize and sustain the business in the long run. While looking at the growth of Amazon, the company depended on book publishers in the initial years (it started as online book seller), later, developed inter-dependency (Amazon required publishers and publishers required Amazon) due to gaining brand image and sales among target consumers. However, learning from this experience, Amazon intended to become independent of book publishers by launching Kindle e-reader device for downloading and storing e-books. Through such act, it disrupted the publishing industry through gaining digital rights of millions of books through creating kindle editions of books for target consumers to download and read. Moreover, it also launched Kindle app for smartphones which enables billions of consumers could buy and use Kindle e-books without Kindle e-reader.

Now, Amazon focuses on developing different genre of authors and encourage them to write and publish books (fiction and non-fiction) through Amazon Kindle e-books. It opened up the publishing industry and Amazon is becoming a leading publisher as it could ask leading authors to write for Amazon in near future as it has done through Amazon Prime Video (D-T-H) business. Amazon Prime Video now focuses on developing its own entertainment content like NetFlix, a biggest competitor to Amazon Prime Video. Such notions reflect the independent aspect of digital business model. Therefore, it is vital to achieve independent status and self-resilient in today’s ever mounting completion in digital business world. Such achievement would enable the company to sustain its success for the long run. It is imperative to notice many universities offering MBA and BBA in UAE focuses more on offering courses related to digital related businesses and strategies for students to commence on new age digital businesses in order to contribute to growth and development of economy.

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