Exchange of Goods and Services

Transactions involve physical goods (e.g., clothes, groceries) or services rendered in person (e.g., haircut, car repair). Cash or checks are the common payment methods.

Deals with digital products (e.g., ebooks, software) or services delivered online (e.g., web design, online courses). Payments are made electronically through debit/credit cards, online wallets, or cryptocurrencies.

Business Operations

Relies on physical stores, offices, and face-to-face interactions with customers and employees. Inventory management and product distribution involve physical logistics networks.

Leverages online platforms and remote workforces. E-commerce platforms handle transactions, while digital tools facilitate communication and collaboration.

Marketing and Advertising

Uses offline channels like print media (newspapers, magazines), broadcast media (TV, radio), and outdoor advertising (billboards).

Employs online channels like social media marketing, search engine optimization (SEO), and online advertising platforms.

Geographic Reach

Businesses are limited by their physical location. They can only reach customers within a specific geographic area.

Businesses can have a global reach, selling their products and services to anyone with an internet connection.

Barriers to Entry

Setting up a traditional business can be expensive due to physical infrastructure needs.

The digital economy offers lower barriers to entry, allowing individuals to start online businesses with minimal investment.

Scalability

Traditional businesses face challenges in scaling their operations quickly.

Digital businesses can scale more easily by leveraging technology and online platforms.

Information Asymmetry

In the traditional economy, information about products and services may be limited.

The digital economy offers greater access to information through online reviews, comparisons, and social media.