Percentage of Business Conducted Online

The myriad uses of the internet for previously analog services has increased steadily as the capabilities of the internet infrastructure in the United States have expanded. For one, expanding internet data capacity has enabled services such as video streaming, cloud data storage and online video games to easily be enjoyed by the average user. Contributing to this effect has been the low cost of internet services, as servers are usually the only fixed cost for internet-based services. In recent years, cloud computing has reduced the cost of services, making internet-based services cheaper for consumers and businesses. Following the great financial crisis, there was a substantial increase in the adoption of Internet services, as businesses attempted to cut costs where possible and consumers sought the best price for the services they demanded. In 2012 for example, the internet surpassed newspapers to become the second-largest advertising medium, according to data from ZenithOptimedia.

Internet service adoption has continued over the five years to 2025, with the portion of revenue generated from e-commerce and other online or internet platforms steadily increasing as a share of total revenue for businesses. As a smaller percentage of dollars is allocated toward other methods of procuring products or services, more will likely be spent on e-commerce instead. More businesses have expanded their online presence to tap into these revenue streams, placing further upward pressure on the percentage of business conducted online. The proliferation of smartphone applications has also enabled users to seamlessly purchase products online, further contributing to the rise of the driver.

This ongoing trend was amplified in 2020 as measures taken to curtail large swaths of the economy to inhibit the spread of the COVID-19 (coronavirus) pandemic made it more difficult to purchase products or services in person. Instead, the coronavirus pandemic spurred an uptick in online activity as businesses were forced to make operational changes to meet the shifting dynamics in the market; IBISWorld estimates that the percentage of business conducted online increased 7.9% in 2020 alone, reaching 25.6% of business activity. In 2021, the percentage of business conducted online stagnated as the economy began to reopen. However, persistent trends from the coronavirus pandemic, in addition to a lack of full reopening due to coronavirus resurgences, have kept the percentage of business conducted online from falling substantially. In 2023, the percentage is expected to increase due to more companies adopting flexible work-from-home schedules. The percentage of business conducted online is forecast to grow at an annualized rate of 3.2% over the five years to 2025, reaching 29.9% of all business activity.