10% of online businesses have Internet-based business models, and 70% of SMEs have no online presence

Last review date: 09/02/2024

Digital transformation is a complex process that requires strategic policies covering various aspects, such as infrastructure development, skills promotion, technological extensionism, regulation, and innovation promotion. In this context, having reliable and comparable statistical data is crucial for designing, monitoring, and evaluating evidence-based policies and regulations.

The international statistical community and various organizations have advanced in creating standardized frameworks for measuring the adoption of information and communication technologies (ICT), especially regarding Internet connectivity. Despite these advancements, measurement methods have not kept pace with the evolution of digital technologies and their adoption by various economic agents, presenting challenges such as updating metrics for emerging technologies, obtaining more detailed and timely information, and observing new uses, especially by businesses in their business models.

In this context, ECLAC conducted an experimental exercise with the aim of understanding business dynamics in the digital economy from the perspective of the degree of dependence of business models on Internet usage. This involves classifying companies according to their degree of dependence on the Internet in their business models. Big data techniques were used to obtain information from the web (web scraping), combined with traditional statistics to dimension the "Internet economy," understood as the set of companies that use the Internet in their business activities and as part of their business model. This approach allows for the analysis of segments of companies that base their operations entirely on the Internet, such as e-commerce platforms, professional services, and applications. Furthermore, it allows evaluating the level of Internet usage in other companies within the economy.

Thus, it is possible to classify companies according to the level of income generated through online business activities, distinguishing three main categories:

• •1. Companies without a website: contains companies that do not generate any online income due to their absence on the web.
• •2. Companies with an online presence: refers to companies that generate online income, but indirectly, as their business model does not rely exclusively on these marketing channels. There are two subcategories:
  • •Passive online presence: refers to companies that have a website containing information about the company and its products or services but does not allow interaction with the customer.
  • •Active online presence: companies whose website allows some form of online interaction, such as subscribing to a newsletter, registering for an account, making a payment, or making a reservation.
• •3. Core of the "Internet Economy": companies that base their business models on the web and therefore generate their income mainly from their online activities. It is subdivided into:
  • •Online stores: e-commerce platforms that sell products exclusively through their websites.
  • •Online service: companies that provide various types of online services (financial, business, etc.).
  • •ICT services: companies that provide IT services and products.

Business classification by online activity

Source: Measuring the Internet economy in Latin America: the cases of Brazil, Chile, Mexico and Colombia. Vilgis, V; Jordán, V; Patiño, A.

The exercise gathered information from websites in Brazil, Chile, Colombia, and Mexico. To obtain data describing the Internet landscape in each country, data were extracted from the web using the Dataprovider.com tool, capable of indexing over 450 million domain names in 50 countries. Based on this information, a database was created that includes variables related to the website content, its technical characteristics, and commercial data. It is important to note that the database covers both country-level domain names (.cl, .br, .co, .mx) and generic domain names (e.g., .com, .org, .net).

Business websites by online presence: Brazil, Chile, Colombia, and Mexico

(In percentages)

Source: Observatorio de Desarrollo Digital (ODD) based on Crunchbase.

By analyzing websites according to business presence online, significant growth in e-commerce sites is observed, nearly doubling their share of the total between 2019 and 2023, increasing from representing 8% to 15%.

In 2021, although there is a slowdown in the monthly number of new business websites, the values remain above pre-pandemic levels, reflecting stabilization in this behavior.

The data allowed for the timely evidence of increased business presence online during the COVID-19 pandemic. Between March 2019 and March 2020, business websites doubled in Brazil and Chile and tripled in Colombia and Mexico. In 2021, the pace of new business website emergence decreased compared to 2020, remaining at or above pre-pandemic levels.

New business websites between February and September 2019, 2020 and 2021

(In quantity)

Source: Measuring the Internet economy in Latin America: the cases of Brazil, Chile, Mexico and Colombia. Vilgis, V; Jordán, V; Patiño, A.

By combining data extracted from the web with data from national statistical business records, it was observed that by 2020, over 60% of online businesses had a passive presence, and 10% of online businesses corresponded to the Internet core.

Composition of the Internet economy: results of data linkage to 2021

Source: Measuring the Internet economy in Latin America: the cases of Brazil, Chile, Mexico and Colombia. Vilgis, V; Jordán, V; Patiño, A.

Analyzing companies by category and size according to their number of employees shows that 70% of SMEs have no web presence, indicating the difficulty of this business segment in being part of the Internet economy and leveraging online marketing channels. In all four countries, companies without a web presence are mostly small companies with fewer than 9 employees, and the percentage of large companies (>250 employees) without a website is low. The remaining categories, i.e., all those with some degree of online presence, are evenly distributed across all countries, except in Brazil, where the classification of 50 to 249 employees is relatively lower.

Share of companies by size category by number of employees

(In percentages)

Source: Measuring the Internet economy in Latin America: the cases of Brazil, Chile, Mexico and Colombia. Vilgis, V; Jordán, V; Patiño, A.

In conclusion, regarding the Internet economy:

• •The majority of companies still maintain a passive online presence.
• •The COVID-19 pandemic was an unprecedented driver for increasing business web presence.
• •Companies have the capacity to transition to more advanced stages of digitization and Internet use, but there are also barriers faced by smaller companies when establishing and managing a website.