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Website technologies in the pandemic

Catastrophic events can be powerful catalysts for change. Almost overnight, the COVID-19 pandemic triggered an increased reliance on digital technologies, which played a crucial role in helping businesses weather the worst of the shock (Comin et al. 2021). Unsurprisingly, the pace of digitization appears to have accelerated significantly during this time (Apedo-Amah et al. 2020, Bellmann et al. 2021). However, little is known about the relative pace of transition in different countries and markets and whether COVID is widening or narrowing digital divides between countries.

Using a new source of data on nearly the universe of websites and the technologies embedded therein, our study (Ragoussis and Timmis 2022) documents the rapid growth in the adoption of three types of website technologies in 2020: e-commerce, online payments, and digital advertising.

New database sheds light on dynamics of global online transition

Our analysis is primarily based on BuiltWith, a commercially available dataset containing information on 150 million active websites worldwide. Data has been pulled consistently since mid-2018 using source code information embedded in company websites. The latter is constantly crawled, so virtually every website in the world is taken down every one to four weeks.

We attribute websites to 185 countries in several steps, using the relevant information fields provided in the data: business addresses and phone numbers, language of a website’s text, and their top-level domain.1 To focus on websites with commercial applications, we only consider websites secure, which means that data to and from the site can be encrypted (a prerequisite for any financial transaction).2

Most websites are basic, containing only features that are easily and freely available, while technologies that enable online transactions are scarce. BuiltWith measures the presence of over 30,000 website technologies across different technology providers, which it groups into broad categories based on their function. As of December 2019, while 69% of websites were mobile-friendly, only 14% of websites had e-commerce functionality and 11% of them enabled electronic payments.

To measure the impact of COVID-19 on technology adoption, we combine BuiltWith data with monthly measures of the timing and intensity of COVID-19 lockdowns in countries in a study of formal event. We compare countries with different times of COVID lockdown as an event study, with event defined as the first month in which stay-at-home requirements are imposed.

The big upgrade

The timing of the first COVID lockdowns in early 2020 strongly predicts faster upgrading of website technology, especially e-commerce and online payments (see Figure 1). Businesses responded quickly to countries imposing stay-at-home orders or workplace closure restrictions — within two or three months of the first lockdowns — by upgrading their websites to sell online. Six months after the imposition of the COVID lockdowns, these events represent an increase of around 1.5 percentage points in the use of online payments and growth of 0.7 percentage points in e-commerce. The magnitudes are substantial, with these increases accounting for about a third of the total increase in the spread of e-commerce or e-payments in 2020. The growth in the use of website technology not only represents a dramatic shift in adoption, but trending towards adoption after COVID-related lockdowns (Figure 1). This is consistent with the role of network effects in online markets and/or expectations that COVID will persist in the medium term (Anayi et al. 2021).

Figure 1 Accelerating the adoption of online payments and e-commerce after the first COVID-related lockdowns

Remarks: The event study is estimated via a fully saturated model of all leads and lags of the COVID lockdown event (D_iγ) with country and time (month) fixed effects. Event time coefficients are reported from three periods before to six periods after closures. The sample contains observations from September 2019 to December 2020. As is common practice, the coefficients are reported relative to t-1, the month before the COVID shutdowns. 95% confidence intervals are plotted around the estimated coefficients.
Source: Ragoussis and Timmis (2022)

The effects are robust to alternative measures of COVID lockdown stringency, workplace closure requirements, stay-at-home requirements, or number of COVID deaths, all of which predict e-commerce growth. For example, moving from zero to 80% lockdown stringency – the average value of the lockdown stringency index in April 2020 – is associated with a 1.3 percentage point increase in e-commerce adoption. and a 1 percentage point increase in adoption of online payments by the end of 2020.

But does the general upgrade mask a widening or narrowing of digital divides between countries? Unpacking the trend across regions and countries provides additional insight. While globally, the use of online payments, e-commerce and digital advertising technologies increased by 34%, 19% and 17%, respectively, in 2020. The countries with the highest growth rapid use of these technologies already had less intensive use in 2019 (Figure 2), echoing some evidence from other sources (Alfonso et al. 2021). The difference is not negligible. Countries with starting levels of e-commerce usage 4 percentage points lower in 2019 (equivalent to moving from the median country to the 25th percentile, or from the 75th percentile to the median) experience e-commerce growth of 2 .6% higher in 2020. Similarly, countries with 3.5 percentage points higher initial use of online payments (equivalent to moving from the median to the 25th percentile) experience 2% higher growth of the distribution of online payments the following year. Furthermore, we find that most of the e-commerce growth in lagging countries is driven by the adoption of free features.

Figure 2 Lagging Countries Have Faster Growth in Technology Adoption in 2020

Remarks: The percentage growth in technology adoption at the national level between December 2020 and 2019 is shown compared to initial levels of technology use in December 2019. The sample is a balanced panel of existing websites that exist both in December 2019 and December 2020. A linear line of best fit is included for readability.
Source: Ragoussis and Timmis (2022)

Importantly, as the starting point for the use of e-commerce and e-payments has been low in many countries, the acceleration in technology adoption has not been sufficient to close the gaps between countries. . Absolute differences in usage have continued to grow during the pandemic – especially for e-commerce – despite faster percentage growth at the bottom of the distribution. Overall, the absolute convergence of less used technologies like e-commerce necessitates an even faster pace of digital adoption in lagging countries.

Conclusion

COVID-19 has caused a shock that has changed the trend of digital development, taking advantage of increasingly accessible and low-cost technologies for online transactions. A number of developments have enabled this to materialize, such as the rise of e-commerce platforms or off-the-shelf e-commerce websites, mobile money and relatively widespread mobile broadband. However, the gaps along the income distribution remain large and growing, pointing to needs in areas such as the scarcity of digital skills to run an online business, the availability of banking and logistics services, or challenges related to access and use of data. Further research in this area is essential to address the specific constraints businesses and consumers face as they transition their businesses online and to support the growth of digital markets.

The references

Alfonso, V, C Boar, J Frost, L Gambacorta and J Liu (2021), “E-commerce during the pandemic and beyond”, Bank for International Settlements Bulletin 36.

Anayi, L, N Bloom, P Bunn, P Mizen, G Thwaites, C Young (2021), “Covid-19 and structural change”, VoxEU.org, 28 October.

Apedo-Amah, MC, B Avdiu, X Cirera, M Cruz, E Davies, A Grover, L Iacovone, U Kilinc, D Medvedev, FO Maduko, S Poupakis, J Torres, TT Tran (2020), “Unmasking the Impact of COVID-19 on Businesses: Firm Level Evidence from Across the World”, World Bank Policy Research Working Paper No. 9434.

Bellmann, L, P Bourgeon, C Gathmann, P Gleiser, C Kagerl, E Kleifgen, C König, U Leber, D Marguerit, L Martin, L Pohlan, D Roth, M Schierholz, J Stegmaier, A Aminian (2021), “ The pandemic has boosted business investment in digital technologies”, VoxEU.org, 05 August.

Comin, D (2022), “Technology and resilience. Which companies have weathered Covid-19 the best”, VoxEU.org.

Ragoussis, A, and J Timmis (2022), “Global Transition Online”, World Bank Policy Research Working Paper No. 9951.

Endnotes

1 We exclude all websites with generic top-level domains, “.org” “.edu” “.net” “.com” or “.int”, which do not have addresses, telephone numbers or single country language. Since “.com” is the primary domain extension for US businesses, we completely exclude the US from our analysis.

2 Specifically, we focus on websites with a Secure Sockets Layer (SSL) certificate.