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Pandemic drove small businesses online — and they're staying

When the pandemic forced cities to shut down, millions of businesses moved their operations online — a shift that is having lasting impacts on hiring, real estate and the way we buy goods and services.

Why it matters: Small businesses are the engines of the economy. While many did not survive the last 15 months, new businesses have popped up and found ways to find customers in the new, all-online-all-the-time environment.

Data: Axios research; Chart: Axios Visuals

By the numbers: Tech giants say they saw massive growth in online adoption by small businesses during the pandemic.

  • Stripe CEO Patrick Collison tweeted Thursday that "more businesses launched on Stripe since the start of 2020 than did in the rest of Stripe's history before then." For reference, Stripe launched in 2009.
  • Facebook CEO Mark Zuckerberg said in April that the company now has more than 200 million businesses that use its free services — more than double since 2019 — and that more than 1 million businesses have set up shops on its platform.
  • Etsy: The number of active sellers on Etsy soared from 2.7 million in 2019 to 4.4 million in 2020, the company said in May.
  • GoDaddy: The world's largest internet domain registrar, GoDaddy said last year it added 1.4 million net customers — nearly double the amount it added in 2019.
  • Other firms, including Snapchat and Twitter, say ad revenues have increased dramatically thanks to more small businesses buying self-serve ads.

Be smart: While most people think of the pandemic's digital revolution in terms of e-commerce, the services sector has perhaps experienced the most fundamental changes during COVID.

  • New products and tools from tech platforms have made it much easier for people to obtain services online, like doctor's visits or fitness classes.
  • "We can see in our dataset that services businesses are doing the best right now (digitally) and stores are starting to open," GoDaddy CEO Aman Bhutani told Fox Business last month.

The big picture: The digital small business boom has been a great opportunity for tech giants to prove their value to society while facing record regulatory scrutiny.

  • Google, Facebook and others have spent millions on advertising touting ways they've helped small businesses survive during the pandemic — and helping the overall economy to recover.

Between the lines: The digitization of small businesses wasn't all positive. As companies moved their presence online, many closed up their brick-and-mortar shops, leaving empty storefronts in shopping centers and main streets.

  • The workforce needed for all-digital companies is different than what's needed for an office or in-person retail store.
  • A recent Facebook survey of more than 30,000 small businesses showed that nearly a third of small- and medium-sized businesses have had to lay off workers as a result of COVID-19. Half say they don't plan to rehire employees in the next six months.

The bottom line: "Overall rate of migration to the internet economy is hard to overstate," Collison noted.

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