Annual IIA analysis proves the internet continues to deliver substantial potential savings to consumers, despite narrowing of the cost gap between online and traditional retail sales

WASHINGTON, D.C. – December 13, 2018 – The Internet Innovation Alliance (IIA) finds that the average American household can save $10,539.09 per year on household spending through use of high-speed internet services, according to the organization’s latest Cost Campaign analysis. Before factoring in the average annual cost of a mobile data plan and a home broadband connection ($1,575), the yearly savings add up to $12,114.09. The financial analysis, “10 Ways Being Online Saves You Money,” was authored by Nicholas J. Delgado, certified financial planner and principal of Chicago-based investment bank Dignitas, in partnership with IIA.

Based on the 2017 Consumer Expenditure Survey[1] released by the U.S. Department of Labor, IIA used online resources and applications to find discounts on essentials like housing, apparel, gasoline and food. Significant savings were identified for consumers who take advantage of internet-enabled opportunities to effectively comparison shop, expand buying options, utilize mobile applications to identify nearby deals, and cash in on online-only pricing.

The study calculates potential savings across 10 different categories based on data from the Bureau of Labor Statistics’ annual Consumer Expenditure Survey. Last year, average household income before taxes totaled $73,573 – a 1.5% dip from 2016 – while average annual expenditures per household was $60,060, representing a 4.8% jump from 2016 levels.

“The increasing ubiquity of the internet has led to some narrowing of the cost gap between online and other traditional types of retail sales,” commented Delgado. “Online searches, however, continue to deliver substantial potential savings.”

The following savings are based on average spending in each category for the typical U.S. household, according to the Bureau of Labor Statistics.

Top 10: Potential Internet-Enabled Savings on an Annual Basis

Category Average Spent (Annually)* Average Saved Due to Broadband (Annually) % Savings
Entertainment $3,203.00 $1,692.79 52.85%
Healthcare $4,928.00 $1,600.00 32.47%
Housing $16,062.00 $3,413.18 21.25%
Food $4,363.00 $684.55 15.69%
Apparel $1,833.00 $921.45 50.27%
Automotive $35,889*** $3,383***** 9.43%
Newspapers $288.34** $167.33 58.03%
Gasoline $1,968.00 $157.64 8.01%
Non-Prescription Drugs $338.00**** $53.00 15.68%
Bill Pay $41.16** $41.16 100.00%

* Average spent annually, according to the Department of Labor Consumer Expenditure Survey

** Average spent annually, according to IIA calculations

*** Average October 2017 transaction price for a vehicle, according to Kelley Blue Book (one-time spending)

**** Average spent annually, according to IRI

***** One-time savings

Measured by percentages, the greatest source of savings in this year’s analysis is once again in the Bill Pay category, followed by the Newspapers category. Determined by dollars, the categories offering the greatest opportunity for savings are Housing and Automotive.

“In 2018, online purchasing power is taken for granted by the majority of Americans, but the reality is that many people are still missing out on the possibility of internet-enabled savings,” said Bruce Mehlman, Founding Co-Chairman of the Internet Innovation Alliance. “We need to put policies in place that encourage the expansion and availability of high-speed broadband internet, especially fifth-generation wireless, to help close the digital divide and bring the benefits of broadband to all.”

For more information on the study’s sources, methodology and a “10 Ways Being Online Saves You Money” infographic that can be added to a website or blog, go to http://internetinnovation.org/special-reports/savings2018/.

[1] https://www.bls.gov/news.release/pdf/cesan.pdf