Subject. The article discusses the innovation potential of business environment development. Objectives. The aim is to explore the innovative capacity of business environment development in the virtual market at the stage of digitalization. Methods. The study employs research methods, like comparative, dialectical cognition, scientific abstraction, morphological analysis, synthesis, and theoretical generalization. Results. We systematized preferential characteristics of the virtual market, which consist in large-scale opportunities for promoting marketing innovations in the market of goods and services. The paper defines the role of the virtual market, foundations of the formation of business environment, characterizes innovations of virtual markets, considers the main aspects of digitalization of virtual markets, strategies for innovative development, technologies for the development of innovative capacity of business environment in the virtual market. Conclusions. The digitalization of virtual markets changes the way of doing business, delivering products, and interacting with customers. It requires companies to be flexible, able to adapt quickly to new technologies, and remain competitive. Depending on the degree of readiness, companies need to create and implement various strategies that include transferring customers to the digital space, as well as digital transformation strategies.