Estonia, Good for Business, Internet, Retail

Tonu Vaat, manager of the Estonian E-Commerce Association, said that online sales already account for about one-fifth of total retail trade, being the most important sales channel for many businesses.

"It's important to note that e-shopping outside Estonia, especially in third countries, including Asia, has grown by as much as half in the past six to seven years and, all told, Estonians make purchases in Estonian and foreign e-stores in equal amounts," Vaat said.

The head of the Estonian E-Commerce Association described growth in e-commerce from Asia, particularly China, as impressive. Despite that, Estonian e-retailers have been very successful in the past year, as shopping from Estonian e-stores grew 36 % and shopping from foreign e-stores 18% in 2019.

Vaat said the scope of Chinese e-commerce is demonstrated by the numbers of standard mail arriving from Asia. He described it as noteworthy that the number of international items of correspondence has grown to 2.5 mln items in the past five years.

"An average Estonian sends only one standard letter a year. How many of us have got new friends and acquaintances abroad who send standard letters? This increase in standard letters by several mln clearly demonstrates only one thing -- these are e-commerce purchases that are arriving in our mailboxes mainly from Asia, and without paying tax," Vaat said.

According to the Competition Board, the three biggest providers of courier service in Estonia -- DPD, Itella and Omniva -- hold a market share of 80% combined, with DHL and UPS having another 10% between them. Hence the five companies account for 90% of the market.

"According to the association, the parcel volume of the five biggest courier companies is approximately 20 mln units a year, of which 9 mln are cross-border parcels," Vaat said, adding that about half of the total parcel volume was moving via Omniva.

Estonians used a bank link in paying for 70% of e-commerce purchases last year, a ratio higher than in most European countries. About 80-90% of purchases and first inquiries about products were made via mobile phone in 2019, data from the major e-retailers shows.

In at least 90% of all cases the customer's journey to getting familiar with a product, a service or a business starts on the internet, Vaat said, urging retailers to be more active investing in e-commerce channels with a view to converting the investment into sales.