The growth of domestic e-commerce has stopped – digital consumerism is changing

Last year, online shopping began to decline in many European countries. The declining pandemic and the easing of any restrictions increased demand in brick-and-mortar stores, while the general rise in costs and prices cut purchasing power. In the United Kingdom, for example, the value of e-commerce fell by nearly 10 per cent, in Germany by about nine per cent and in Sweden by nearly seven per cent.

In Finland, the value of digital purchases made by consumers decreased for the first time since 2010, by around six per cent from the previous year. This was mainly due to the decline in the boost brought about by the pandemic.

“Digital purchases also declined as a result of increased cautiousness about rising costs among consumers and the fact that, after the pandemic, there was more demand for purchasing clothes and shoes in person rather than online,” says Chief Economist of the Finnish Commerce Federation Jaana Kurjenoja.

Domestic online purchases decreased while purchases from abroad increased

Although digital purchases decreased last year, they are still one third more popular than in 2019, the year before the pandemic. Over the last three years, online purchases of food, cosmetics, natural health products, pet food, interior decoration products and clothes, for example, have become more common.

In recent years, domestic digital commerce has grown rapidly and has been able to gain a share of foreign e-commerce. But now, the trend has stopped. Last year, online purchases from Finland decreased and purchases from abroad, especially from Germany and the Nordic countries, increased.

“Many small domestic specialty goods stores are still in the early stages of digitalisation and they may not be able to cope with the competition from foreign e-commerce due to the poor economic operating environment,” Kurjenoja estimates.

Customer returns are a global problem

As the pandemic boosted e-commerce to record levels of growth around the world, customer returns also became more common and the costs to businesses have increased.

Digital consumers in Finland made moderate customer returns compared to many other European customers. Last year, 42 per cent of Finnish online shoppers had returned some of their digital purchases, compared to half of Swedish digital shoppers, 53 per cent of British shoppers and 55 per cent of German shoppers.

Clothes are the most frequent type of customer returns. Prior to the pandemic, 16 per cent of Finnish consumers buying clothes online returned products, while last year the share of consumers returning products had already reached 28 per cent.

Influencer marketing increasingly important

Until a few years ago, 76 per cent of Finnish online shoppers were looking for different types of product information to support major purchase decisions. This share has now fallen to 65 per cent. At the same time, important sources of product information, such as various online stores, price comparison pages and reviews made by other customers, have lost significance.

“Digital purchasing has become faster and the importance of influencer marketing in the purchase decision has increased. Buying through social media platforms is also on the rise. All this can make people less motivated to search for product information,” Kurjenoja ponders.

Nearly one fifth of Finnish digital consumers say they have made a purchase inspired by influencer marketing and a third of under-30-year-olds have already done so.

“The share is likely to grow both as social shopping becomes more common and TikTok becomes more popular. TikTok is one of the most powerful social media platforms for giving buying impulses,” Kurjenoja predicts.

Digitalisation of specialty goods trade must be supported

Domestic specialty goods trade is in a difficult situation as it should evolve through digitalisation and respond to both changes in consumer behaviour and foreign competition.

“Without support, it is difficult for small specialty goods stores to cope with this, even if they have unique selections that could also be in international demand,” says Mari Kiviniemi, Managing Director of the Finnish Commerce Federation.

“Finnish specialty goods stores do not receive enough support with digitalisation, which is why there is a risk that we will lose the competition with foreign e-commerce,” Kiviniemi adds.

Increasing amounts of customer returns are unsustainable, both in terms of the environment and the costs for companies. In Kiviniemi’s opinion, logistics companies should also participate in tackling the problem by offering a range of services that would better take into account paid customer return options.

Further information: Jaana Kurjenoja, Chief Economist, Finnish Commerce Federation, tel. +358 (0)40 820 5378, jaana.kurjenoja(at)kauppa.fi

The main sources of the study, conducted by Jaana Kurjenoja, Chief Economist of the Finnish Commerce Federation, include statistics and consumer surveys provided and conducted by eMarketer, Statista and Statistics Finland, as well as consumer surveys conducted by Kantar TNS and planned by the Finnish Commerce Federation. More detailed descriptions of the definitions, research backgrounds and methodologies and a list of sources are provided in a separate appendix.

An extensive presentation of the study as well as an Excel file of the reviews received by online stores can be found in the studies section of the members’ section.