Online buying from domestic sources decreased while online buying from China increased – Finnish speciality goods trade needs support in order to compete

According to a report by the Finnish Commerce Federation, online shopping by Finns decreased for the second year in a row, now by more than three per cent, as Finns primarily decreased their digital purchases from domestic sources. The decline in digital purchasing was particularly visible in online purchases of construction and renovation products, books and home electronics, but, for example, more cosmetics, pet supplies and food products were purchased digitally than before.

“Unlike in Sweden, our online sales of daily consumer goods continued to grow, and now account for just under three per cent of the entire daily consumer goods trade,” says Jaana Kurjenoja, Chief Economist of the Finnish Commerce Federation.

Traditionally, home electronics have been the largest product group in the e-commerce market in euros, although fashion merchandise, i.e., clothing, footwear, bags and accessories, have been the most commonly purchased products. Although online purchases of fashion products decreased last year, purchases of home electronics shrunk even more, and fashion now became the largest product group in the e-commerce market.

In total, Finns made digital purchases of retail products from Finland and abroad totalling almost EUR 5.3 billion. Measured by the number of monthly visitors, Finland’s largest online store last year was k-ruoka.fi, followed by verkkokauppa.com, motonet.fi and tokmanni.fi.

“This year, we expect the digital purchases made by Finns to increase by about five per cent. Based on the development of the early part of the year, it seems that growth will be directed especially to foreign online stores,” Kurjenoja says when talking about the development.

Digital buying from China increased – pushing of Temu began

In addition to Finland, online shopping decreased last year in many continental European countries, such as Germany, France, Spain, Italy and Sweden. At the same time, in many European countries including Finland, online buying from China grew again.

“In Finland, the soaring rise of Shein and especially Temu is reflected in the growth of digital purchases of fashion and electronics made in China. In terms of monthly visits, Temu has already joined zalando.fi, previously the most visited foreign marketplace for Finns, since the beginning of the year,” Kurjenoja says.

The rise of Temu and Shein can also be seen on the lists of the most downloaded and used shopping apps. Temu has become the most downloaded shopping app in both Finland and Sweden, and both Temu and Shein are among the 10 most used shopping apps in both countries.

“With cheap prices, free shipping, an AI-based ordering system, effective social media marketing, and the entertainment of shopping, these online giants, which are spewing cheap Chinese products to the world, have changed the entire operating logic of e-commerce from marketing to logistics,” Kurjenoja says.

According to the Finnish Commerce Federation, there are also negative features in the development.

“The ultra-fast e-commerce is guiding the ecosystems of Temu and Shein to continuously produce new products that are not even meant to be long-lasting. Transportation of individual purchases in separate parcels directly from the Chinese factory to the consumer also often means that no customs duty is paid on the purchase. In addition, consumer protection at the EU level is not realised if products break down easily or if product labels and instructions for use are not appropriate,” Kurjenoja explains.

The Finnish speciality goods trade needs support to keep pace with AI

Artificial intelligence and machine learning are already being utilised in a variety of ways by companies in the world of commerce. For example, in the United States, proactive shopping recommendations based on artificial intelligence already play a major role in online shopping. The two largest online stores in the US, Amazon and Walmart, use AI to optimise transport routes, for example, so that weather forecasts are also taken into account in route planning.

Artificial intelligence is also used, for example, in service design, website content production or marketing campaign planning to improve the conversion rates of e-commerce. Especially fashion online stores around the world struggling with high return rates are hoping for well-functioning virtual fitting rooms, and experience is already starting to accumulate.

“Various e-commerce development projects based on artificial intelligence are under way around the world. However, our small, domestic speciality goods trade sector needs support in order to keep up with its international competitors,” Kurjenoja points out.

“For example, Business Finland’s forms of support should be developed so that they would also focus on improving the productivity and applied development of trade and service companies. Once the basics are put in order, even small businesses will have a chance to compete internationally,” Kurjenoja says.

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