Even though the Finnish consumer usually carries out their online shopping in online shops that are available in Finnish, country borders are not considered an obstacle. More than 40% of transactions by Finnish online consumers go to foreign online shops. Taxation policy can also be used to influence the competitive prerequisites of Finnish commerce.

A recent survey by the Finnish Commerce Federation indicates that last year, Finns spent EUR 4.6 billion online on retail goods from Finland and abroad. That is almost one fifth of the turnover of the entire specialised commerce and department store trade subject to VAT. Last year, EUR 1.9 billion was spent on foreign retail trade purchases. A total of 3.9 billion was spent on different tourism services, tickets and online meal orders.

The e-commerce of retail goods, in turn, remains quite small. Last, year, the consumer good and alcohol orders made in Finland constituted about 0.4% of the overall turnover of grocery trade subject to VAT.

Finns spent most money on home technology and clothing purchases. Outside mobile phones and related accessories, most of the home technology was purchased from Finland.

"Electronics are typical products where the shops support online purchases and vice versa. It is easy to place your order from the comfort of your home and pick up and pay in the shop. It saves time and transportation costs," says Jaana Kurjenoja, Chief Economist of the Finnish Commerce Federation.

In addition to home technology, gardening products are primarily purchased from domestic online shops. On the other hand, foreign online shops are used, in particular, to buy women's clothing and accessories, more than half of which now come from outside the borders of Finland. Men's and children's clothing, however, is still primarily purchased from Finland.

Clothes and footwear see most returns

After the use of e-commerce became more common, concerns arose on dispersed logistics costs and the environmental impact of parcels transported around the globe. Internationally, the returns of clothes and footwear are an expensive burden to companies; up to 20–40% of online purchases are returned. In some international online shops, return rates may be as high as 50–60% of ordered items.

However, the survey of the Finnish Commerce Federation shows that Finnish consumers are less likely to return their online orders than foreign consumers. Even at their highest, the return rates were at 10–25% of ordered products. Children's footwear and women's clothing are the largest product groups returned by Finnish consumers. Nearly 40% of those who order children's footwear return their items. Slightly more than one fifth of those who have ordered women's clothing report that they have returned some items.

"Even though, by international standards, Finns do not return their purchased goods as often as others, even these percentages cause substantial expenses to companies. In addition to the high costs of processing the returns, logistics and refunds, the returned items often cannot be sold again. It is no wonder that international operators are eager to find solutions to cut back on returns without also cutting back on the quality of customer service," says Kurjenoja.

Mobile use on the rise

Mobile devices are an important tool for Finns in the different steps of the path to purchase, especially in finding information and comparing prices. However, mobile devices are still used quite rarely in the actual event of purchasing when compared to several other countries. Three out of four online purchases made by Finns were still made with a computer.

Computers were especially used to buy electronics, large domestic appliances, package tours and spare parts and accessories of cars and other means of transportation. On the other hand, only half of meal orders were made with a computer, and nearly half of alcohol orders were also made on a mobile device.

"Consumers under the age of 25 especially use mobile devices for purchases. That is why it is easy to predict that mobile purchases will become more common as these types of consumption trends usually spread from the younger generations to the older," says Kurjenoja.

Geography indicated in online purchases

The use of e-commerce is common in all age groups and all over Finland. However, there are some geographical differences. For example, ordering meals from restaurants and cafés is clearly more popular in the metropolitan area, whereas bus and train tickets are purchased online especially outside Uusimaa.

Some products, such as cosmetics and hobby equipment, are purchased more often than average outside the metropolitan area. The most likely reason is that the shops of smaller localities have a more limited selection due to their small clientèle.

The same phenomenon can also be seen on a wider scale. In Finland, the share of online purchases compared to the size of the retail sector is, by international standards, large. Online, the consumer can browse wide selections in prices enabled by foreign levels of cost and the economies of scale.

"Price is the most significant selection criterion of e-commerce. That is why it is extremely important that the government also remembers to maintain the competitiveness of Finnish shops. Cutting back taxation on labour is one of the means of reducing the pressure to increase costs," says Kurjenoja.

The survey is based on diaries kept by a total of 2,079 consumers in the respondent panel of Kantar TNS. The consumers recorded their online purchases in two-week intervals for a year. For the survey, Kantar TNS also collected information on the entire population with telephone and online questionnaires.

Further information:

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

The Finnish Commerce Federation represents commerce—the largest sector of economic life. Commerce employs around 300,000 people in Finland. The Federation has around 7,000 member companies and represents both retail and wholesale commerce in industry policy and labour market lobbying. www.kauppa.fi