Finland’s geographical location puts it at the centre of three expanding markets: the Baltic countries, Scandinavia, and Russia. The country also benefits from a workforce that is both experienced and extremely well-educated. Most Fins under thirty speak English, and Swedish and Russian are also widely spoken. In fact, in 2015, the World Economic Forum estimated that Finland had the best human capital in the world. And since their speeding tickets are calculated on their income, Fins are probably also the best drivers there are…
Investors interested in superior digital connectivity will also find there an ultra-fast cable that runs between Finland and Germany, one of the fastest in the world. The Arctic Connect project also explores the possibility of using the Northeast Passage to build a digital bridge between Europe and Asia, positioning Finland as the primary data gateway between the East and the West. It’s no surprise that, in 2010, Finland was the first country ever to declare access to the Internet as a legal right.
Foreign investors interested in setting up operations in Finland should, however, be aware of some challenges, mainly related to high tax rates, regulatory red tape, and inflexible labour laws. But the country needs to attract more investments and the government has, in the past years, made progress in eliminating discriminatory regulations. Many foreign companies have established themselves in Finland for the long term, with high return on investment. In this guide, we will guide you through the process of reaching Finland’s consumers, successfully making sales on ecommerce channels, and getting your products to reach the desired consumers.
Finland is a sophisticated market with a high standard of living and a well-educated workforce. It is characterised by growth in the Finnish consumers’ purchasing power, which has increased Finnish imports.
The most important factors affecting Finnish consumer behaviour are quality, safety and the product origin. Brand is considered a strong signal of quality. Finns favour national products, especially regarding food (according to a research commissioned by K Group on food and consumer habits, Finnish consumers increasingly invest in food quality and grocery stores are expected to have a wider selection of food than before).
Finnish consumers tend to favour simple and practical products with simple packaging, as well as products that are non-harmful for the environment. In an economic forecast, the Bank of Finland predicted that private consumption will increase on the back of growing employment and a boost to consumer purchasing power. However the Bank foresees households’ savings rate remaining negative and also expects them to continue to amass more debt. Inflation is expected to remain below that of the rest of the Eurozone between 2017 and 2020. Meanwhile the central bank expects the savings rate among households to decline due to the country’s ageing population. A growing proportion of household incomes represent pensions and other social benefits.
Finns feel confident regarding their financial situation and have increased their level of debt in recent years. By mid-2017, household debt amounted to nearly 128% of income and in 2020 that figure is set to reach 129% of income, according to an economic outlook by the Bank of Finland. Consumer credit accounts for a significant share (around 12%) of aggregate household debt.
As the online environment allows selling worldwide without building traditional brick-and-mortar stores to every country, expanding the ecommerce business abroad is becoming increasingly tempting. Finland among other Scandinavian countries is an interesting market area: according to statistics Finland has comparatively high purchasing power and it can also be seen as a gateway to Russia. We interviewed a Swedish ecommerce service provider and a web store to hear out their thoughts about selling to Finland online. However, there are always some obstacles in the way, as Karlsson points out:
“Entering a new market is a rather big challenge regardless of which one you choose to start with. Even though Finland and Sweden in many ways are quite similar there are differences that need to be taken into account for a successful launch in Finland. The overall biggest challenge regardless of market is usually the cost for translation of content to new languages. For instance with the Finnish language you need to take into account that it is a ‘long’ language that may even affect the design of the web shop. 
In 2016, 88 percent of Finns used the Internet with 56 percent using social media. For those among the ages of 16-34 years old, 88-89 percent followed a social media service. Overall, the most used social media platform is Facebook. Amongst young people, the most popular social media service was WhatsApp followed by YouTube, Facebook, Instagram, Spotify, and Snapchat.
Companies in Finland have been slow to utilize digital marketing. Domestic firms have been edged out by U.S. firms. Facebook and Google established a strong position in Finland, accounting for approximately half of the digital marketing in Finland. Search engine marketing and display advertising are the most utilized digital marketing. The best performing Finnish company is Sonera and the strongest industry is telecom. In 2014, only 23 percent of all media marketing was digital advertising.
Fashion is the most popular online retail sector in Finland, followed by media and home electronics. Travel is by-far the most popular vertical for purchases via a mobile device while apparel and electronics are showing signs of expansion. The key brands to watch, especially in the international space, are Amazon, CDon, eBay, HM.com and Zalando. CDon and Komple are particularly interesting brands worth investigating further.
Shops and deparment stores in Finland are allowed to be open every day of the week, excluding the public holidays mentioned below.
New Year’s Day (Jan 1), Epiphany (Jan 6), Good Friday, Easter Day, 1st of May, Mothers’ Day (2nd Sun in May), Ascension Day, Whitsuntide, Midsummer Day, All Saints’ Day, Fathers’ Day (2nd Sun in Nov), Independence Day (Dec 6) and Christmas Day (Dec 25).
On Midsummer Eve and Christmas Eve shops are allowed to be open between 7am and 12 noon.
Radio and TV advertising of mild alcohol drinks can only be aired after 10 p.m. instead of current 9 p.m.. Outdoor advertisement of mild alcohol products has been banned in order to protect young people in particular (however, ice hockey stadiums will be an exception). While advertising on newspapers and internet continues to be admissible, Finnish companies maintaining alcohol related Internet sites must delete or block any customer praise of alcohol. Click here to have more information about the alcohol marketing regulations in Finland.
The advertising of medicinal products must not be improper or induce people to use the products unnecessarily.
Advertising for children under 18 is more strict. The word “free” is not allowed unless the product is free of charge with no further involvement. In 2007 a regulation on nutrition and health claims entered into force – “Regulation 1924/2006” – focused on the adverstising of nutrition claims such as “low fat” or “high in vitamin C” and health claims such as “helps lower cholesterol.”
According to Euromonitor International, the internet penetration in Finland was 93.7 percent in 2016. The precentage of households with access to internet was 90.3 percent. These were both an increase from the previous years. There has been a steady increase in internet subscribers, internet users, and house hold accessibility to broadband internet. Finns were estimated to have spent approximately $5.09 billion online on retail goods from Finland and abroad. The two largest incentives for Finns to shop online are the greater variety of goods and lower prices. Finns spend the most money on home technology and clothing purchases. Electronics are popular products to be bought online. Finns rely heavily on foreign retailers for online purchases.
In 2015, it was estimated that an average of $2,408 was spent from each individual shopping online in Finland. 78 percent of Finns were shopping online. The total sale of both online goods and services was $7.9 billion and estimated to be $8.8 billion in 2016. There is still room for extensive growth for eCommerce in Finland. Last year, the consumer good and alcohol orders made in Finland constituted about 0.4 percent of the overall turnover of grocery trade subject to VAT.
On 1 January 2015, a reform of the Finnish regulation on information society was put into effect. The Information Society Code sets regulations on e-privacy, consumer protection, communications networks, and data security. It aims to promote consumer protection, data security, simplified procedures, and equal opportunities for service providers in the market.
There has been a rise of C2C sales of consumer goods and online services. C2C online services are relatively new and growing in popularity. In 2015, the most popular platforms for C2C eCommerce were online marketplaces such as Tori.fi and Huuto.net, but various Facebook groups are also popular. It appears that consumption is becoming increasingly focused on online stores outside Finland as well as the C2C eCommerce sector, out of the reach of the tax authorities and regulation.
Mobile devices are utilized for researching and price comparison but three out of four online purchases in Finland are still made with a computer. Smartphone applicable websites have become extremely important for retailers. While the use of mobile devices for purchasing is still low, trends show an increase in mobile commerce, especially amongst millennials. Millennials make up a large portion of people contributing to eCommerce and customers under the age of 25 especially use mobile devices for purchases. Future trends are predicted to be a wider range of goods provided and an outbreak of new eCommerce concepts such as online grocery shopping.
In 2016, Finns spent the most money on home technology and clothing purchases. Most of the home technology was purchased from Finland, other than mobile phones and related accessories. In addition to home technology, gardening products are primarily purchased from domestic online shops. While women’s clothing is mostly purchased abroad, men’s and children’s clothing are still purchased from Finland. Price and range are important, which is why many Finns shop from foreign retailers instead of domestically.
Finland is very dependent on foreign players in eCommerce. Almost 50 percent of online shoppers have made purchases abroad. There is a large eCommerce market in Finland. In 2016, the top 3 product categories purchased from international retailers were clothing and footwear, home electronics, and media. 34 percent of clothing and footwear purchased online were from international retailers. Approximately $3.5 billion was spent on online purchases with 38 percent of purchases coming from abroad.
From a Postnord survey, the five most popular countries from which to buy are Germany, China, United Kingdom, Sweden and the US. 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. Finland’s eCommerce market has catching up to do. They consistently shop online less than their neighbors and lag behind in eCommerce.
B2B eCommerce is an attractive market in Finland because it is quickly growing. B2B companies in Finland have fallen behind B2C companies in active social media engagement. Customers’ experience has become an important factor in B2B ecommerce sites along with omni-channel management and exploiting customers’ purchasing behavior. Customers are now more concerned about privacy, security, and trust issues related to online stores in the field of B2B eCommerce.
In 2016, Finns spent a total of $3.9 billion on B2C services purchased online. The most popular services were travel tickets, package tours, and accommodations. 40 percent of the total services purchased online were travel tickets (airline, ship, train, and bus). Only 2 percent order meals online, a more common practice in the metropolitan area.
The U.S. International Trade Administration states that enforcing intellectual property rights (IPR) violations on immaterial products has been less of a priority for police and customs in the Nordic countries, and the laws are currently being rewritten to reflect the digital reality. Like all markets of the world, manufacturers need to make sure their intellectual property is protected, whether they produce a physical product or something more immaterial such as software, code, art, or music. IPR considerations are regulated nationally with the official patent offices.
The top sites for online shopping in Finland are tori.fi, verkkokauppa.com, Ebay, oikotie.fi, and kela.fi. The overall top 5 websites accessed in Finland were google.fi, YouTube, Facebook, google.com, and iltalehti.fi. Internet and telecom sites are the most popular categories.
Only 12 percent of Finns have reported using a cell phone to purchase products and 15 percent have reported using a tablet. Mobile use for online purchasing has been increasing due to a growing trust in mobile payments. There is a large opportunity for growth in mobile eCommerce and mobile payments. Consumers under the age of 25 especially use mobile devices for purchases.
The four most popular eCommerce payment methods are debit or credit cards, direct payment via bank, invoice, and PayPal or similar online payment options. The Finns find it important to offer a range of different payment options but especially the option to use a debit/credit card or direct payment via bank. They are extremely concerned about the safety of their card information.
Online bank transfers dominate eCommerce purchases, accounting for nearly half of all transactions (48.1%).
Invoice payments are also popular, accounting for 17.7% of transactions but mobile accounts for just 1%. According to the World Bank, mobile phone subscriptions have grown and are now at 173 per 100 people, suggesting mobile is an area for focus.
In line with Nordic regional trends, Finland has made significant progress towards becoming a cashless society, as several companies and government offices in Finland have abandoned the use of cash. The National Land Survey of Finland stopped accepting cash in two customer service branches in North Karelia during January–April 2013; the primary reason for this was to save costs, as cash deposits needed to be sent to the bank once or twice daily. As the trial was successful, the National Land Survey of Finland stopped accepting cash in all branches in Central and Southern Finland, and Pirkanmaa-Satakunta. Similarly, Aurinkomatkat, one of Finland’s largest travel agencies, has terminated cash payments in its service offices.
To capitalize on the fast-growing mobile payments (m-payments) market, an increasing number of retailers are allowing customers to make payments by mobile phone. OP-Pohjola Group launched a mobile wallet app, Pivo, in March 2015. The wallet uses Host Card Emulation (HCE) technology to emulate a card on an NFC-enabled device to make contactless payments. This service is available for holders of Visa Debit and Visa Electron cards. Since May 2014, the Finnish hamburger chain Hesburger has allowed customers to make payments and redeem reward points by using the Seqr mobile app, which was developed by the Swedish company Seamless.
There are a number of global carriers able to provide collection, distribution and delivery into the Nordics (using their own operations or local partners). The main ones are:
UPS – Offers a range of services and delivery times to the Nordics subject to country of origin and the specific destination
Fed Ex – Offers two main services to the Nordics with delivery times subject to country of origin and the specific destination:
DHL – Offers one main service option, namely – Export Express Worldwide – guaranteed delivery by the end of the next possible working day. As an example, from the UK to the Nordics this will typically be the next working day subject to the exact delivery address.
TNT – Offers a range of international services to the Nordics starting from next day by 09:00 subject to country of origin and the specific destination. As an example, from the UK:
TNT does not offer its lower cost day-defined Economy Express service from the UK to the Nordics
DPD – DPD is particularly of note in the Nordic market because PostNord (the postal service provider for Sweden and Denmark) is a strategic partner and its delivery partner in all four countries. It offers a range of service options to the Nordics with the examples below showing transit times from the UK in business days:
In respect of e-retail deliveries perhaps the two most interesting services are:
For its ‘home’ markets of Norway and Finland, Bring provides its home service which offers a fixed price per parcel.
Posti Group (Finland Post) provide both home delivery and pick-up options for the Finnish ecommerce market. Home delivery services are offered at a price premium in Finland:
The lower cost option is usually for the customer to collect their parcel:
The delivery operator selected will be able to provide full details and advice on the necessary documentation and processes and some can go further by pre-clearing orders while the goods are in-transit or at the start of their journey using a consumer duty paid process. This can be done using the HTS code assigned to each product category and can reduce delivery times and remove a potential barrier of having the goods held when they arrive in country. Retailers are therefore advised to specifically ask what their chosen delivery partner can do to facilitate customs clearance and duty calculation / collection.
The provisions of the Privacy and Data Protection Act apply to the processing of personal data, unless otherwise provided elsewhere in the law. Namely, the Act Applies to the automatic processing of personal data. Also other processing of personal data where the data constitutes or is intended to constitute a personal data le or a part thereof. Also, the processing of personal data where the controller is established in the territory of Finland, or otherwise subject to Finnish law.
Where the Controller is not established in the territory of a Member State of EU, the act applies where the controller uses equipment located in Finland in the processing of personal data, except where the equipment is used solely for the transfer of data through the territory. In this case the controller shall designate a representative established in Finland. Does Not Apply; To the processing of personal data by a private individual for purely personal purposes or for comparable ordinary and private purposes and to personal data les containing, solely and in unaltered form, data that have been published by the media.
Finnish foreign exchange controls have been abolished.