Finland

A Consumer Focused on Quality on All Levels

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).

The Finnish Consumers

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.

Translation

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. ^[17]

Social Media

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.

Digital Marketing

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.

Major Shopping Categories

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.^[20]

Major Retail Holidays

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.

Advertising Limitations

Beverages and Alcohol

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.

Pharmaceuticals & Drugs

The advertising of medicinal products must not be improper or induce people to use the products unnecessarily.

Other Limitations

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.”

Lagging Other Scandinavian Countries but Steadily Catching Up

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.

Current Market Trends

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.

Domestic eCommerce (B2C)

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.

Cross-Border eCommerce

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

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.

eCommerce Services

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.

eCommerce Intellectual Property Rights

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.

Popular eCommerce Sites

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.

Mobile eCommerce

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.

Online Payment

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.

Other Payment Methods

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.

Payment Regulation

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.

Local Entitites

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.

Infrastructure

Global carriers

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

• UPS Express Plus – 1 to 2 business days delivery by 09:00
• UPS Express – 1 to 2 business days delivery by 12:00 noon
• The example service times above are from the UK.
• UPS Express Saver – 1 to 2 business days delivery by end of day
• UPS Standard – 3 to 5 business days delivery during the day

Fed Ex – Offers two main services to the Nordics with delivery times subject to country of origin and the specific destination:

• International Priority – 1 to 3 business days
• International Economy – 2 to 5 days

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:

• 09:00 Express – Denmark
• 10:00 Express – Denmark and Sweden
• 12:00 Express – Norway and Sweden
• Express – Next day – all countries

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:

• DPD Classic which includes DPD Predict, a pre- delivery advice notification which is a service feature generally welcomed by online shoppers
• DPD Direct which is DPD’s own branded direct access solution (see section – Direct access) offering lower cost consignment + kilo rate pricing, customs clearance, tracking and a returns service for unwanted items.^[11]

Deliveries

For its ‘home’ markets of Norway and Finland, Bring provides its home service which offers a fixed price per parcel.

• Before a delivery attempt is made, the recipient is contacted by phone in order to agree the day on which they want their parcel delivered.
• Deliveries are scheduled Monday-Friday between 09:00 and 21:00.
• If the recipient cannot be reached by phone they will be sent a letter with information regarding their parcel and asked to get in touch to arrange a day and time for delivery.

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:

• Express Flex – a tracked service for delivery to the customer’s selected address after one or two working days but always by appointment. The customer’s address AND phone number must be shown on the label. If after two call attempts the customer cannot be reached, a call-back request is left and the parcel retained for the week of delivery plus two further weeks before being returned to the sender if not delivered or collected.
• Small Item – for parcels up to 2 kilos and 250 x 353 x 30 mm. These will usually be delivered within two weekdays of dispatch, with the normal letter mail. A non-signature service, the item will be left in the mailbox but if it is too large, the customer will have to collect it.

The lower cost option is usually for the customer to collect their parcel:

• Economy – for delivery to the recipient’s selected postal outlet by 16:00 the next working day with collection until 17:00 that day or for two weeks afterwards. The customer is sent an SMS message (or letter if no mobile phone number is provided) advising that the order is available for collection from a dedicated area in their chosen outlet.
• SmartPost uses Posti Parcel Points – lockers where customers can choose to have their parcels delivered. Some shoppers may already have registered free for the My Pick Up Point option to have all of their parcels delivered to a particular locker location. Currently only available in Helsinki and Utsjoki although the network is being extended.^[12]

Import Duties

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.^[13]

A Safe and Strong Export Market

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.

The Finnish Consumer Protection Act Regulates on Various Fields:

• Chapter 2. Regulation on Marketing: No conduct that is inappropriate or otherwise unfair from the point of view of consumers shall be allowed in marketing. Marketing that does not convey information necessary in respect of the health or economic security of consumers shall always be deemed unfair. Marketing must clearly show its commercial purpose and on whose behalf marketing is implemented. The Seller is prohibited in delivering the goods to the customer, if the goods are not expressly ordered. Comparison of the goods to the competitors products is acceptable as long as the information on the competing products are not false or misleading.
• Chapter 3. Regulation on Contract Terms: In general the Contracts are binding. However, the concept of ‘Social Civil Law” has been accepted into the Finnish Contract Law. The consumer is kept as a weaker party of a contract where the contract has been made between a consumer and a trader. The EU Directive on unfair terms in consumer contracts (93/13/EEC) has been implemented by the Consumer Protection Act.
• Chapter 5. General Provisions on the Sale of Consumer Goods: The section 5 applies where the seller is a business, and the buyer is a consumer. A contract provision, which di ers from what has been laid down in the Consumer Protection Act to the detriment of a Customer shall be void. For example where a warranty has been granted to a product, the restriction of a warranty right is not possible, and the Consumer has always the right to invoke the failure in the product, and rely on the warranty that was granted at the time the purchase took its place.
• Chapter 6. Door-to-door selling and Distance Selling (eCommerce): The Chapter 6 regulates on the 14 days money back guarantee. Opposite to the other types of business, the consumer bears the right of returning the product without further explanation in 14 days time. The Consumer is the one bearing the costs caused by the returning of the goods. After receiving the noti cation of the withdrawal, the Seller is to return the paid money without delay.

FX Policies

Finnish foreign exchange controls have been abolished.^[23]