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Finnish retailers up their online game with state investment

Veteran Finnish retailer Stockmann has announced that it has invested in a giant new distribution centre to kick-start its slow online sales. Reporters at the Finnish Broadcasting Company Yle have learned that the government has pledged to allocate funds to boost e-commerce initiatives, in the hopes that Finnish companies will finally break through into the international online sales market.

Stockmannin uusi jakelukeskus sijaitsee Tuusulassa.

The Stockmann department store chain is testing a new 39,000 square meter distribution facility in Tuusula, a city 30 minutes north of the Helsinki city centre. When the building is taken into use in August, all of the company’s warehousing and distribution will be concentrated there.

A new automated system for handling the goods is expected to expedite both brick-and-mortar and online sales.

“Three other warehouses will be shut down, and we will be able to concentrate our collection and distribution activities at just one location. This will cut more than one whole day from our delivery process,” says Elina Laine, who is in charge of the centre’s execution.

Stockman’s new chairman of the board Jukka Hienonen told Yle recently that the new centre is an absolute prerequisite for achieving improved e-commerce profitability.

The 30-millon-euro investment is projected to save the company 6 million euros each year, as the new centre also requires less staff than the previous arrangements.

The sky’s the limit

Less than one-fifth of the retail transactions in Finland are made online at present. Even so, this accounts for over four billion euros in annual sales. Another half-million euros change hands via the online sales of used goods.

Half of the profits of online sales in Finland currently go to foreign companies. By the same token, Finnish firms that are serious about expansion must set their sights on reaching customers outside the country’s borders. Finnish e-commerce imports now heavily outnumber exports.

“The web opens up a global market. If we can gain a foothold, the possibilities are boundless,” says Oula Järvinen, a representative of Ecommerce Finland, a representative organization for online retailers.

He agrees that fluid logistics are necessary for any firm hoping to break into the online market, but what has truly been missing in Finland is a bold attitude.

“It is a combination of our location, logistical challenges, costs and our reticent culture. We don’t have an international retail culture in Finland and must work to create one,” Järvinen says.

State provides financial support

The Finnish government has even become aware of the problem. The Ministry of Employment and the Economy has just granted funds to promote a Team Finland programme to foster e-commerce growth.

Yle reporters have learned that the investment, which will be announced next week, will be one million euros in size. The money is intended to patch Finland’s “knowledge gap” in e-commerce and provide assistance for Finnish online merchants that hope to go international.

“Online sales and marketing channels in Finland today are in pretty dire straits. We will try to get them in shape,” says government-steered export booster FinPro’s director Kari Pokkinen.

So far, Finns can only dream of achieving success on the scale of German-owned Zalando, or American online giants Amazon or eBay. But the right combination of clever marketing and specialty products nevertheless has the potential to reach a substantial slice of the millions who shop online.

“We are talking small and medium-sized entrepreneurs with a global customer base. If you know what you are doing, there is an opportunity there to reach massive amounts of people,” says Pokkinen.