Estonia is quickly becoming a Baltic hub for e-commerce, making for an excellent opportunity for global merchants to enter the market. Estonia’s e-commerce revenue was estimated to reach US$ 467m in 2021 with a projected market volume of US$ 541m by 2025. 74.8% of Estonians make online purchases or pay bills online.
Cross-border payments accounted for as much as 40% of the country’s e-commerce turnover between 2020 and 2021. This cross-border activity totaled about US$ 1.62 billion in 2020, increasing the number of e-shoppers in Estonia by at least 50% and demonstrating that Estonians are looking into the possibilities to shop beyond their borders. According to industry insiders, over 1000 e-shops were set up during the COVID-19 lockdown, and demand for e-commerce has increased dramatically with many customers preferring to shop online.
The increase in Estonian e-commerce, however, has brought out some of the issues that are slowing down the growth of online shopping. The inability to integrate fast and easy solutions alongside the shortfall of Local Payment Methods (LPMs) offered by Merchants and Payment Service Providers (PSPs) are challenges that limit the chance for Estonian shoppers to be a part of the global e-commerce.
Nearly 50% of Baltic shoppers prefer to pay through online banking, which has become the primary payment method in the region. However, only around 29% of Estonians have a credit card. Instead, showing a preference for online banking payments, Estonian consumers often encounter difficulties using their favorite payment method, as often, it’s not available to them in the checkout process. This results in shopping cart abandonment of almost 60%.