Latvia’s eCommerce Industry Boomed in 2017
Latvia experiences significant growth in online sales
E-commerce in Latvia has experienced significant growth but more needs to be done to fully capitalise on the opportunities offered by the digital marketplace.
Statistics released by Eurostat at the end of last year revealed that e-commerce activity in Latvia has grown significantly in the past few years, with more than 870,000 people currently shopping online, and a further 50,000 expected by 2021. In fact, Latvia demonstrated a 28.5% growth in this area (the highest growth rate of countries in the region), suggesting that e-commerce is in fact a burgeoning sector for the Baltic state.
There are a number of factors that have contributed to the development of the Latvian e-commerce sector. Wider access to the internet and faster internet speeds have certainly played a part, while Latvian’s EU membership has given the country’s businesses access to a much wider market. On a more practical level, improvements to the region’s road freight systems have made deliveries more reliable and efficient.
Good for the economy
Growth in e-commerce activity is certainly good news for the Latvian economy, with online sales generating a total annual revenue of more than 280 million US dollars (USD). What’s more, this is expected to increase to 418 million USD by 2021.
The big winners are electronics and fashion, which account for 99 million and 79 million USD respectively. However, the effects can be felt beyond the e-commerce sector, with other businesses also reaping the benefits. Mailing companies and freight businesses who make pallet deliveries to Latvia and beyond are just some of the companies who can expect to see an increase in profits thanks to the development of online business in the country.
Work to be done
While Latvia is taking steps in the right direction when it comes to e-commerce, there is still some work to be done. Latvia might have shown the biggest level of growth, but it is still some way behind its neighbours when it comes to the proportion of turnover generated by online business. Between 2015 and 2016, just 9% of Latvia’s business turnover came from online sales, whereas 13% of Lithuania’s and 16% of Estonia’s sales were conducted online.
This relatively low proportion of online turnover, if not addressed, could prove detrimental to businesses and the country as a whole, leading to a loss of profits, money being spent outside of the country and, according to some experts, will have a negative impact on Latvia’s ability to compete on the international stage.
Luckily, Latvian businesses have a significant opportunity to grow in this online market, and the more skilled they become in this area, the easier it will become to expand into new markets and compete with foreign businesses. However, business efforts may not be enough. In order to truly take advantage of the significant opportunities offered by the digital marketplace, Latvian businesses need strong support from the government, not least in the shape of programmes and initiatives that will help to develop the country’s overall e-commerce sector.
Looking ahead to the future, e-commerce will continue to play a key role in the economy – both in Latvia and around the world – as consumers increasingly expect to be able to purchase what they need online.
And this digitalisation of retail and wholesale is set to change the face of the business sector, creating new jobs, new business opportunities, and new ways of communicating with customers.