Evaluation of Chinese E-commerce Cost and Lead Time Performance to Estonia

Purpose: Retail sales growth has been sluggish in the recent decade in North European countries. Number of factors have caused this, like problems in macro-economy, sanctions and the effect of ageing population. Also increasing amount of e-commerce from China has taken its share. Future development paths need to be researched further to identify the outlook of North European retail. Methodology/Approach: Four different imported items were examined, which were hypothetically planned to be brought on Estonian consumer markets from China. We take into account freight costs, custom duties, VAT and profit margin requirement. Also lead time performance is being examined. Findings: Analysis shows that company based imports is not that viable model as profit margin requirement as well as governmental costs (duty and VAT) take lion share from overall costs. Even if profit requirement of company importing the products would decrease, wage inflation in Asia and freight will probably lead to higher product prices. Therefore, e-commerce needs to enlarge to lower cost manufacturing locations and/or use more direct sales to consumers. Total lead time soughts new solutions too (e.g. railway connection to Europe). Research Limitation/implication: Examination is limited to small Estonian market, and their custom tariffs and VAT. Also logistics costs to Northern Europe are higher than to Central Europe. Originality/Value of paper:Research is one of the first based on the examination of products and overall costs. It adds value through understanding of import cost structures.