How to Start a Dropshipping Business in Estonia

Online shopping represents a more convenient and economic approach to buying compared to traditional shopping. That’s one of the main reasons why a dropshipping business in Estonia, or anywhere else, is growing in popularity.

Nowadays, it is common for people all over the world to rely on the Internet to purchase a variety of products. This list ranges from clothing and shoes to books and tech products. This is why it’s important that you know how to find products for dropshipping before you start.

This trend is not just good news for retail enterprises, but it has also created an exploding market for those looking to make money online. Many online merchants opt for a low-risk business model called “dropshipping” to sell products online to take advantage of this trend. 

Everyone can start a successful dropshipping business because you don’t need a technical background.

Luckily, there are many tools people can use to create and run a dropshipping business, which makes the technical work a lot easier than it was earlier. And the best thing about dropshipping is that you can do it anywhere and anytime.

If this sounds appealing to you, then keep reading! In this article, we are going to discuss how to start a dropshipping business in Estonia and whether this country is the right solution for your business. 

Estonia’s Population and Economy

According to the latest United Nations data, the population of Estonia is more than 1.3 million. Although Estonia is one of the least crowded countries in Europe, it has an advanced economy, with GDP worth $39.1 billion in 2019.

Estonian E-commerce Market Size

The total Estonian e-commerce revenue across all product categories is expected to reach $405 million in 2022. This e-commerce market size is attractive to many online entrepreneurs, including dropshippers.

Internet User Penetration

Due to its strong tech infrastructure, Estonia ranks among the most computerized countries in the world. Estonians can do literally anything online.

Except for several things such as buying or selling real estate and getting divorced or married.

That’s why this country has a high internet user penetration rate (the share of monthly active internet users is expected to reach about 85% out of a population of more than 1.3 million in 2025.) 

Preferred Payment Methods

The country’s digital transformation has contributed to the high usage of cards and other non-cash payments.

Estonia has become a frontrunner for card payments, with most of the payments being made through electronic channels. Specifically, in 2019, 338 million debit card payments were made in the country.

Popular Online Shopping Categories

“Toys, Hobby & DIY” is the leading online shopping category in the country. Statistics project these products to generate $114 million in sales by the end of 2023. Fashion is another popular online shopping category here, with projected revenue of $100 million in 2022. 

Tax Laws and Regulations

It is very easy to start a dropshipping business in Estonia completely online through its innovative e-Residency program. This is the first country in the world to offer entrepreneurs the chance to become digital residents and register a company online from anywhere in the world. 

Once you become an e-Resident, you will receive a government-issued digital identity, which allows you to register and operate a dropshipping business in Estonia entirely online. 

You don’t have to be a citizen or an Estonian resident to become an e-Resident and launch your business there. But the e-Residency does not give you the right to physically reside in the country. 

Also, you do not have to apply for a tax identification number in the country separately. The ID code given upon e-residency serves as it. So, this is not a way to avoid paying taxes. If avoiding taxes is your primary motivation, Estonia is not the right place for your dropshipping business.

Thanks to this program, you can easily establish your presence in the Estonian e-commerce market and start making money online.  

How to Start a Dropshipping Business in Estonia

We have made a list of 5 step-by-step instructions that will help you start a dropshipping business in Estonia. Take one step at a time, and you will be on your way to successful dropshipping business ownership.

• Select a profitable niche 

Setting up a dropshipping business involves planning and making some very difficult decisions. One of the key decisions you need to make now is to select a profitable niche that will connect you with a focused and interested audience.

To clarify, a niche is a segment of a larger market characterized by its own unique identity, needs, and preferences. For instance, there are various segments or niches within the market for clothing and apparel.

Luxury clothing would be a niche market, as would children’s clothing. These are all niche markets within the larger market for clothing and apparel.

In order for a niche to be profitable, it needs to fulfill a need, solve a problem, or offer something people want. Therefore, choosing a niche based on the sales trend is one of the simplest and best ways to find the right domain to enter. 

To select a niche based on the sales trend, you can use the free tools provided by Google, such as Google Keyword Planner or Google Trends. Just put a specific category in the search bar, and you will see if it is large enough to possibly be profitable.

• Conduct market research and competitive analysis

You may not be aware of the importance of market research and competitive analysis, but as soon as you enter the industry, you will realize that conducting in-depth competitive analysis and market research on your field and the demographics of your potential customers is an important part of running a successful dropshipping business in Estonia. 

Market research helps you identify how your potential clientele may view your business and identify gaps in customer expectations. Competitive analysis helps you identify your major competitors and determine their products, pricing, sales, and marketing strategies. 

You need to use reliable sources, which provide customer and market information, to do your product research.

The free statistics readily available on Google are some of the most reliable sources to gain info on potential customers, demand, costs, consumer spending, sales, and market performance.

To identify the strengths and weaknesses of your competitors, you should analyze their websites and social media presence.

• Choose a domain name and create your website

Before starting the website building process, you need to come up with a proper domain name for your store. A domain name is a word or phrase that you choose to put an identity on your dropshipping website. This allows customers to find you online and get more exposure to your dropshipping store.

You should choose a domain name that reflects your company’s name. After all, you do not want somebody to type www.jewelsgem.com into Google and be pushed to a site selling shoes with a big slogan reading, “Life is too short for bad shoes.”

This is an extreme example, but it may happen. And when it does, it can make people lose trust in your brand. Tools, like Lean Domain Search, Name Mesh, and DomainWheel, can help you get inspiration and choose your domain name wisely.

When it comes to the website building process, an easy way to build a website, which supports a dropshipping business model, is to use a hosted e-commerce platform such as Shopify or BigCommerce.

By using a hosted e-commerce platform, you will not worry about coding or web hosting. This is ideal for those who have little or no e-commerce development experience.

If you have some basic technical skills, you can use open-source and self-hosted e-commerce platforms, like WordPress, WooCommerce, or Magento, which give you more control over your site and allow for maximum automation and customization of your dropshipping business. Just keep in mind that if you go with Magento, you’ll probably need a Magento 1 to Magento 2 migration service.

• Find a reputable supplier

As a dropshipper, you do not keep products in stock. When a customer places an order and pays, you ask the supplier to ship the order to your customer. Partnering with the wrong supplier may result in low product quality, delayed delivery, and dissatisfied customers. This means that your supplier plays an important role in the success of your business.

Thus, you should do extensive research on Google, subscribe to a legitimate dropshipping supplier directory, or contact the manufacturer directly and ask them for all the wholesale distributors they ship to. 

First of all, you need to compile a preliminary list of potential suppliers. Then, you need to pay attention to their location, product quality, pricing, minimum order quantities, and customer support. Finally, see if they have integrations with your e-commerce platform to automate your business. (As your business grows, you may not have enough time to accomplish everything. This includes manually managing inventory levels, place orders, and track shipments.)

• Promote your business 

Before spending money on marketing you need to ensure when someone visits your website they have a reason to stay. Ensure that your website accurately represents your brand and differentiates you from your competitors. Then, you can create an effective marketing strategy to drive customers to your store. You can also double conversion rates, and generate more sales and revenue. 

In today’s digital world, the marketing options are endless, ranging from search engines and social media channels to email marketing and customer reviews. Select the strategy that’s just right for your business and motivate your potential customers to contact you and place an order on your website.

Conclusion

Because of its fantastic online business environment, the strong tech infrastructure, the wide range of innovative e-services, and the high internet user penetration rate, Estonia has become an emerging hub for global e-commerce activity. 

It is one of the least populated countries in Europe, but Estonia’s entrepreneurial prowess is so notorious that, in 2019, the World Bank ranked the country as one of the best places to start and operate a business.