The Covid-19 pandemic has significantly changed shopping habits, as a result even entrepreneurs have had to rethink their sales channels, developing and investing in e-commerce platforms. “Lursoft“studied that the number of business units on the Internet has increased due to the pandemic, but in the past year their number has decreased again.
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Data show that fewer than 18.6 thousand structural units of this type were registered in October last year, while now their number has dropped to 15.7 thousand. The data collected reveals that the largest number of existing e-commerce structural units were registered in 2020 and 2021. This is undeniably influenced by the Covid-19 pandemic, which has significantly changed previous sales channels. For example, of the 15,700 e-commerce structural units currently in existence, 2,751 were registered in 2020 and 3,782 in 2021. Note that the number of e-commerce structural units has shown a significant increase since 2016, but the impact of the Covid pandemic -19 their number grew even faster.
The decrease in the number of registered e-commerce structural units is most likely also influenced by the changes in the application of VAT, which entered into force throughout the European Union from 1 July 2021.
Now, both the companies of the member states of the European Union and the companies of third countries or third territories operating in the e-commerce market can register for the purpose of paying VAT in an EU member state, considering and paying VAT in that member state for the sale of all eligible goods and the provision of services to buyers – physical and legal for people who are not VAT payers and are located in other EU member states.
To do this, the company must register for a special VAT regime. Latvian companies carrying out cross-border e-commerce transactions in the EU territory have recognized a special VAT regime – the Union regime – as most appropriate. You can register for the use of this scheme if the company provides services in other EU Member States to natural and legal persons who are not VAT payers, or carries out distance sales of goods in the EU territory. If Latvian companies sell goods imported from third countries or third territories (China, USA, UK) via their online store, they can register under the import regime for the long distance sale of goods imported from third countries or third territories, or the IOSS (Import One Stop Shop) regime. Internet platforms can also use the IOSS mode.
The oldest e-commerce structural units currently active were registered more than 10 years ago. Among them is, for example, the Internet shop Universal.lv belonging to SIA “CRN Projekti”, which was the only structural unit of this company registered in 2006. Lursoft data reveals that it was registered at the beginning as of 2010. Lursoft Multi report data shows that the company has not received any revenue from business for a long time and has also consistently shown losses. At the moment, when you visit the website of a particular online store, you can see an offer to buy its domain. The sole owner and true beneficiary of SIA “CRN Projekti”, Normunds Raubiškas, also owns SIA “Gameparty.lv”, which was registered in 2010, but this company also does not carry out economic activity. The last time it received income from business was in 2015.
While only a few structural e-commerce units were registered in 2010, one year later their number was higher. 43 structural e-commerce units registered in 2011 are still active this year at the beginning of October. Among these are several magazine websites published by the publishing house “Žurnāls Santa”, as well as several other successful companies that continue their growth . Among them – the online store Madaracosmetics.lv of JSC “MADARA Cosmetics”, as well as the websites and online stores of “Jānis Roze”, the jewelry retailer jahonts.lv and other companies. It should be noted that in 2011 VAS “Latvian State Broadcasting Center“also registered the eparaksts.lv website.
E-commerce structural units are currently registered in almost 10.8 thousand companies, which means that among these there are also companies that manage several e-structural units at the same time. For example, the structural units plus e-commerce are SIA registered “Tet“. The telecommunications company currently has 53 active structural units, of which 41 with websites, including several sites with foreign domains. The second company with the largest number of e-commerce structural units is SIA” Gruppo Conte “. Domain company has only three online stores, while the other 26 structural units are surveyed abroad, for the most part as Amazon shops.
Data from the “Lursoft” Multi report show that Jānis Vītola’s SIA “Cone Group” worked with a decrease in turnover last year. If in 2020 the company’s turnover exceeded 1 million EUR, then last year it fell to 0.88 million. EUR.
As is also the case with SIA “Cone Group”, Latvian companies not only create structural units with Latvian or foreign domains to promote their business and acquire new markets, but also quite actively use already successfully functioning foreign online store solutions that allow them to place their assets for sale. . The research data reveals that Latvian companies currently have 579 structural units in the “Amazon” e-commerce trading network, an even greater number – 725 – of such structural units are “Etsy”, while “EBay” has 326.
Structural units for 55.3 thousand companies are currently surveyed, of which nearly 10.8 thousand companies have at least one e-commerce structural unit
Furthermore, there are currently 27 e-commerce structural units registered by SIA “SB”, which specializes in the trade of thermo-hydraulic products, as well as in the design and installation of heating systems. Lursoft Multi report data shows that with the onset of the pandemic in 2020, SIA “SB” recorded a drop in turnover of 4.86%, but already last year achieved the highest result in the company’s history . In 2021 SIA “SB” had a turnover of 18.88 million. EUR, earning 1.89 million after tax. EUR.
Structural e-commerce units are often created and registered with the aim of promoting the demand for goods and services offered by the company. This is also reflected in the sector breakdown, as nearly 42% of all companies that have registered this type of structural unit work in retail or wholesale. At the same time, it should be noted that e-commerce structural units are an important support for attracting customers in other industries as well. Therefore, this type of structural units, in addition to physical offices, warehouses, customer reception areas, are also registered in other sectors, such as textile production, real estate industry, agriculture, etc. One example is SIA “Minute Clinic”, which has four clinics in the Riga region, but at the same time as the website 1min.lv, where patients can book the most convenient time for their visit, is also referred to as a separate structural unit .
More than half (55.23%) of all companies with registered e-commerce structural units are from Riga, but a considerable number of such companies are also registered in Mārupe and Ogre counties, as well as Jūrmala and Jelgava. Although the turnover of these companies remained at the level of 2020 last year, they managed to increase their profit by 42.44%. In 2021, 131.1 thousand employees were employed in these companies.
