According to Estonian E-Commerce Association data, some 984,00 packages were delivered to Estonian package terminals in April and 991,000 packages in May. On year, package volumes decreased 17 percent in March and by more than a quarter in April, as shopping malls were closed due to COVID-19 pandemic-related restrictions last year.

"The current extraordinary year will certainly have an impact as well — the war, fuel, food and other price increases as well as inflation, which is seriously curbing the consumption of average households beyond basic needs," Estonian E-Commerce Association CEO Tõnu Väät explained regarding the drop in the april package terminal survey.

According to the association's information, package service providers' market shares have remained stable this year, with Omniva controlling 45 percent, Smartpost 30 and DPD 25 percent of the market in April. Of these, DPD saw the highest growth as well as the smallest decrease on year.

Commenting on the overall decrease in package volumes in April, DPD Estonia CEO Remo Kirss said that this reference base wasn't quite right, as it's comparing current normal circumstances with a period last year when shopping malls were closed and much of trade was directed to online channels. DPD nonetheless saw its cargo volumes increase in May as well.

"What is plain to see is that the growth curve isn't as sharp as it was before," he added.

DPD currently operates 257 package terminals in Estonia. According to Kirss, they take dozens of parameters into account when planning and expanding their network. What is important is that the terminal is located in a highly frequented spot; another consideration is package terminals not being too far from package recipients' homes.

"That is why we had a strong focus over the past two years on installing package terminals in smaller towns in particular," he explained.

This year, DPD is shifting its focus to expanding its existing package terminals and will not be increasing the geographic scope of its network. The goal is for people to be able to pick up their packages during the winter holiday season with little to no waiting in line.

Omniva expanding network yearly

Kristi Unt, COO of package terminal market leader Omniva, said that they are expanding their network of terminals every year, and that investments to this end are being made this year as well.

Like DPD, Omniva likewise bases its decisions regarding new terminal locations on them being located along people's daily trajectories. The company also cooperates with towns and local governments as it plans its network.

Omniva has 287 package terminals in Estonia, which receive a total of nearly 450,000 packages a month. Formerly Eesti Post, the company, which is also Estonia's universal postal service provider, also operates post offices, more limited postal service points as well as a courier service.

Unt highlighted that while Omniva package terminals are located close to their competitors' in Estonia's bigger cities and towns, it is Omniva terminals that are more visible outside of town.

"We're still seeing that package terminals are the preferred channel," she said. "Clients appreciate that [our package terminals] are accessible 24/7. Also, if a client has ordered several packages to be delivered to the same package terminal, they can pick them up from one locker."

Itella Smartpost operates 254 package terminals and 32 package service points. The company has two different kids of package terminals — blue ones, which have been in use for years already, and newer white ones that include an individual keypad on each locker to help avoid lines forming. All Smartpost package terminals are located indoors.

"We will install more package terminals as needed," said Triin Parmsoo, customer experience manager at Itella Estonia. "In planning their locations, we monitor market demand first and foremost, but also the activity of our competitors."

Both she and Omniva's representative confirmed that despite the fierce competition, there are currently enough clients to go around.

Price, location, carbon neutrality

Parmsoo noted that price levels have remained stable over the years, and fluctuated more in the case of online store deliveries. Nonetheless, promo code campaigns impact the package market as well.

"Estonian consumers remain very price sensitive, and even minimal differences in price can make a crucial difference," she acknowledged.

The head of DPD Estonia, meanwhile, considers proximity to home more important than price.

"Someone isn't going to travel further from home to pick up a package over a price difference of a couple dozen cents, as is the case with some promotions," Kirss said. "One of the main parameters in deciding [on the location for a new package terminal] is still location — that is clear. And according the results of our e-barometer study, it turns out that, in addition to products, the environmental friendliness of a delivery method has become crucially important."

DPD has made a conscious effort to focus on carbon-neutral package deliveries, he added.

The volatility of overall volumes poses a major challenge to package service providers. In addition to the winter holiday season, severalfold more packages are also sent during Black Friday, E-smaspäev (e-Monday) and other similar sales campaigns, putting immense pressure on a short period of time.

Package terminals aren't sitting empty at other times, though, as online retail trade boomed during the COVID-19 pandemic and package terminals continue to remain a popular delivery method, Kirss confirmed.

According to the CEO, DPD Estonia 160-170 employees, plus another just under 300 couriers on top of that. Itella Estonia employs approximately 350 people. Omniva has around 300 couriers tasked with filling and emptying the provider's package terminals in Estonia, and package terminals account for approximately a fifth of their turnover.

"Across the Baltics, those numbers are significantly higher," Unt said. "Online retail has returned to pre-COVID levels, and growth is continuing at 15-percent intervals. What has changed is the fact that clients are significantly more aware of the convenience involved in online retail."

Last year, online retail trade in Estonia increased by €1 billion to €2.5 billion. More than 12 million packages were sent via package terminals in 2021, marking an increase of 33 percent on year. DPD, which installed the most new package terminals last year, also saw the biggest growth.

The E-Commerce Association forecasted at the beginning of the year that the three major package service providers' package terminal market shares will equalize even further.

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