Our website uses cookies

Cookies enable us to provide the best experience possible and help us understand how visitors use our website. By browsing Essential Retail Magazine, you agree to our use of cookies.

Okay, I understand Learn more

Comment: Trading into the Nordics

The Nordics (which refers to Sweden, Denmark, Norway and Finland but not Iceland for the purposes of this article) is a region containing just 26 million people – but representing the 12th biggest economy globally, according to the World Bank.

Of particular note within the Nordics is the politically-created region of Greater Copenhagen – an area encompassing 300km around Copenhagen and reaching into southern Sweden – which offers a population of over 9 million people; 87% of whom speak English.

Generally speaking, the Nordic region is in good financial shape, with high average levels of disposable income and a well-educated customer base.

Below we outline a few factors you should consider when building your strategy for market entry into the Nordics.

Four separate countries

While it may be convenient for reference purposes to consider the four countries collectively as the ‘Nordics’, each country is distinct in its own way and shoppers within each have their own preferences and behaviours which need to be taken into consideration.

For example, while each country offers good access to a wide range of online retail sites, each has a different top 10 list of online stores with very little crossover domestically – although the international stores they visit are similar.

There are demographic variations in relation to shopping frequency too. Data from DIBS shows that the most frequent online shoppers are 30-44 years old in each of the countries except for Sweden – where the 49-59 age group were found to be the most prolific.

Norway has by some distance the highest annual shopper spend, while Sweden has the second-highest and largest total market while also having the lowest level of internet penetration out of the four countries – although it is still high compared with other European countries.

A region with strong eCommerce potential

According to the EC’s Digital Scorecard, all four Nordics countries are highly ranked in relation to their readiness and ability to conduct business digitally. Denmark is currently ranked the highest with an overall score of 65%.

In addition, a UN report on trade and development put all four countries in a top 10 list of those where eCommerce provided the greatest opportunity. Some of the key characteristics common to those countries featuring highly in this measure were use of credit cards as a payment mechanism, a tendency for a smaller population and good access to telecommunications and postal infrastructure (including IT resource).

And this strong take-up of digital provides positive news for retailers looking to sell into the Nordics market – with 50% of Norwegian and 49% of Finnish shoppers making cross-border purchases according to PostNord. Denmark (36%) and Sweden (32%) had a lower penetration, although it is worth keeping in mind that some Nordic brands have a local presence across all four countries and do not necessarily register intra-country sales as ‘cross-border’. A full 25% of total eCommerce trading is estimated to be made through international sellers.

The UK is the top international online shopping destination, followed by Germany, the US and China.

Logistics

The Nordics may have a small population, but logistical challenges abound due to the sheer size of the region (121,000 sq km), particularly given the length of coastline – Norway has the second-longest stretch in the world – and the fact that there are hundreds of associated islands and fjords.

That said, good air and road links exist and much of the population reside in the coastal and central / southern region, so it is possible to focus on these specific areas when getting started. It’s also worth keeping in mind that the exact rules for each country may differ slightly – Norway for example is not in the EU, although it is part of the European Free Trade Area (EFTA) meaning it shares many of the EU’s regulations.

A popular fulfilment option in the Nordic region is use of pick-up / drop-off (PUDO) points, with shoppers there generally more willing to use alternative delivery services than most other developed eCommerce markets. Some kind of home delivery is still the preferred option for most shoppers, and research suggests that providing the option to leave the parcel in a mailbox or other safe place is important.

Nordic shoppers are also among the first to start using ‘in-car’ delivery services, which is being pioneered by Volvo. This option authorises the carrier to use a digital key to open the boot of a customer’s car and ‘deliver’ the parcel, and has been commercially available in Sweden since November 2015.

Free download: To find out more about the Nordics eCommerce market, download your free copy of the Nordics Cross-Border Trading Report 2016, published in association with Direct Link.

What’s Hot on Essential Retail?