Amazon to Launch in Sweden Following COVID Pandemic
Updated: Aug 13, 2020
The world’s largest e-commerce brand announces plans to launch in Sweden. Currently, the sales giant does not have a presence in any of the Nordic countries.
Swedish customers have had to rely on Amazon.de if they wanted to buy from the site. This meant orders were being shipped and fulfilled from Germany and carried a high delivery charge for customers.
“Amazon has been available to Swedish consumers and companies through our various European websites for years but the next step is to introduce a complete retail offering in Sweden and that is what we are planning to do now” Alex Ootes, Vice President of EU Expansion at Amazon stated last week.
He went on to say “ We are excited to empower small Swedish Businesses through Amazon and are investing in tools and services to help them grow, We’re optimistic that by focusing on the things we believe customers value the most - low prices, vast selection, and fast delivery - over time we will earn the trust of customers in Sweden”.
It is clear by Oote’s statement Amazon is dedicated to commanding the Swedish e-commerce space.
Some local players have been preparing as they could see the clues Amazon was ready to enter their market.
In March Commerce 8 shared that Amazon had been looking for Swedish speaking employees to fill open jobs across Europe. They are hopeful Swedish speakers will fill positions such as Performance Marketing Manager, Swedish Translation Specialist, Content Developers, Fraud Investigation Agent, etc.
Furthermore, Dagens Industri tells us Amazon is looking for Swedish speaking employees to work on regulatory compliance in their Polish offices. Those employees will be responsible for ensuring products sold on Amazon comply with Swedish Laws and regulations.
Amazon did not state exactly when and where they would launch a distribution centre however Reuters had been told by Kuehne and Nagel Logistics group they were building a logistics facility 100 km west of Stockholm in Eskilstuna.
Amazon purchased the domain Amazon.se back in April 2017.At the time of writing this article, Amazon.se still redirects visitors to Amazon.de, but a roll-out of the Sweedish site is expected soon.
Emma Hernell, HUI Research’s CEO, has been quoted saying “We have had signals from players in the field that they are about to launch a Swedish Site. We can’t be 100% sure. They will do it at their own pace”
She expands with “We think that they’re going to keep delivering from their central warehouse in Germany. That means not rolling out the full package, such as fast deliveries. But perhaps they would also start with a small warehouse in Sweden”
Will they be welcome?
Retailers in the US and Europe have successfully adapted to compete with Amazon.
One might ask how small retailers could compete with mega-shark that is Amazon.
They increased quality and stocked premium products as well as brands that were not sold on Amazon, increased private labels and focused on improving all aspects of delivery.
Does this mean that Swedish companies and entrepreneurs are scared of the E-commerce giant entering the market?
Per Ljungberg from the Swedish Digital Trade Association boasts “We are positive on Amazon’s plans and are convinced that the increased competition will lead to even stronger growth for e-commerce in Sweden.”
Per Ljungberg isn’t the only one who is enthusiastic about Amazon’s expansion. Some Swedish companies are already seeing positive results from Amazon’s EU store.
“The opportunities on Amazon are enormous” Pierre Magnusson exclaims. He is the head of E-commerce at N!CK’S, a Swedish healthy snack company and advises “I would definitely recommend more Swedish Companies start selling on Amazon.”
“Amazon has grown to become our most important channel for exports, and within the first months of working with Amazon, we were cash flow positive. N!CK’s continues to grow and has become one of the best-selling brands within our category, and we are still seeing 50% year-on-year growth in the EU Amazon Stores alone” Magnusson explained.
Why don’t they already operate in the region?
Amazon has accomplished unrivalled success elsewhere in the world and members of the Swedish Digital Trade Association welcome their presence as they think it will benefit the health of the market and there are even examples of companies doing so.
This all leaves us pondering the question: Why has Amazon waited till 2020 to enter the Nordic e-commerce market?
After some research, we found several reasons why it may have been a big challenge for them in the past. Which are explained below but can be summarised as low population density, fragmented languages, unharmonized market conditions and an expensive workforce.
One of the reasons Amazon has become so popular is its delivery service. They offer such good service customers can not resist using them, convenience sells.
For Amazon to be able to promise this level of service to all of its customers they require a certain level of population density. The Nordic regions lack this.
Compared to the rest of Europe it covers 20% of the land area but only contains 4% of the population. Which immediately implies a higher cost per order fulfilment.
Amazon makes the world a smaller place when selling products and one part of that is translating and localising content to make it available for customers in their own language.
Only 26 million people belong to the eight states that make up the Nordic countries. Astonishingly 18 languages are spoken throughout these countries.
As Sweden is the largest of the Nordic countries with a population of 10 million and achieving continuity of 90% Swedish speaking citizens, it’s a no brainer why Amazon is setting up shop here first.
Surprisingly there are significant differences in the Nordic countries when it comes to trading and they are seen as an unharmonized market place.
Looking at currency Sweden, Denmark and Norway all use their own version of the krone but Finland uses the Euro. Norway and Iceland are not even part of the EU.
Amazon’s business operation is more difficult to automate than you may think. The flexible service offers a varied size of parcels to customers, not to mention some products require special care.
In a bid to keep costs low Amazon employs a workforce that is low paid, is normally accepted by low skilled candidates. To satisfy its fluctuating demand they rely on hiring a larger workforce who are very flexible and can work as many or as little hours as required.
This will be a big challenge for them in Nordic countries where typically labour unions are strong, unemployment is low and on average salaries are some of the highest in the world.
This paints us a clear picture as to why Amazon hasn’t taken the dive into this market previously but what has changed now?
Why is Amazon taking action now?
Amazon is always growing and the service they offer is most ideal during a global pandemic.
Despite the extra costs of warehouse expansion and corona virus-related expenses the company has seen profit double to $5.2 billion. This extra profit allows the company to grow and enter new markets.
Amazon will still have the challenges they have experienced previously but 2020 is a new age, more hospitable for tech giants and e-commerce brands.
Online orders have increased dramatically in the last 6 months. If the amount of orders amazon receive per region are high it will help supplement costs that arise from low population density.
AI is our future and one area where it has made massive advancements is understanding and translating language. Companies such as DeepL, Google and Atril are at the forefront of this. Last year Google even managed to accomplish the amazing feat of translating speech whilst retaining your voice using “voiceprints”.
Amazon is not one to be left behind and have has several AI projects of their own. You can even utilise some of these advancements with Amazon Web Services. Meaning the 18 languages spoken in the Nordic region pose as less of a challenge than they did five years ago.
Covid 19 will challenge public health systems and modify our behaviours but the longer-lasting effect will be the damage it does to every economy across the world.
Sweden did have a different strategy of minimising the effects of Covid 19 than other countries but regardless they will feel the economic hit. A recent report from the Swedish central bank said the country will experience an economic contraction of between 7-10% for the year.
They also said that unemployment would reach between 9-10%, a considerable increase from last years 6.8%. Statista even tells us about a surge of people newly registering as unemployed during the pandemic.
On the week commencing 30th March 25,350 people registered as unemployed. That brought the total up to 68,420 newly unemployed people just within the first five weeks of the coronavirus crisis in Sweden.
This is a crisis for the country but an opportunity for Amazon. With rampant unemployment, people will be throwing themselves at the company and will be willing to take on flexible hours even if there is a low frequency of work.
With all of this in consideration, we can see why Amazon has decided to make their move into the Nordic market now and why they have wisely started with Sweden.
As long as entrepreneurs and CEO's understand what is required of them to compete with the e-commerce mogul, then this could be very healthy for Sweden's markets and offer a boost to their economy.
We thought we would leave you with a snapshot of public opinion.
The local conducted a poll on Twitter to see how people feel about the company launching in Sweden, the results are below.