Nordic companies face a strategic dilemma and a big decision: join forces with the tech giant and the world’s largest retailer Amazon or fight back with everything they can.
Already at the end of October, the US company asserted its presence in Scandinavia by opening a fulfilment centre in Eskilstuna, Sweden.
However, while some consider it a milestone in the market’s e-commerce evolution, others see it as metastasis of yet more ‘corporate cancer’.
The Nordic B2C e-commerce market is growing fast and is now near €25 billion, according to Boston Consulting Group’s analysis published in December, titled ‘Disruption at our doorstep, Amazon’s arrival in Sweden and the Nordics’. Due to geographical challenges and an insufficient push from retailers, e-commerce among this group of countries is still said to be in its expansion phase, which has been further accelerated by the COVID-19 pandemic.
Amazon currently has a mere 2% market share in Nordic countries. Based on figures from other markets, however, Boston Consulting predicts that the company could capture 5-10% of the area’s e-commerce within five years and become a major Nordic e-commerce player.
Boston Consulting Group proposes two alternatives to deal with the e-commerce giant.
The first is for Nordic companies to partner up with Amazon, as this would give access to a growing customer base, easy-to-manage platform and logistics network.
Alternatively, if Nordic companies were to stand up against the giant, they should focus on the US tech giant’s “vulnerabilities” such as limited physical store network, limited personalised relationships with customers and a lack of local understanding.
In other words, the companies’ “houses must be in order”. Value proposition, channels and operations must be in pristine condition, Boston Consulting concluded.
The COVID-19 pandemic creates an undercurrent for the development of e-commerce and the whole economy. Statistics show that of the Nordic countries, Denmark has come out best, outperforming its peers in the region and globally. And although Finland and Sweden have been more resilient than the global average, Norwegian companies have suffered most with significant losses. (Pekka Vänttinen | EURACTIV.com)