What to expect from Amazon in the Nordic countries?
An e-commerce giant and much more than that; Amazon. The tech leader and conglomerate expanded to Sweden on October 28th, 2020. That date could very possibly be a significant day years from now for Nordic e-commerce. But what can we really expect from Amazon in the future here in the Nordic countries?
The Nordic e-commerce has grown rapidly in recent years and Amazon has also noticed this, as we can see. One of the main reasons why consumers have started to favor online shopping so much is the price, availability and convenience. These things happen to be a few of Amazons competitive advantages at the same time. Is that coincidence? Well, I don’t think so.
However, Amazon is not new to many consumers, since it enjoyed almost 2% market share in 2019 through cross-border trading without any marketing efforts nor physical presence (BCG analysis, 2019). Amazons growth is based on long-term orientation, strong customer focus and operational excellence. They also have a very strong competitive membership advantage which can be used to get e.g. free transportation indefinitely, as well as access to their video streaming and music services. Overall, it’s very difficult to compete against them.
Looking to the future, Amazon will most likely intend to gradually expand its range in Sweden, before expanding to the other Nordic countries. Based on previous entries, Amazon has achieved first or second positions in markets they entered, so it’s very likely that they will also take the lead in the Nordic markets, because e-commerce markets here are relatively small comparing to major markets in the world. Other main factor is its willingness to “take over” Nordic markets. By that I mean how much they will invest in pricing, marketing and most importantly their physical presence in the Nordic countries.
Either way, Amazon has come here to stay, and with its huge market share other players will face significant challenges to stay ahead of the competition. When it comes to Amazon many things can only be guessed at. Their long-term strategy has often proven to be very effective, so keeping an eye on their performance is definitely worth it.
A threat or a possibility? It’s up to you.
Best, Teemu
Sources: Boston Consulting Group
