E-commerce is flourishing in the Nordic region—it’s time to get on board

As e-commerce grows in the Nordic region, consumers are demanding more from merchants—including 24/7 convenience, flexible deliveries and their preferred choice of payment methods. We spoke to Nordea’s experts about the challenges B2C and B2B businesses face when transitioning to an e-commerce model, and how our upcoming payment solution can help.

60% of Nordic residents (aged between 18 and 79) made purchases online during an average month in 2017. That year, e-commerce sales in the Nordics totalled €21.7 billion. While there’s still catching up to do compared to other markets—including the UK and the US—this indicates a great deal of potential for e-commerce in the region.

Waltteri Karhusaari, Head of Nordea Connect at Transaction Banking, Nordea, believes several factors are driving Nordic populations to embrace e-commerce. One is that the Nordics enjoy some of the best internet access in the world. “We have a high penetration of fast internet access—and we’ve had that for a long time. We’re getting very used to doing things online,” Karhusaari says. In 2010, Finland was the first country in the world to make broadband access a legal right for citizens.

There’s also the dispersed nature of Nordic cities which makes online purchasing attractive. “Many of the Nordic populations are spread out across sparsely populated geographic areas. For people in these remote locations, certain goods may be hard to get, and it’s often easier to place an online order than to visit a physical store.”

Changing customer demands

As Nordic consumers adopt e-commerce in greater numbers, they’re starting to expect more flexibility from merchants. “The rapid rise of mobile devices—smartphones, tablets and iPads—is a major trend we’re seeing in both market reports and discussions with our customers,” says Karhusaari. “People in the Nordics are starting to expect the freedom to shop however they want, at any time of day.”

The rapid rise of mobile devices—smartphones, tablets and iPads—is a major trend we’re seeing in both market reports and discussions with our customers. People in the Nordics are starting to expect the freedom to shop however they want, at any time of day.

Waltteri Karhusaari, Head of Nordea Connect at Transaction Banking, Nordea

Expectations are also evolving when it comes to deliveries. “Whether you want to pick up a package yourself, or have it delivered to your own home or a local store—being able to choose your delivery day and location is becoming more important than ever,” says Karhusaari.

The benefits for businesses

It’s clear that transitioning to an e-commerce model can help you meet the demands of today’s consumers. But the incentives go beyond customer satisfaction. Selling your goods and services online can help your business greatly extend its reach. “By investing in e-commerce, you open your product and services up to a much broader audience than you would reach in a physical store,” says Karhusaari. “It gives your business the ability to reach a global market instead of just a local one.”

The move doesn’t need to be all or nothing. Many Nordic companies are now embracing an omnichannel approach. “If you have physical stores, a webstore can complement them as another sales and information channel,” explains Karhusaari. You might install a dedicated showroom where customers can touch, see and experience your products before completing the purchase in a way that suits them—whether it’s by placing an order right then in your showroom, or buying it later online. This means the majority of your stock can be kept in warehouses, reducing store-related costs such as rent and utilities.

These benefits aren’t limited to B2C. A growing number of B2B businesses are also transitioning to an e-commerce model, giving their clients the ability to order goods and services and pay for them online. “Whatever kind of business you’re operating, today’s customers expect to be able to find and interact with you online. It’s all about making their journey easier,” says Karhusaari.

Challenges for businesses

With these benefits in mind, it’s no surprise that many Nordic businesses—both B2C and B2B—are rushing to adopt e-commerce models. But businesses of all size can face challenges when it comes to this transition, especially if they’ve never sold online before.

One of the biggest considerations for companies going into e-commerce is logistics and inventory management. “You need to know how much of each product you have, where it is located, how fast it can be shipped, and keep this information up to date to meet the 24/7 needs of online shoppers,” says Karhusaari. “That can be a big challenge for many businesses going into e-commerce for the first time.”

Another challenge for businesses is ensuring that the customer journey is as smooth as possible—from the moment they land on your website, all the way to receiving and possibly returning any goods purchased. And this includes allowing customers to pay quickly and easily, in their desired way. In Sweden, 34% of consumers say they’ve abandoned an online purchase purely because their chosen payment method wasn’t available.

But knowing which payment methods to offer can be a challenge. “There’s a plethora of different payment options in the Nordic region, so it’s quite a fragmented and country-specific market,” says Karhusaari. “How do you know which payment methods are easy to use, right for your customers, and also cost-effective for you as a merchant?”

There’s a plethora of different payment options in the Nordic region, so it’s quite a fragmented and country-specific market. How do you know which payment methods are easy to use, right for your customers, and also cost-effective for you as a merchant?

Waltteri Karhusaari, Head of Nordea Connect at Transaction Banking, Nordea

A new payment service provider solution

To help businesses overcome their payment challenges in e-commerce, Nordea is introducing a new payment service provider solution called Nordea Connect. It provides a fast, secure and simple way for merchants to accept the most popular Nordic payment methods online—with new options being continuously added. Nordea Connect is already available in Sweden and Finland and will be extended to Denmark and Norway later in 2018.

As Nordea Connect is rolled out across the region, it will become easier for merchants to do business in multiple Nordic countries. “Let’s say you’re a Sweden-based merchant that’s also doing business in Norway, Denmark and Finland. Currently you’d need a Payment Service Provider (PSP) agreement for each of these markets. But we’re going to offer the opportunity to cover all countries with one agreement, and the ability to choose where you want the money settled,” says Karhusaari. “This is part of our plan for Nordea Connect.”

By helping to streamline the payment side of things, Nordea Connect will free up businesses to focus on other crucial aspects of e-commerce—such as sales, deliveries, effective inventory management and creating innovative customer experiences. In the future, the solution will also offer powerful analytics tools—so you can see where your customers are spending and identify opportunities for growth.

“We have a vision for Nordea Connect, and it’s not just about creating better payments. It’s about creating better merchants,” says Karhusaari. “We want to help you focus on what you do best—selling your products and growing your business.”

For more information: Nordea Connect

We have a vision for Nordea Connect, and it’s not just about creating better payments. It’s about creating better merchants. We want to help you focus on what you do best.

Waltteri Karhusaari, Head of Nordea Connect at Transaction Banking, Nordea

With special thanks to:

Waltteri Karhusaari, Head of Nordea Connect at Transaction Banking, Nordea

The information provided within this website is intended for background information only. The views and other information provided herein are the current views of Nordea Bank Abp as of the date of publication and are subject to change without notice. The information provided within this website is not an exhaustive description of the described product or the risks related to it, and it should not be relied on as such, nor is it a substitute for the judgement of the recipient.

The information provided within this website is not intended to constitute and does not constitute investment advice nor is the information intended as an offer or solicitation for the purchase or sale of any financial instrument. The information provided within this website has no regard to the specific investment objectives, the financial situation or particular needs of any particular recipient. Relevant and specific professional advice should always be obtained before making any investment or credit decision. It is important to note that past performance is not indicative of future results.

Nordea Bank Abp is not and does not purport to be an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction.

The information provided within this website may not be reproduced, distributed or published for any purpose without the prior written consent from Nordea Bank Abp.

Related articles