From Bring. The E-commerce Report 2013 From Bring

Transcription

1 From Bring The E-commerce Report 2013 From Bring 1

2 Freedom of choice E-commerce is evolving rapidly. Online shopping has become a central part of people's lives in recent years, and Bring is taking part in this development. We aim to be the preferred supplier of services that enable e-commerce businesses to succeed and simplify shopping for consumers. We have therefore created a separate division with leading edge competence in all aspects of e-commerce, offering the full spectrum of services in the online shopping value chain both within our own business and via our Nordic partners. You are now holding the 2013 E-commerce report from Bring. We have produced these reports since 2009 in order to look at the major trends within e-commerce in the Nordic Region. If you are to remember only one thing from this year's report, it should be freedom of choice. Choice is a factor in all aspects of commerce. E-commerce customers are increasingly demanding more. They expect to be able to shop whenever they want, wherever they want, and however they want, both on the high street and online. They want to decide how goods should be paid for and delivered, depending on what suits them best in different situations. The e-commerce winners will be the operators who adapt best to the consumer demands for convenience and choice, and who are able to personalise the customer's shopping experience. Our goal is for online stores to succeed. With this 2013 E-commerce report, Bring wishes to provide operators in the Nordic e- commerce market with a tool to better equip them in the increasingly strong competition for customers. Gunnar Henriksen Executive Vice President E-commerce Division, Bring About the report The Bring E-commerce report analyses the e-commerce market in,, and. It covers consumers and consumer trends, charts general e-commerce patterns and examines how businesses are responding to e-commerce. As part of this year's survey, Ipsos MMI interviewed over 4,000 consumers in,, and. They also interviewed around 750 businesses in, and, of which 450 sell goods or services via the internet. Interviews with businesses were carried out over the telephone, while those with private individuals were carried out online. The interviews took place in April During the same period, Bring interviewed a selection of e-commerce experts in, and. The E-commerce report consists of four parts. The first reports on the status of e-commerce in 2013 and points to significant future prospects. Part two covers international e-commerce, while part three is about the importance of adapting stores to the various channels. Part four deals with the logistical aspects of e-commerce, particularly delivery and return options. The report concludes with specific advice and tips for online stores. This year's survey: A total of 4,000 consumers interviewed in,, and Around 750 businesses interviewed in, and, of which around 450 have online stores In-depth interviews with Nordic e-commerce experts 2 3

3 Report in brief The 2013 e-commerce report from Bring builds on the insights from last year's report, in which we concluded that "e-commerce" is now synonymous with "commerce". In other words, for most Nordic consumers e-commerce is a completely normal way to buy tangible goods. In last year's report, we emphasised the importance of tailoring the online store to the individual consumer and providing a good buying experience. This year, we take a closer look at two important e-commerce trends: international e-commerce and multichannel. We also report on the status of Nordic e-commerce in 2013 and how online stores can increase sales via good delivery and return systems. Freedom of choice If one term is key to this year's E-commerce report, it is freedom of choice, which affects all aspects of commerce. Consumers must be free to choose when and how they wish to shop, pay for and receive goods. Insufficient freedom of choice will send them elsewhere to other stores. If there is one thing that is relevant for 2013/2014, it is to take consumer power seriously and provide an easy way for consumers to make the choices that suit them best. It is therefore crucial for businesses to be aware of their customers' needs. International e-commerce Consumer power is also evident in buying patterns. Nordic residents increasingly buy goods from foreign online stores, and the survey indicates that this is due to lower prices and a wider range of goods. As more consumers gain experience of international shopping, we expect this trend to continue to increase. To deal with this development, Nordic online stores must stand out by providing good buying experiences and niches. We also expect more Nordic online stores to establish themselves in other Nordic countries. There are clear signs that more Swedish and Danish online stores will launch on the Norwegian market. One experience Nordic consumers expect high street stores to trade online as well. They want their shopping experience to be simple and convenient, and e-commerce is often the answer to this. In addition, in 2013 online stores must work with mobile phones and tablets. Online stores, mobile and high street units are linked together as one experience. Again, freedom of choice is key: consumers must be able to research the store and shop whenever and however they want, via any device. The winners will be the stores that integrate tangible and digital channels well and exploit the advantages of the various channels. Delivery and returns Books and small electronic goods still dominate e- commerce, but clothing and shoes show the most growth. Good return systems are crucial in these areas. Our survey shows that a majority who have tried returning goods are satisfied with the system, mainly because it is simple and often free. Consumers prefer different delivery options, depending on what they are buying. This is the main trend regarding delivery. "If one term is key to this year's e-commerce report, it is freedom of choice." This also varies substantially among the different product groups. Offering more delivery options will cover the needs of more consumers and increase sales. "Regardless of how pretty your online store is, you need a good delivery service - it's part of the purchase. The return system also has to work well." Benjamin Gundgaard, Customer Sense 4 5

4 Status of Nordic e-commerce Chapter 1 Nordic e-commerce in 2013 Status of Nordic e-commerce For Nordic consumers, e-commerce is synonymous with commerce. Which products have you bought online in the past 12 months? "In the next five years, e-commerce will comprise 20-25% of all commerce" Sïmon Saneback, SmartGuy Nordic The number of people buying tangible goods online is similar to last year. Over 8 out of 10 consumers in, and buy tangible goods online, as do 7 out of 10 Finns. While the proportion of people who are shopping online has changed only slightly, Nordic online stores are selling more: over half of businesses increased sales in the past year. E-commerce continues to grow! The keenestonline shoppers in the Nordic region are the Swedes under 30. 9% buy tangible goods online every week and 39% do so every month. In the other Nordic countries, over 25% of consumers under 30 also shop online every month. While the proportion of Finns who shop online is slightly lower than elsewhere, the under 30s are just as active as in the neighbouring countries to the west. Satisfied consumers The increase in e-commerce is partly because Nordic consumers are happy with their online purchases. More than 6 out of 10 are very satisfied, and over 9 out of 10 are fairly or very satisfied with their most recent online purchase. As online stores become better at providing good buying experiences, satisfaction will probably continue to rise and e-commerce will increase further, making competition among online stores even tougher. Part of daily life E-commerce has become an important part of daily life for Nordic consumers, illustrated by the average amount people spent on their most recent e-commerce purchase. According to the survey, over 30% of purchases cost less than 25 and over 50% cost Single transactions over 100 grew by over 4% to 57%. Consumer expectations are determinedby price as well as product category. Books, small electronics, clothing and shoes are the most common goods purchased online by Nordic consumers. Interestingly, over half the Nordic population under 30 has bought clothing and shoes online. has the highest proportion of online clothing and shoe purchases, with over 50% of consumers aged between 30 and 50 Books Clothing/shoes Consumer electronics Films/DVDs Personal care Photo Sports and leisure Toys Health supplements White goods 0 % 10 % 20 % 30 % 40 % 50 % 6 7

5 Status of Nordic e-commerce In your currency, how much did you pay for the last tangible product you ordered online? Over 1,000 NOK 27% 14% 22% Over % NOK 43% 60% 47% % Under 250 NOK 30% 26% 31% Under 25 31% having bought this online. The future winners among clothing and shoe stores will focus on e-commerce, ideally in combination with a high street store. The book industry is still a huge e-commerce category. Increased digitisation and the advent of ebooks have to some extent reduced the proportion of consumers buying tangible books online, but books are still the largest e-commerce product group. The number of people who have bought ebooks is also rising: in, 11% of consumers have bought ebooks, followed by 7% of Swedes and Danes and 4% of Finns. "The established retailers will focus more on e-commerce. They're like supertankers - hard to get going, but unstoppable once they are moving." Patrick Müller, Dibs Increasing commerce ahead 8 out of 10 Norwegian and Danish online stores and 7 out of 10 Swedish stores expect to increase sales in the coming year. This is a clear expression of e-commerce's stronger position in the Nordic Region at the expense of traditional shopping. Our survey shows that consumers expect to buy more of the the major product categories. In all markets except, clothing and shoes is the category that most expect to buy more of in Nordic consumers also expect to buy more personal care products and small electronic goods. Despite the advent of digitisation, expectations of buying more tangible books online are still very high, while ebook sales are also projected to grow substantially in the coming year. Growth in online grocery shopping Online grocery shopping currently account for a very small part of the market, but consumers expect to buy a lot more groceries online in In all countries covered by the survey, more consumers expect to buy groceries online this year compared to last year. In the Nordic Region as a whole, more people expect to buy more groceries online than those who have already done so. In, 8% expect to buy more groceries online, up from 6% last year. The increase and percentage are slightly lower for the other three countries. Proportion of consumers who shop online at least once a month år 50 + years years years Country 25% 21% 6% 14% 39% 23% 11% 21% Nordic average 30% 24% 11% 19% 25% 17% 4% 11% 30% 21% 8% 16% 8 9

6 The E-Commerce Report from Post and Bring Autumn 2012 Status of Nordic e-commerce "The mobile is creating new situations for usage and purchasing. This change is only moving in one direction - more goods are being purchased via smartphone. The winners are those who tailor their online shops accordingly." Jørgen Brunborg-Næss, Synlighet Why we shop online Ease of purchasing, lower prices and 24 hours open stores are the most important reasons why consumers shop online. How important are the following factors in order for you to shop online? Easy to order Lower prices Shop when I want In, and, the most important reason for e- commerce is that ordering is easy. In, the option of having products delivered to the home is the most important factor. The importance of home delivery has increased since last year, when this was only the sixth most important reason for e-commerce in. This fits with the pattern we are seeing: in the Nordic Region, Swedish consumers value convenience the most. In and, on the other hand, the lower price is almost as important a factor as simplicity. For Norwegian consumers, e-commerce is also about convenience, as it is simple, saves time and can be done when it suits them best. These differences indicates that stores wishing to succeed with e-commerce in multiple Nordic countries must emphasise different factors depending on the country they are moving into. Businesses on the right track Online stores are mostly aware of what consumers state as the most important reasons for shopping online. They are on the right track with convenience, but underestimate the importance of low prices. Swedish online stores consider the option of home delivery to be more important in e-commerce than businesses in the other Nordic countries. This is in line with the priorities of Swedish consumers. Offering good delivery solutions according to the consumer's wishes is crucial in this type of market. The fact that Norwegian consumers are less concerned with the option of home delivery is also reflected in the assumptions of Norwegian businesses. Barriers and security For the small proportion of people who do not shop online, the biggest barriers are lack of information about delivery and return options and prices, as well as security. This shows the importance of having a user friendly online shop providing easily accessible information. We providing clear information on delivery and exchange. This helps consumers to feel secure and at home, which in turn leads them to shop. Saves time Can compare prices Option of home delivery Can read product reviews Better choice of products 0% 10% 20% 30% 40% 50% 11

7 Status of Nordic e-commerce Prebuying process How do you prefer to gather information before choosing the products you buy online? Online discussion Online store's own website Search engines Product tests "The organic growth in e-commerce will not continue in the same way. Factors such as search engine optimisation (SEO), advertising and marketing, will make operating an online store ever more expensive." Benjamin Gundgaard, Customer Sense You need to know how costumers gather information before shopping online in order to succeed in bringing customers into the online store. Being visible and on top of customers minds are crucial to bringing traffic to the online store. Online discussions, the store's website and search engines are the most important information channels for Nordic consumers when looking for the product they want to buy online. Prior knowledge of the online store and search engine visibility are crucial in attracting customers. Gender differences Men and women seek information in different ways. Broadly speaking, men largely obtain information through product tests and search engine results, while women place more emphasis on tips from friends and acquaintances. Social media can play an important role here. Marketing channels Norwegian consumers under 30 are more active online in the research phase than similar age groups in the other countries. In, 37% prefer to gather information in a high street store before shopping online. A tangible sales point or showroom can therefore be useful. Again, the differences between countries and age groups show how important it is to know and tailor the online stores to the different markets in which the store is to operate. It is crucial to differentiate the marketing based on the customers the storeé target group. How to reach the customer Our survey indicates that businesses understand which channels they need to use in order to reach out to their customers. Their own website and SEO marketing fits well with consumer preferences. It is important that consumers know the store or can easily be led there via simple search mechanisms. For start-ups and little known online stores, most of the Friends and acquaintances High street stores Discussion in papers/magazines Online advertising Direct mail advertising Advertisements in papers/magazines Social media TV advertisements 0% 10% 20% 30% 40% 50% 60% 12 13

8 Status of Nordic e-commerce "A customer who finds you via Google Adwords is only valuable when a relationship is built ensuring that he returns. If the customer does not prefer your store, you have to pull him in via expensive marketing, and that makes it hard to earn money." Max Riis Christensen, MakesYouLocal marketing activities should be about spreading information about the store and building the brand. Challenges Consumer preferences and requirements, along with the proliferation of online stores, mean online stores face major challenges in terms of market penetration. Attracting customers and being the first store consumers think of when they are buying a particular product online can take up a huge amount of resources. Small online stores with limited resources will probably struggle in this type of market unless they succeed in becoming known for a distinctive quality without having to spend a lot on marketing. Social media and opportunities to use customers as ambassadors for the store provide options for creative, less resourceintensive solutions. Market consolidation Several experts predict a consolidation in the ecommerce market. MAjor international companies will dominate, primarily due to greater international competition, pressure on prices and higher marketing and online visibility costs. In order to meet this challenge, it is important for smaller online stores to stand out. Kenneth Grönlund at cosmetics chain Kicks says an online store "must either be large or a niche" in order to succeed in the future. His views are supported by Sïmon Saneback at Smart Guy and Annette Fallberg at FDIH. Esa Tielinen at Bring says the increase in online stores will peak in a few years and then decrease, but the number of parcels will increase. He predicts that among the giants, the strongest brands will survive. In terms of small operators, those who are sufficiently specialised will manage, while medium-sized operators will face strong challenges. Advices! "Social media is increasingly important, and friends, family and acquaintances have a big effect on people's choice of stores. Google's importance is waning as bloggers become more important." Annette Fallberg, Danish E-Commerce Association (FDIH) The future e-commerce winners are the stores which are able to create a simple and convenient shopping experience for customers via good information and freedom of choice E-commerce will grow at the expense of traditional retail focusing on online trading is crucial for future growth Ensure that the customer has your online store at the top of his mind when looking to buy products you sell As competition gets tougher, online visiblilty will become more expensive find your niche and be creative! Various consumer groups gather information in different ways find your target group and tailor your marketing to fit their preferences 14 15

9 International e-commerce Chapter 2 International e-commerce International e-commerce International e-commerce is growing, presenting potential challenges for Nordic online stores. It also provides great opportunities, with the potential for catchment and sales areas to expand substantially. Have you bought tangible goods from foreign online stores? Of all online customers, 61% of Norwegians, 54% of Danes, 53% of Finns and 41% of Swedes have shopped at least once at a foreign online store the past 12 months. The variations between customer groups are significant: men under 30 and experienced online shoppers also those buying most from abroad. The important markets Most Nordic consumers prefer buying from British and American stores when shopping online. A substantial proportion of Nordic consumers also buy from ; around 20% of consumers who shopped in a foreign online store bought items from. Swedish consumers are less likely to shop abroad than their neighbours, possibly because Swedish consumers strongly prefer Swedish stores. Johan Holgersson at Bring says Swedish consumers prefer Swedish brands, and imports from Asia into are less prominent. China is becoming more important to Nordic consumers. Around 15% of consumers making purchases in foreign online stores bought goods from Chinese online shops. This is a substantial increase from last year. This international trend means even more competitors for Nordic online stores. Price and selection of goods are key The reason for shopping at a foreign online stor differs from why consumers shop online. The most important reason why consumers shop online is convenience; a better selection of goods and lower prices are the most important reasons why they shop at foreign online stores. Lack of security A third of consumers who do not shop at international online stores, say it s because it does not feel secure enough. This fear is greatest in and, the countries with the lowest proportion of international e-commerce. The second largest obstacle to international online shopping is uncertainty regarding the overall cost once customs and excise are added. In and, the Nordic markets most experienced with international trade, this is the main reason why consumers do not shop abroad. A quarter of consumers say they are uncertain about return systems from foreign online stores. This offers Nordic online stores with an opportunity to promote good, secure solutions for returning goods amid growing international competition. Many consumers also state that shopping online at foreign stores is not relevant to them. Half of the Norwegian consumers who do not shop abroad state this as the reason why. Expansion plans 24% of Danish, 17% of Swedish and 12% of Norwegian online stores are currently planning to open new online stores abroad in the next two years. When established online stores reach saturation point in their domestic market, international expansion can help maintain growth. This may be an underlying reason why more Danish and Swedish online stores intend to establish a foothold outside their domestic markets years years 50 plus 0% 20% 40% 60% 80% Why do you choose to buy from foreign online stores? Price Availability 42% 68% 77% 14% Saves time 13% Good delivery and return options Choice Price 66% 77% 72% Choice Availability 76% 29% 58% 54% 66% 30% Saves time 12% 9% 13% Good delivery and return options 10% 15% 15% 16 17

10 International e-commerce The older the online store and the greater the proportion of sales that derive from e-commerce, the greater the probability of international expansion. There are also differences between industry sectors. Stores selling sports and leisure equipment, clothing and beauty products are more likely to plan an online store abroad. These sectors offer internationally well-known brands that are easier to sell than other product categories. attracting the most interest Danish and Swedish online stores intend to establish themselves in, probably due to the high living standard, strong consumer power and linguistic similarities. For Norwegians and Swedes, is also high on the list of countries to aim for. Danish and Swedish online stores are more likely than Norwegian stores to have expansion plans into other European countries. A quarter of Swedish online stores intending to open in the rest of Europe, compared to just 11% of Norwegian ones. Danish online stores are the most focused on opportunities in Germany. National differences When launching a Scandinavian online store in another Nordic country, it is crucial to be aware of national differences. The belief that all Nordic countries are alike causes stores to fail in their attempts to expand. There are differences in how consumers want goods delivered and how they want to pay - for example, Swedish consumers are happy to pay by invoice while Danish consumers prefer paying with Dankort. Future e-commerce winners Increasing globalisation of e-commerce is leading to tougher competition among online stores and even greater pressure on prices. To succeed with international expansion, a business must adapt to the local market and stand out from local stores, primarily through a broader product selection or lower prices. Most of the industry experts we interviewed believe that large online stores and niche businesses will survive. Online stores must therefore become big enough to compete or sufficiently specialised. Foreign expansion is motivated by the desire to grow the customer base and volumes. If Nordic online stores are to withstand competition from abroad, it is important to exploit advantages in terms of local knowledge and customer proximity which enable more personal assistance and customer service. Physical proximity to customers also facilitates faster delivery and cuts logistical costs. "If I could give people one piece of advice when shopping online- it would be to check the company registration number. If we only shopped in stores with company registration numbers, we would shut out many foreign operators who are not bona fide. Lillian Fjeld, Trygg E-handel Advices! Why have you not shopped at foreign online stores? 22% 39% 29% 42% 31% 31% 27% 31% 26% 27% 28% 26% 15% 12% 14% 11% 9% 10% 4% 7% Not secure enough Uncertain about return options Lack of customer follow-up Unsure of the overall price Shipping/delivery too expensive Competition from international online stores will increase because Nordic consumers are shopping at foreign online stores and the increased presence of foreign online stores in the Nordic Region. Stand out from these businesses by finding your niche and offering a great customer experience Succeeding in new markets demands local knowledge carry out detailed surveys and adapt your online store to local conditions If your ambition is to increase your sales from your online store to customers abroad minimize uncertainty as regards customs, VAT and excise by providing solid information Spend time and money on good quality translations of the text in your online store this makes the consumer feel more secure If the store is planning to set up an online store in more countries in the next two years, where do you intend to open? Norwegian businesses Swedish businesses Danish businesses

11 Multi channel commerce Chapter 3 Multi channel commerce Multi channel commerce Do you expect high street stores to offer the option of buying goods online as well? 55% Yes E-commerce has become an ordinary part of commerce and influences consumer expectations and demands. Over 50% of consumers expect high street stores to also offer their goods online. No 45% "Over the next three years, we will become less focused on devices and channels. We will realise it isn't about the device or channel we are buying in." Sïmon Saneback, SmartGuy Nordic This means that high street stores without an online presence are not meeting the expectations of some consumers, thus losing sales and their market share to online stores. Similarly, online stores are increasingly planning and establishing high street stores or showrooms. These are particularly common in Great Britain and USA, and Nordic online stores are following the same trend. According to Annette Fallberg at FDIH, online stores are setting up bricks and mortar concepts to build relationships with customers and provide advice and guidance. Leverage the strengths Businesses which are able to combine and use their strengths in multiple channels will succeed in commerce. Benjamin Gundgaard at Customer Sense, Sïmon Saneback at Smart Guy and Annette Fallberg at FDIH say e-commerce encourages buying on the high street and vice versa. In other words, it isn't a matter of either or, but both. Businesses are increasingly operating both in tangible channels and online. Among these operators, an increasing proportion of turnover derives from the online store. Prior scepticism among hight street stores about focusing on online stores due to fear of channel cannibalising seems to have abated. In this year's survey about 75% of online businesses have both online and high street stores, and a very small proportion state that the online store competes with the bricks and mortar one. The vast majority of online stores believe that a presence in both channels is an advantage, as they supplement each other. Clearer strategy Businesses increasingly need a clearer multi channel strategy. Many of the businesses we interviewed see great potential in integrating the tangible and online channels. The most important advantages cited by businesses are better availability and an increased geographical catchment area, which help them reach a bigger market and increase potential for higher revenues. In recent years, online stores have experienced much higher growth in revenues compared with the high street retail trade. The Nordic retail trade, especially in and, has been poor in recent years, while online businesses in this year's survey talk of growth and great optimism. Expecting growth Online stores are very optimistic about increasing sales in the coming year. 66% of businesses in expect to see the most growth in the online channel i n the coming year, compared with 21% for the high street store, along with 60% and 51% 56% 56% Yes No Yes No Yes No 49% 44% 44% 20 21

12 Multi channel commerce "The online store is primarily there to optimise the overall user experience, not necessarily to increase online sales. The customer must be able to find information online and shop in the high street store. We should deliver not only a product, but a total experience." Odd Arne Walbækken, Nordic E-Commerce Director Elkjøp Nordic 28% in and 83% and 7% in respectively. In particular, businesses that currently derive under 20% of revenue from e-commerce expect this proportion to increase substantially within two years. We expect the number of online stores to grow for some time. Around a fifth of businesses interviewed that do not currently offer e-commerce expect to set up an online store in the next two years. Expertise about what is needed in order to set up an online store is also growing, including among businesses that do not intend to go this route. As mentioned, over the next few years, we anticipate a slowdown in the growth of online stores and more consolidation in the market over the next few years due to increasing competition as the online channel continues to mature. The fight for online attention will also continue to take up more resources. Mobile commerce Integration between multiple channels, a variety of options and flexibility are also important. Consumers expect to be able to buy via multiple channels like their mobile phone, tablet and computer. In order to satisfy as many customers as possible, the online store must be working in these channels. Consumers increasingly own smartphones or tablets; in last year's report, almost two-thirds expected to be able to shop via these devices. Of consumers with mobile devices, 4 out of 10 in, and expect to shop online via smartphone or tablet in the coming year. Many online businesses appear to have understood this, as a greater proportion have modified their online store for mobile phone and tablet this year. However, despite positive developments in both and, a good half of Nordic online stores have not yet done this. To meet consumer expectations it is crucial to allow them to shop and visit the online store from their preferred device. Advices! Does the company intend to allow consumers to buy goods and services via the internet, mobile phone or tablet in the next two years? Yes Don't know No 24% 69% 15% 76% 24% 66% 3% 31% In what way have your online sales changed overall in the past 12 months? 2% 64% 9% 48% Increasing Stable Don't know Decreasing 3% 40% 9% 26% 3% 61% Running a store is largely about creating good customer experiences, which includes allowing customers to shop in the store whenever and from wherever they want Be aware of what "multi channel" means for your online store and use the strengths of the various channels Modify the site for mobile devices people expect to be able to shop using their mobile phone, including making the actual payment Competition from major high street stores focusing on the internet is increasing. Visibility is becoming more resource-intensive it is important to create a unique customer experience in your online store Consider the channels through which you want to be available and how to integrate them 22

13 The E-Commerce Report from Post and Bring Autumn 2012 Sales-generating logistical solutions Which delivery options does your online store offer? 32% Sales-generating logistical solutions 23% 39% 25% Own store 39% 37% Chapter 4 Sales-generating logistical solutions Product delivery is a key aspect of e-commerse. The purchase is not completed until the customer receives the product and decides to keep it. How the product is delivered and the consumer's delivery experience affect the customer's experience of the online store, even when the online store is not responsible for the delivery. Over a third of Nordic consumers say delivery options are crucial when choosing an online store. As with other aspects within e-commerce, the delivery process must be simple and smooth for consumers, while adapting to their various needs and desires. Freedom of choice is crucial: The delivery option a consumer choose will depend on his day to day doings. Choice of delivery option Low price and security are the key factors for consumers when choosing delivery options. Businesses overestimate the importance of quick delivery. The recipients want to know when the product is delivered. Price, on the other hand, is underestimated. Our e-commerce experts also confirm this impression. If we look at how different types of products are delivered, the delivery option varies along with the type of product. In line with last year's report, small, inexpensive goods are often delivered to the letterbox, while more expensive items are often picked up from a collection point. Large goods are to a larger extent delivered to the home. National differences Despite the general trend, there are distinct differences between the Nordic countries. Danish consumers get substantially more items delivered to the home, while Norwegian and Swedish consumers are more likely to pick up goods from a collection point. There are also substantial variations within the same product group. Each customer's circumstances are different when shopping online, influencing their delivery preferences. In addition to Annette Fallberg, FDIH what they actually choose, our analysis shows that if consumers could choose for themselves, more young consumers would prefer to have the goods delivered to the home, either in the letterbox or at the door. "One size doesn't fit all." 36% 71% Letterbox 48% Home delivery 47% Collection point 70% 33% 25

14 Sales-generating logistical solutions Particularly young Swedish consumers value having a broad spectrum of goods delivered to the home. Within the Nordic Region, this group is most likely to shop online for reasons of simplicity and convenience. We believe that they are leading the way, and that Nordic consumers will value their time more in the future than they currently do, resulting in greater demand for services that save time and simplify things for the customer. Recipient-controlled home delivery will increase in the next few years. Still work to do While consumers want different delivery options, Nordic online stores still have a lot of work to do in order to offer this. A little over half of Swedish and Danish online stores offer just one delivery option. In, the proportion of stores offering one delivery option is just under 50%. In and, 20% of online stores offer more than two delivery options, as do 30% in. Increasing the number of delivery options reduces barriers to e-commerce. E-commerce must accommodate the potential buyer's situation at any given time: one day the buyer may want goods delivered to the home, and the next it may be easier to collect them in person. In the future, successful online stores will allow customers to choose whatever suits the costomers best. The fact that online stores are starting to deliver goods to letterboxes, collection points and to the door is a good start. How was the latest item you bought delivered? "E-commerce is concerned with express delivery, but consumers do not particularly value this. They want delivery precision to know when the item will be delivered." Sïmon Saneback, Smart Guy Nordic Advices! Clothing and shoes Books Small electronics Large electronics Personal care Films/DVDs Music (CD/vinyl) Mailbox I collected it To the door Consumers have different preferences for delivery options depending on what they are buying and their situation multiple delivery options are crucial in order to generate more purchases The Nordic countries differ when it comes to delivery options. If you have an online store in more than one country, it is important to adapt to these differences Display delivery options simply and clearly 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% 26

15 Sales-generating logistical solutions "The optimal return is unlimited, free of charge and simple put the goods outside your door and it is collected by the store. It shouldn't cost money, take up time or cause stress. The question is how close to this ideal we will come in the future." Jørgen Brunborg-Næss, Synlighet Returns - a double-edged sword Returns are a double-edged sword for online stores. On the one hand, a good, flexible and cheap exchange and return system is crucial to make consumers feel secure buying online. If this is lacking, many people will shop elsewhere. On the other hand, returns are expensive for online stores in terms of transport, tying up capital and higher storage requirements - so the number of returns should be minimised to save on costs. How can online stores have a good, flexible return system that does not impede sales, while also minimising the number of goods being returned? The wrong size The main reason why customers return goods is that they do not fit. For online stores selling products in various sizes, such as clothing and shoes, it is important to create systems that ensure people buy the right size at the first attempt. This could be a virtual changing room, in which customers enter their vital statistics and can see how the clothes fit as for example British shirt manufacturer Thomas Pink or providing exact shoe size dimensions, like grandshoes.se. Damaged goods and missing parts are other important reasons for returns. Online stores can minimise these returns by improving their procedures and processes for goods handling and deliveries. Returns pose a challenge in terms of both the shipping costs and "Handling returns well can be very rewarding, but the system needs to become more individualised. At the moment, the consumer does all the work. In the future a driver should sort out everything, as a basic service. Taking this approach to returns, online stores could slowly but surely move away from free shipping and returns. I believe customers are willing to pay for returns if they result in added value." Johan Holgersson, Bring the frustration and disappointment felt by customers when they have to return goods, which may dissuade them from returning to the store. A bad customer experience spreads quickly, both among friends and via social media. Investing in good customer experiences by improving the return system may turn out to be extremely valuable for the online store. Success criteria for returns Around 40% of Nordic consumers have returned an item they bought online. Over 90% of these were satisfied with the return system, indicating that, in general, Nordic online stores have adequate systems. Customers were satisfied because returning the item was easy and free. Simplicity is a matter of providing adequate information about how the product should be returned, including a return label and also (on occasion) pre-filling information. The main reasons why customers were not satisfied with the return system were that it was complicated and expensive. To keep customers coming back to the store, returns must be simple, convenient and cheap. At the same time, stores must instigate measures to avoid customers having to return goods. Advices! Reasons for returning an online purchase. Why did you return the product? Incorrect size Damaged or missing Wrong item Not as expected Changed my mind about the purchase 58% 59% 59% 42% 22% 22% 24% 29% 15% 17% 13% 13% 20% 13% 9% 12% 6 9% 13% 17% "Customers check how items can be returned before they buy, and when they return a product they expect to hear from the online store immediately." Max Riis Christensen, MakesYouLocal Make it easy for the customer to return an item Ensure that good logistical procedures are in place to minimise error Ensure that good information about the online store's return system is provided this creates a feeling of security and increases sales Establish a good return system for consumers which is simple and appropriate Enclose a pre-filled return label or include return packaging 28 29

16 Bring's advices for online stores Make it easy to buy online Ensure you have sufficient resources to develop the online store Aim for the customer to become your ambassador Emphasise and personalise the buying experience making it relevant to the customer Test and measure the impact of changes - utilise the available information Make your online store work on mobile phones and tablets Offer customers multiple payment and delivery options Inform customers of exchange, return and delivery options early on in the purchasing process Keep the customer informed during the buying and delivery process, and don't forget him after the purchase is made Create advantages that enable your online store to deal with increased international competition "Good, accurate surveys of different circumstances in the country you want to establish your online shop are very important. For instanse, you don't send out a newsletter to Norwegians on the 17th of May, the Norwegian Constitution Day. The Norwegians won't be at work then, but out celebrating." Max Riis Christensen, MakesYouLocal Bring is one of the largest postal and logistics operators in the Nordic region and manages both national, Nordic and international assignments. For further information, visit bring.com 30

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