NORDIC E-COMMERCE NORDIC DIBS S ANNUAL REPORT ON E-COMMERCE, MOBILE COMMERCE AND PAYMENTS

NORDIC E-COMMERCE NORDIC DIBS S ANNUAL REPORT ON E-COMMERCE, MOBILE COMMERCE AND PAYMENTS DIBS S ANNUAL REPORT ON E-COMMERCE, MOBILE COMMERCE AND PAYMENTS

NORDIC E-COMMERCE 2015

NORDIC E-COMMERCE CONTENTS 01 Intro SWEDEN 02 Swedish E-commerce 03 Online payments in Sweden DENMARK 04 Danish E-commerce 05 Online payments in Denmark NORWAY 06 Norwegian E-commerce 07 Online payments in Norway 08 Nordic survey Glossary

01INTRO 02 03 04 05 06 07 08 E-COMMERCE CONTINUES TO REVOLUTIONISE OUR DAILY LIVES E-commerce is revolutionising one industry after another. It can be a threat or an opportunity depending on how you approach and handle that change. In order to adapt accordingly you have to understand today s major trends. The purpose of this report is to identify and describe these major trends within e-commerce. Technology is developing at an incredible speed. When it is fertilised with creativity, new products and services will emerge generating new demands. This is exactly what Apple managed to channel by opening up App Store to other developers; nobody had predicted the universe of apps that emerged when anyone with a good idea could make it accessible to more than half a billion iphone users. Today many established industries are being challenged by newcomers. Tablets suddenly appeared and challenged the computer business and along came printed newspapers, magazines and books. Netflix has changed the way we watch TV try to explain prime time TV to a teenager. Online grocery shopping has changed the way many, particularly families with young children, are planning their meals and their purchases. The media industry s advertising model is challenged by global players like Facebook and Google. The taxi industry is challenged by Uber, which partly serves as a taxi dispatching centre and also connects individuals. Airbnb is similarly challenging the hotel industry by connecting individuals seeking to lease their property with individuals looking for rentals. Marketplaces are in the process of establishing themselves as an intermediary between customer and shop. The development is being led by Amazon, which currently accounts for a fourth of the e-commerce market in the U.S. In the Nordic region, new marketplaces have emerged, such as CDON Marketplace and the bargain warehouse Fyndiq in Sweden. In a sense e-commerce has made the competition conspicuously global. On the one hand Nordic businesses have access to customers all over the world, and on the other hand a Chinese or American player can turn up at any time and challenge them in their home market. In the retail business consumers now expect to be able to order online (preferably on a mobile optimised website), pick up the items at the post office and to change or return them in the shop. They expect the same service from a brand regardless of the channel (computer, mobile and physical store). In this respect there is an obvious gap between the consumers expectations and the shops service. Many companies have already come a long way. Intersport, Magasin and Kicks have all been rewarded for their multichannel retail solutions. At Kicks you can make an order online, then pick it up and, if needed, return the product in the physical store. The U.S. is far ahead of the Nordic countries in this area, and U.S. shops such as Macy s and Target are actively working on providing customers with a complete experience in the buying process, regardless of how the consumer moves between the different channels. In last year s report we established that the payment solutions in e-commerce was facing a major technological leap, when Swish, MobilePay, MasterPass and Apple Pay were in different ways making it easier to shop on mobile devices. Since last year the use of Swish by private individuals has had a huge breakthrough in Sweden. The next step is an e-commerce solution. In Denmark, MobilePay has gained an impressive 2.5 million users in a short period of time and the service has recently been launched in Norway. In the next year MasterPass will be launched, and Apple s mobile payment solution, Apple Pay, may be released in the Nordic countries as well. We know from experience that Apple can transform markets in unexpected ways. Consumption patterns are changing rapidly and there is much to learn by studying the development of Nordic e-commerce. Mobile e-commerce in the Nordic countries has increased by 100 percent in three years and one out of three Nordic consumers subscribe to a video streaming service. Understanding consumer demands such as flexible delivery conditions and a mobile optimized website is crucial. It all boils down to understanding and embracing the changes we are witnessing; the world is going to continue to change, with or without you. 4 NORDIC E-COMMERCE 2015

The world will continue to change, with or without you. Daniel Larsson Deputy CEO, DIBS 5

01 02SWEDISH E-COMMERCE 03 04 05 06 07 08 E-COMMERCE IN SWEDEN 2015 We are increasing our online shopping; just like last year almost all of the growth is happening on mobile devices, and most consumers expect to shop at least as much or more in the future. E-commerce continues its strong growth in the Nordic region. The Swedish online market for products and services has increased from 70 billion to over 90 billion SEK in three years. In the past year alone, the market has risen by 12 percent. We are witnessing a huge change in which we all take part. The major trend in recent years is that an increasing share of e-commerce is happening on mobile devices such as smartphones and tablets. In three years the percentage of mobile purchases has nearly tripled in Sweden. Nearly half of the consumers (42 %) state that they have made an online purchase via smartphone or tablet in the last six months. In terms of online spending, travel is by far the most dominant category. According to consumers own estimates, 42 percent of their e-commerce budget is spent on travel. Consumers have been accustomed to purchasing travel and holidays online for a long time. The travel industry started their e-commerce venture early on, and has maintained a frontline position in the development. Purchasing travels online have many tangible benefits. One can do research, compare prices, and view videos of different hotels and travel destinations online. When the decision has been made, payment is easily done by card. Subscription to video streaming services is the subscription product category that is growing the fastest. More than a third of consumers currently pay for services such as HBO, Netflix or Viaplay, the most common being families with young children. The tendency to subscribe to newspapers, however, increases with age. There is a lot to learn from the data, both for those seeking to understand the times we live in and for the businesses that want to better meet the needs of their customers. For example, every third consumer cancel their purchase because they were unable to pay by the method they prefer. In the U.S. 85 percent of online shops have adapted their websites for mobile devices (Internet Retailer Top 500 Guide), while in Sweden only 58 percent have done so (E-barometern Annual Report 2014, PostNord). Because the market for many products is global, it is clear that any e-commerce business without a mobile optimised website that is attempting ambitious expansion might want to rethink their strategy. 6 NORDIC E-COMMERCE 2015

THE MOBILE BREAKTHROUGH % Have you purchased anything via your smartphone or tablet in the past six months? +90% 2012-2015 38% 2015 35% 29% 20% 2014 2013 2012 +163% 2012-2015 Norway 42% 2015 40% 2014 40% 2015 +90% 2012-2015 28% 16% 2013 2012 Sweden 36% 32% 21% 2014 2013 2012 Denmark Mobile e-commerce had its serious breakthrough two years ago. Since then, it has continued upwards in all the Nordic markets. 4 of 10 online consumers have at some point used a mobile device to shop. This applies throughout the Nordic region. Mobile purchases in Sweden have developed a bit faster; increasing in three years by 163 percent. Mobile e-commerce is most popular amongst parents of young children. 68 percent of them have made a purchase with a smartphone or tablet during the last six months. There has also been a big breakthrough (61 percent) among young adults aged 25-34. 7

01 02SWEDISH E-COMMERCE 03 04 05 06 07 08 MARKET SIZE AND GROWTH Mdkr Uppskattning av den svenska e-handelsmarknadens storlek BN SEK Estimation of the Swedish e-commerce market size +12% +7% 90.5 BN SEK 70.5 BN SEK +7% 75.7 BN SEK 80.8 BN SEK 2012 2013 2014 2015 The Swedish online market for physical goods and services has a turnover of 90.5 billion SEK. That is an increase of almost 10 billion SEK (12%) compared to last year. In three years e-commerce has increased by 28 percent. The figures are based on the actual increase of around 15 000 online retailers in the Nordic countries. 8 NORDIC E-COMMERCE 2015

E-COMMERCE DISTRIBUTION IN SWEDEN % How is your online spending distributed? (Last 3 months) 51% Travel & Services 34% Goods 15% Other & Media 9% Other 6% Media 2015 9% Services 42% Travel It is commonly perceived that e-commerce primarily concerns purchasing physical goods online, but the largest category is services. The physical goods category represents only a third of e-commerce. The services segment is solidly dominated by travel. Travel sales represent almost half of all our spending online (42 percent). The share of travel sales is even higher among those spending the most online. However, amongst those shopping the least (1-899 SEK in three months) media/ entertainment and clothing/footwear are the dominant categories. 9

01 02SWEDISH E-COMMERCE 03 04 05 06 07 08 A CLOSER LOOK AT TRAVEL AND GOODS % How is your online spending distributed? (Last 3 months) A closer examination of the travel segment shows that more than 60 percent of all purchases within this category are flights and hotels. There are big differences between the various age groups. The youngest group, 15-24 year olds, spend considerably less on flights and hotels, however much more on buses, trains and public transport. Compared to those aged 55-65, the youngest group spends three times more of their travel budget on public transport, over four times as much on buses and trains, but less than half as much on hotels. The physical goods segment is relatively evenly divided between four categories, each with an annual turnover of about seven billion SEK. There are large differences between the consumption of men and women. The share of men who spent more than 4,500 SEK on electronics in the past six months (12 percent) is three times higher than that of women. The share of major consumers of clothing and footwear is twice as high among women (6 percent) as men (3 percent), and the rate is even higher in the 25-34 years age group. Other 8% Cars 5% Taxis 2% Flights 33% Health care 8% Electronics 25% Public transport 8% Travel Interior decorating 19% Goods Trains and buses 16% Hotels 28% Clothing and footwear 24% Home consumables 24% 10 NORDIC E-COMMERCE 2015

CUSTOMER CASE STUDY: FRITIDSRESOR / STAR TOUR STRONG MOBILE TREND AMONG TRAVEL CUSTOMERS Travel dominates Norwegian e-commerce. The industry s revenue derives almost entirely from customers looking for and booking trips online. Almost half of the online traffic is now coming from mobile devices. In 1997 Star Tour launched its first website, and in 2005 more than a third of their customers booked their trips online. Since then the share has increased steadily each year. Today, online bookings represents 80 percent of the revenue. What s the reason for your success in mobile e-commerce? What it all comes down to is how you manage to inspire and engage, and also communicate what you have to offer. This needs to be done through the channels most appealing to the customer. During 2014 we focused even more on our digital channels, not least on adapting to mobile devices. One example is the app called My holiday, which provides our customers with all the necessary and relevant information before and during their holiday. With this app our customers can ask questions to the guides whilst in their lounge chairs, and receive a response within an hour. Thus they will not need to walk to the hotel reception to see a guide about their questions. What proportion of your customers shop online? We have experienced a significant boost via mobile. Almost half of our traffic is from mobile devices and it is increasing fast. Mobile devices of today present an equally good user experience as computers. Mobile consumption is rising rapidly and increasingly more people are choosing their mobile devices for payments. We are experiencing the same shift in payment methods as with the computer in the early 2000s, but the difference now is that it is happening so much faster. Patrick Törn Ancillary & Partner Sales Manager Fritidsresor/Star Tour 11

01 02SWEDISH E-COMMERCE 03 04 05 06 07 08 MOBILE E-COMMERCE CONTINUES TO RISE Mobile e-commerce continues to present strong growth. In three years the share of people who have made purchases on a mobile device has risen from 16 to 42 percent. In this past year, the mobile market in Sweden has increased by over 200,000 consumers. More than three million of the Swedish consumers have now made an online purchase via a mobile device. The number of mobile purchases increased from about 31 to 33 million, and trends look approximately the same in all Nordic countries. Mobile e-commerce will likely continue to grow. Furthermore, the increase is strong in almost all ages. New consumers begin to shop on their smartphone or tablet each year. The most common reason to make a purchase on a smartphone is that it is close at hand. The smartphone is always within reach, also when visiting a physical store. Our consumption patterns are in the process of getting mixed up; online is intertwined with offline. We do research online and then make our purchases in a physical store, or vice versa. Sometimes we are visiting a physical shop whilst ordering a product online. It is clear that amongst mobile consumers who spend the most money online, the largest share of it - almost half - goes to travel. However, consumers who have spent less than 900 SEK in the past three months are mainly purchasing songs, films, clothing and shoes. The reason why we prefer to shop online is not primarily due to lower prices or a greater selection, although these are also important factors. Most important is that it is easy, convenient and saves time. Online shopping has become a way to simplify dayto-day life. This includes both men and women - and in particular consumers who make purchases on mobile devices. 77 percent of mobile consumers say that they have shopped just as much or more on their mobile devices this year as compared to last year. The increase is expected to continue. 12 NORDIC E-COMMERCE 2015

Mobile shopping is growing % Have you purchased anything via your smartphone or tablet in the past six months? 16% 28% 40% 42% 2012 2013 2014 2015 Nearly half of all Swedes have made a purchase using a mobile device in the last six months. Since 2012 the share has increased by 163 percent. The rate has slowed down in the past year, but it still added 206,000 mobile consumers to the market. Mobile e-commerce has had its largest breakthrough in the 25-34 year age group and amongst families with young children, where respectively 61 and 68 percent made purchases on a smartphone or tablet. Older age groups have not adapted to the technology to the same extent. There is also a clear distinction between city and countryside, where consumers in metropolitan areas are more likely to shop on mobile devices compared to those living in rural areas. Consumers of all age groups are going mobile % Have you purchased anything via your smartphone or tablet in the past six months? 2012 2013 2014 2015 60 50 40 30 20 10 0 15-24 25-34 35-44 45-54 55-65 Ages Consumption via mobile devices is increasing across all age groups except amongst 55-65 year olds. 6 out of 10 aged 25-44 have now shopped on a smartphone or tablet. The fastest growing group is the 25-34 year olds, with an increase of 28 percent more mobile purchases this year as compared to last year. 13

01 02SWEDISH E-COMMERCE Proximity is king % Why did you shop on your smartphone? 03 04 05 06 07 08 My smartphone was closest at hand at the time of purchase I used an app to shop I opened an offer via e-mail on my smartphone I was in a shop but purchased the product online instead 5% 20% 30% 65% I don t own a computer 4% Only internet connection 4% I scanned a QR-code 4% 0 10 20 30 40 50 60 70 Two out of three say that they used their smartphone to make a purchase online because it was closest at hand at the time. This is an increase compared to last year. This is not exactly surprising now that almost everyone has a smartphone with direct access to a world of offers at all times. It is worth noting that the proportion of consumers who visited a physical store and still chose to order the product on their smartphone seems to have increased slightly since last year (from 3 to 5 percent). As we established last year, the division between physical stores and online shops is becoming ever more diffuse; sometimes we do research online and shop offline, other times we do the opposite. One out of five smartphone consumers has made a purchase on their smartphone after receiving an offer via e-mail. The tablet is an important gateway to the web % Why did you shop on your tablet? My tablet was closest at hand at the time of purchase 71% I opened an offer via e-mail on my tablet I used an app to shop 16% 19% I don t own a computer Only internet connection I was in a shop but purchased the product online instead I scanned a QR-code 5% 5% 4% 2% 0 10 20 30 40 50 60 70 80 The majority of those who shop via tablets say they chose it because it was the closest at hand. At the same time we see that 5 percent of consumers use the tablet because they do not own a computer or any other internet connection. Email is an important sales channel for tablet consumers as well. 14 NORDIC E-COMMERCE 2015

APP OR BROWSER? IT DEPENDS ON THE SCREEN SIZE % Have you purchased anything via your smartphone or tablet in the past six months? 25% Tablet app 40% Tablet browser 41% Smartphone app 41% Smartphone browser Those making purchases on their tablet use the web browser more frequently. This is of course due to the screen size. It is better and easier to search, compare and look at products in the browser on a tablet than it is on the browser on a smartphone. Smartphone consumers are just as likely to shop with an app as in a browser. 15

01 02SWEDISH E-COMMERCE 03 04 05 06 07 08 Travel and services also dominate sales on mobile devices % How is your online spending via smartphone and tablet distributed? (Last 3 months) 53% Travel & Services 35% Goods 12% Other & Media 7% Other 5% Media 2015 2% Services 51% Travel We purchase a lot more travel and services than physical goods on mobile devices, too. In fact we buy an even larger share of travel on mobile, which is probably because public transport mobile solutions are improving. Total spending via mobile devices % How is your online spending via smartphone and tablet distributed? (Last 3 months) 6% Other 4% Taxis 2% Cars Flights 26% Health care 10% Clothing & footwear 34% Public transport 15% Trains or buses 22% Travel Hotels 26% Interior decorating 14% Home consumables 14% Goods Electronics 27% Travel and services also dominate on mobile devices. However, we are more likely to book train or bus tickets and purchase public transport tickets via mobile devices than via a computer. At the same time, it remains more common to book flights on a computer. The main difference between computer and mobile device consumers in the physical goods segment is that mobile consumers buy 50 percent more clothing and footwear. 16 NORDIC E-COMMERCE 2015

women GENDER DIFFERENCES men IN CONSUMPTION PATTERNS How is your online spending via smartphone and tablet distributed? (Last 3 months) women men 53% 49% TRAVEL 18% 6% CLOTHING & FOOTWEAR 5% 14% ELECTRONICS 4% 11% OTHER 4% 6% MEDIA 5% 5% HOME CONSUMABLES 5% 5% INTERIOR DECORATING 5% 2% HEALTH CARE 2% 3% SERVICES The category we spend the most on online is travel, by far. Consumers estimate that they spend 51% of their online purchases via smartphones and tablets on travel. There is a great difference between men and women. Women purchase more clothing and footwear over three times more than men. Men on the other hand spend almost three times as much on electronics as women. 17

01 02SWEDISH E-COMMERCE 03 04 05 06 07 08 WHAT WE SPEND AND HOW WE SPEND IT % How is your online spending distributed? (Last 3 months) 1-899 SEK 900-4499 SEK 4500 SEK or more 50 40 30 20 10 0 Electronics Home consumables Interior decorating Travel Media Clothing & footwear Health care Services Other O Travel dominates the e-commerce market in terms of money. This is because travel consumption is strongly overrepresented in the customer group that spends the most money online. High-level consumers, those who spent at least 4,500 SEK in the last three months, spend almost half of their online budget on travel. Those who spent less than 900 SEK primarily consumed media and entertainment, i.e. rented movies, purchased songs and perhaps subscribed to a streaming service. High-level consumers spend only 5 percent of their e-commerce budget on media. 18 NORDIC E-COMMERCE 2015

BIG SPENDERS PURCHASE TRAVEL AND SERVICES % What products or services have you subscribed to online? Other and media 15% Travel and services 53% Goods 32% 4500 SEK OR MORE Other and media 38% Travel and services 11% Other and media 24% Travel and services 22% 1-899 SEK 900-4499 SEK Goods 51% Goods 54% 19

01 02SWEDISH E-COMMERCE 03 04 05 06 07 08 STRONG INCREASE IN ONLINE SUBSCRIPTION SERVICES Subscribing to products and services online is becoming increasingly widespread. The most common is subscribing to a video streaming service (e.g. Netflix or HBO). Every third person now pays for access to such services. Men are clearly overrepresented with 38 percent of all men subscribing to streamed video, compared to 29 percent of all women. TV/Video Streaming (Viaplay, Netflix and HBO) 33% 27% Music Streaming (Spotify or Wimp) 29% 27% 2014 2015 2014 2015 38% 45% 42% 44% 45% 38% 30% 23% 15% 22% 20% 6% 15-24 25-34 35-44 45-54 55-65 66-74 Ages TV/Video Streaming Subscription to video services is the most common of all amongst families with young children and young adults without children. It is three times more common amongst families with young children than amongst pensioners. It is also more common amongst highincome earners than low-income groups. In contrast, there is hardly any variation between different parts of the country; the lowest rate is in rural areas (28 percent) and the highest rate is in Stockholm (38 percent). 15-24 25-34 35-44 45-54 55-65 66-74 Ages Music Streaming Streaming music is even more clearly linked to age groups; the younger a person is, the more likely he or she is to subscribe to Spotify or Wimp. Consumption is at about the same level throughout the country, except in rural areas where only every fifth person subscribes to music, probably because the service does not work as well on mobile networks there. 20 NORDIC E-COMMERCE 2015

Magazines & Books Groceries 23% 21% 9% 6% 2014 2015 2014 2015 32% 13% 15% 27% 27% 21% 21% 7% 8% 13% 4% 3% 15-24 25-34 35-44 45-54 55-65 66-74 Ages 15-24 25-34 35-44 45-54 55-65 66-74 Ages Magazines & Books The share subscribing to newspapers, magazines and books online increases with age, from 13 percent amongst youths to 32 percent amongst pensioners in the age group 66-74. This is the only subscription service where the elderly are overrepresented. An important reason is that they are presumably used to a regularly distributed newspaper delivery from a time when the media landscape was different. Everything indicates that the younger generation absorbs the news in other ways than before, as the media is changing. Groceries Subscription to food delivery is most common in the 35-44 age group, when many have young children, two incomes and a hectic daily routine. 21 percent of families with young children purchase food online, compared to 7 percent of young consumers without children and 2 percent of pensioners. Food delivery is also much more common amongst higher income earners (17 percent) than amongst lower income groups (4 percent). Food delivery is four times more common in Stockholm (11 percent) than in rural areas (3 percent), which is to a large extent explained by the availability of such services. 21

01 02SWEDISH E-COMMERCE 03 04 05 06 07 08 Why we shop online % What is the most important reason why you shop online? 80 67% 57% 58% 60 40 54% 43% 42% 2015 20 0 Simplifies Lower prices Easier to compare products Larger selection Always open Finding products not available elsewhere Exactly as before, the most important reasons for shopping online are that it is easy, convenient and it saves time. This category is rising sharply; this year the figure is 67% whereas two years ago it was 61%. At the same time the share of consumers who shop online because it is cheaper seems to be decreasing. In two years this share has fallen from 63 to 57 percent. Fewer are also motivated by the larger selection offered online. Both men and women want to save time % What is the most important reason why you shop online? 70 60 50 40 68% 66% 59% 55% 55% 61% 45% 41% women 58% 51% 42% 43% men 30 20 10 0 Simplifies Lower prices Easier to Always open Larger selection Finding products compare products not available elsewhere There is very little difference between men and women s shopping motivation. Women are slightly more likely to appreciate the convenience and time-saving aspects of e-commerce, while men put more emphasis on other factors, such as price, selection and availability. The difference from last year is that both men and women prioritise saving time more and lower prices less. 22 NORDIC E-COMMERCE 2015

Older consumers are the least motivated to save money % What is the most important reason why you shop online? Ages 15-24 Ages 66-74 80 60 40 20 0 Simplifies Lower prices Easier to Always open Larger selection Finding products compare products not available elsewhere We can see that the older group is to a lesser degree driven by saving money, whilst younger people value variety and comparability of products more. The youngest are twice as likely to appreciate a larger product selection than the older generation. It is interesting to note that the variety of products is most important in smaller towns, whilst consumers in Stockholm and rural areas value it less. Generally, there are small variations across the country. Price and selection drive customers abroad % Why did you choose an online shop abroad for your purchase? The product or service is not available in Swedish online shops Lower prices than in Swedish online shops The product or service is not available in physical shops in Sweden Lower prices than in physical shops in Sweden 29% 35% 61% 61% Lower tax/vat 7% Other reason The product will be used in the country where purchased 4% 3% 0 10 20 30 40 50 60 70 The main reasons for shopping in foreign online shops are that the prices are lower and the selection is wider. This year there are just as many who say they are driven by the lower price as the wider range. The main deviation is that the youngest, aged 15-24, more so than the others (47 percent), were drawn to foreign online shops because of the range of physical shops at home. 23

0201 SWEDISH E-COMMERCE 03 04 05 06 07 08 24 NORDIC E-COMMERCE 2015

FOUR OUT OF TEN SHOP ABROAD Have you purchased anything from a foreign website in the last six months? 40% Yes Women 33% Yes Men 46% Yes 52% 45% 42% 39% 33% 22% 15-24 25-34 35-44 45-54 55-65 66-74 Ages The proportion of consumers buying from foreign online shops is much higher among men than women. Almost half of all men have made a purchase from a foreign online shop over the past six months. The highest share is among high income earners (49 percent) and those aged 25-34 (52 percent), and the trend clearly decreases with age. The lowest share is amongst the 66-74 year olds, of which only 22 percent have made a purchase from abroad. 25

01 02 MOBILE PURCHASES INCREASE SWEDISH E-COMMERCE 03 04 05 06 07 08 Have you purchased more via mobile devices in the last year? 77% Same as now or more 9% Less Everything indicates that consumption on mobile devices will continue to increase. 77 percent of the respondents claim to have shopped as much or more on mobile devices over the past year as compared to the year before. Only 9 percent said they have reduced their shopping. Mobile e-commerce is expected to increase further in the coming years. 26 NORDIC E-COMMERCE 2015

MAJOR DIFFERENCES women BETWEEN MEN men AND WOMEN S MOBILE SHOPPING In what areas have you increased your shopping via smartphone or tablet in the last 12 months? women men 23% 38% 35% 22% CLOTHING & FOOTWEAR 19% 28% TRAVEL MEDIA 23% 10% HEALTH CARE 5% 28% ELECTRONICS 16% 15% INTERIOR DECORATING 13% 15% OTHER 11% 11% HOME CONSUMABLES 7% 12% SERVICES There are great differences between men and women s purchases via mobile devices. The greatest difference is in electronics, about a third of the men have increased their purchases compared to just 5% of women. On the other hand, many more women than men increased their purchases of health products and clothing and shoes. It is also primarily men who have increased their purchases via smartphones and tablets in the largest category, travel. 27

01 02 SWEDISH E-COMMERCE 03 04 05 06 07 08 28 NORDIC E-COMMERCE 2015

Difficult times for music CDs and printed newspapers % Will you purchase the following products in the coming 12 months? Music Books Newspapers & magazines Music (CD & vinyl) 50% No / will stop buying 11% Buy less 26% Equal or more Books 25% No / will stop buying 13% Buy less 51% Equal or more Newspapers & magazines 31% No / will stop buying 15% Buy less 42% Equal or more The CD is in the past. Half of all consumers have already stopped buying music on vinyl and CD, or plan to do so, and another 11 percent plan to cut back on their consumption. Almost no one plans to increase their purchases. Consumption of CD and vinyl on the internet is strongest in southern Sweden, and among 35-44 year olds. The percentage of people who have completely stopped buying records is highest in the oldest age category. The paper book is more resilient. Half say that they continue to buy paper books to at least the same extent as before, and only a quarter have stopped or plan to do so. The proportion of people who have stopped buying printed books is higher among men than women, and highest in rural areas. The printed book is the strongest amongst families with children and 35-44 year olds, while 55-74 year olds have to a large extent never bought or stopped buying in the first place. The consumption of printed newspapers and magazines is placed somewhere in between. 42 percent say that they continue to purchase just as much as before. Young consumers are overrepresented amongst both those who say that they have started buying printed newspapers, and amongst those who say they are planning to increase their purchases. There are probably income differences at play; they expect that they will be able to afford to buy newspapers and magazines to a higher degree. We can also see that more low-income earners stopped or never started buying printed newspapers, magazines and books compared to the high-income earners. 29

01 02 03 ONLINE PAYMENTS IN SWEDEN 04 05 06 07 08 NEW PAYMENT METHODS REVOLUTIONISE E-COMMERCE - AGAIN It remains unnecessarily difficult to pay by mobile phone. Now, new solutions are being introduced to make it easier. This is going to change our consumption patterns. In last year s report we noted that mobile e-commerce was facing a technological leap, as several major players were about to launch new payment solutions. This still holds true. Apple has released its new payment method Apple Pay, although not yet in the Nordic region. Swish are releasing their e-commerce solution, and the MasterCard solution MasterPass is being launched in Sweden and Norway. The Danish MobilePay already allows you to pay online with your phone. All these new payment solutions have one thing in common; they make it easier to pay. They reduce friction. You should not have to enter your card details into your phone each time you pay a parking ticket or order a book. The reason for using mobile phones to shop is that it is simple. The harder it is, the less likely you are to do it that way. 47 percent of e-commerce consumers want to be able to store their card details to avoid having to re-enter it upon each purchase. Amongst mobile consumers, the share is 55 percent. This is most important for the oldest consumers. One in three consumers even said they would shop more from mobile devices if they did not have to enter card details every time. We also found that 38 percent of consumers have at some point cancelled an online purchase, usually because they have not been able to use their preferred payment method. It is most likely a temporary problem. Shops that do not offer the right method of payment will see themselves eclipsed by their competitors, in much the same way that shops without mobile adapted websites will lose out. Practically everyone today has a smartphone within reach, a portal to all the world s shops. The journey from idea to completed purchase has never been shorter. The battle for mobile consuumers rides largely on meeting demands with the right range, a mobile optimised website and a convenient way to pay. The range is already there. More and more e-commerce operators have built simple, smart and fast mobile device sites. When several of the major payment operators are launching new, mobile adapted payment methods, technology is set for the next phase. 30 NORDIC E-COMMERCE 2015

CARD PAYMENTS REMAIN MOST COMMON % Which payment methods have you used in the last six months? Card 2015 84% 54% 51% 14% Invoice Online bank payment PayPal, Payson etc. It remains the most common to pay online transactions by card. 84 percent of those who shopped online during the last year used their card, and about half paid by online bank payment or by invoice. Invoice payment is very common amongst women. It is worth noting that every eighth person has used a payment service such as PayPal or Payson. Amongst 25-34 year olds the share is almost every fifth consumer. 31

01 02 03 We prefer to pay by card ONLINE PAYMENTS IN SWEDEN 04 05 06 07 08 % Which online payment method do you prefer? 50 40% 41% 40 38% 30 23% 25% 24% 29% 23% 24% 2013 2014 2015 20 10 5% 5% 7% 0 Card Online bank payment Invoice PayPal, Payson etc. Card payment is also the payment method most consumers prefer. The distribution between preferred payment methods has not changed much in recent years, but we see a slightly increasing trend for card payment, which is now preferred by 41 percent of consumers. The preference for services like PayPal and Payson decreases clearly with increasing age. Cards dominate mobile payments % Which payment methods have you used via smartphone or tablet in the last six months? 2013 2014 2015 80 60 67% 71% 74% 40 26% 30% 24% 32% 34% 20 14% 8% 13% 12% 0 Card Online bank payment Invoice PayPal, Payson etc. Cards are the most common payment method even for mobile device transactions. In fact, almost as many paid by card payment in the past year as with the other payment methods put together. This was a clear finding, even when there were multiple options in the survey question. Women largely use online bank payment or invoice payment, while men use services like PayPal and Payson almost twice as much as women. 32 NORDIC E-COMMERCE 2015

Payment methods should be simple and safe % Why do you prefer the following payment option? Easiest Safest Cheapest Bonus points 80 60 71% 59% 49% 65% 52% 61% 40 28% 20 21% 20% 14% 15% 0 2% 1% 3% 6% 3% Card Online bank payment Invoice PayPal, Payson etc. Simplicity and safety are the most common motives for choosing one particular payment method over another. Card users prioritise simplicity above all else, while those using invoice or PayPal and similar services put security first. There are also elements of other motivational factors; one in five card users take bonus points into account, and both card payment and online bank payment users highlighted price as a factor, as these payment methods are not linked to a fee, unlike invoice payments. Women prefer invoice, men prefer card payment % Which online payment method do you prefer? women men 48% 33% 27% 30% 5% 21% 18% 8% Card Online bank payment Invoice PayPal, Payson etc. More prefer card payments than last year, amongst both women and men, but men still prefer card payments to a much greater extent than women. Women, on the other hand, prefer invoice almost twice as much as men. These differences persist year after year. 33

01 02 03 ONLINE PAYMENTS IN SWEDEN 04 05 06 07 08 SWISH HAS HAD ITS BREAKTHROUGH % Which of the following payment methods do you know? 100 Know of and have used Know of but have not used 90 80 70 60 50 39% 51% 40 51% 39% 30 20 39% 21% 10 0 49% 11% 25% PayPal Swish Payson Wywallet SEQR Apple Pay MasterPass V.me 6% 19% 2% 8% 6% New payment methods continue to increase. PayPal is increasing only slightly, but has now been used by more than half of all respondents. This year s rocket is Swish, which is used by almost twice as many as last year. 4 out of 10 Swedes have now used the Swedish bank s service for peer to peer payments on mobile phones. A 90 percent brand awareness is a very strong performance for a brand that did not exist three years ago. The service has over the past year become a serious contender for the existing dominant mobile payment methods. From its launch in 2012 to the summer of 2014 Swish was a payment solution for private individuals, and then it became possible for companies, associations and organisations to offer Swish as a payment method. 34 NORDIC E-COMMERCE 2015

MOBILE PAYMENT SOLUTIONS IN PHYSICAL STORES MUST BE SIMPLE AND SECURE What would it take for you to start paying with your smartphone in a physical store? 19% Secure solution 24% Easy to use 25% Would not pay by smartphone in physical store 28% Quick payment 35% Availability 41% Easy to get started Within a short time there will be a number of new technical solutions to pay by mobile in physical shops. It is likely that the way to pay for products will undergo a dramatic change. Even today there are solutions to pay by mobile in physical stores but they have had little success. Some of the reasons why not many consumers have been using these solutions are that they are not perceived as sufficiently secure and easy. It is likely that big names are required, in which people already have great confidence such as the Swedish banks to support these solutions. For consumers it is important that these solutions are easy to use and safe. Both considerations are mentioned by at least one third of all respondents. It is also essential that the purchase is fast and that the solution can be used in many different shops. Only one in four says that they would not use their mobile phone for payments in physical stores. It remains to be seen how many of those will change their minds when the various solutions are launched and gradually make payments easier, faster and safer. 35

01 02 03 ONLINE PAYMENTS IN SWEDEN 04 05 06 07 08 CUSTOMER CASE: EASYPARK PARKING METRES ARE BECOMING EXTINCT EasyPark has been present in the Nordic market for fifteen years. 30 percent of all parking services in Oslo are paid with the EasyPark app. There are fewer and fewer parking metres they are not necessary anymore. How have you become so successful in mobile e-commerce? We have a service that helps people in their everyday lives, that both saves time and money. It is possible to use the same app no matter where you are, so that the customer will not have to think about how to pay for parking. Another important factor is that we have focused on a niche and have not been tempted to offer everything to everyone. We focus on car parking services and we have become very good at just that. Do you see any interesting trends? We are seeing that what happened to phone booths is now about to happen with parking metres. The need for them decreases dramatically when everyone always have a mobile phone in their pocket. We are also seeing that coins as a payment method are disappearing. Meanwhile, mobile payments are becoming more independent from interfaces. Our service is not only available in smartphones and wearables such as watches; it already exists in the systems of many modern cars. How many payments are made with the app? This year we will reach an estimated 25 million transactions. Marie Johansson Revenue Assurance Manager EasyPark 36 NORDIC E-COMMERCE 2015

Most mobile customers want to be able to store card details % Would you prefer not having to enter your card details every time you shop online? 47% Yes 55% Yes Registering your card details each time you make an online purchase is perceived as cumbersome. Almost half of all consumers would like to avoid having to enter card details when they are shopping online. Amongst mobile consumers the proportion is significantly higher. 55 percent of mobile customers would like to avoid having to register the card information upon each purchase. The proportion is roughly the same in all age groups. 1 out of 3 would shop more via mobile if card details were stored % Would you use an online shop more frequently if you did not have to type in your card number for each purchase? 23% Yes 31% Yes Almost a fourth of all consumers say they would buy more in an online shop where they did not have to enter their card details upon each purchase. Amongst the mobile consumers, the figure is higher and rising; one out of three say that they would shop more in this type of shop. This represents an increase of 10 percent since last year. 37

01 02 03 ONLINE PAYMENTS IN SWEDEN 04 05 06 07 08 Many cancel their purchases % Have you cancelled an online purchase in the last 6 months? 38% Yes More than one in three consumers have cancelled an initiated online purchase at some point during the past six months. The proportion is highest amongst those consumers who purchase most often with mobile devices. One explanation is definitely that these savvy consumers are more demanding and have come to expect a seamless process and a variety of payment options. The right payment method is important % Why did you cancel the purchase? Not the right payment option 34% Complicated registration 30% Payment process Unclear conditions 28% 28% Technical problems 24% Insufficient information Low confidence 19% 20% Not possible to pick up goods 4% 0 10 20 30 40 The single most common reason that consumers cancel e-commerce purchases is that the shop did not offer the preferred payment option. More than every third consumer who cancelled a purchase responded that this was the reason. It is advisable to offer several payment methods, as it improves the conditions for a high conversion of visitors into paying customers. 38 NORDIC E-COMMERCE 2015

EXPERIENCED CONSUMERS DEMAND MOBILE OPTIMISED WEBSITES Have you cancelled a purchase because of the website not being adapted to mobile devices? 39% Yes CANCEL 4 out of 10 mobile consumers have cancelled their 4 purchase av 10 mobilkunder because the har site avbrutit was too köp difficult för att to sajten navigate and varit insufficiently för svårnavigerad adapted to och the otillräckligt small screen anpassad of a smartphone. efter mobiltelefonernas The most demanding små consumers skärmar. Andelen are the experienced har ökat något ones sedan who made förra mobile året. Högst purchases krav ställer at least de 11 vana times konsumenterna, in the past six months. We can also confirm that youth and young de adults som without handlat children mobilt minst make 11 very gånger high demands det senaste on mobile halvåret. optimised Vi websites, kan också compared konstatera to att pensioners ungdomar shopping och unga online. vuxna utan barn ställer mycket högre krav på mobilanpassade sajter än mobilshoppande pensionärer. 39

01 02 03 04DANISH E-COMMERCE 05 06 07 08 E-COMMERCE IN DENMARK 2015 We continue to increase our online shopping. Like last year, almost all the growth is coming from mobile devices, and most consumers are expected to purchase at least as much in the future. E-commerce continues to grow extensively across the Nordic region. In Denmark, the e-commerce market has risen from 42 billion to almost 59 billion DKK over the past three years. Just last year there was an 8 percent rise. It is a massive change that we are witnessing, and that almost everyone is a part of. A marked trend during the last couple of years is that a rising share of e-commerce is happening via mobile devices, mainly smartphones and tablets. In the last three years, the share of mobile sales has doubled in Denmark. 4 out of 10 online customers state that they have made a purchase via a mobile device over the past 6 months. The product category that dominates our online spending is travelling. According to consumers own estimates, half of their e-commerce budget is spent on travel. Consumers have since long been accustomed to buying holidays online. The travel industry started selling online at an early stage and has maintained its leading position when it comes to e-commerce development. Booking flights and hotels online has several tangible benefits. One can do research from a computer at home, compare prices, as well as see pictures and videos from different hotels and destinations. When a decision has been made, the vacation is paid easily by card. The product category that is becoming increasingly popular is subscription of TV and video streaming services. Today, one in three pays for services such as HBO, Netflix or Viaplay. This is most common among families with young children, who also lead the way in terms of development by using online services such as regular grocery delivery services, another product category on the rise. One can learn a lot from the data, with lessons that are beneficial both for those who wish to understand current trends as well as for businesses seeking to meet consumer demands. For example, statistics show that 15 percent of customers have cancelled an online purchase because their desired payment method was missing. In the U.S., 85 percent of all online shops are adapted to mobile devices (Internet Retailer Top 500 guide), compatred to only 58 percent in Sweden (Ebarometern årsrapport 2014, PostNord), and in Denmark the number is even lower. 40 NORDIC E-COMMERCE 2015

THE MOBILE BREAKTHROUGH % Have you purchased anything via your smartphone or tablet in the past six months? +90% 2012-2015 38% 2015 35% 29% 20% 2014 2013 2012 +163% 2012-2015 Norway 42% 2015 40% 2015 +90% 2012-2015 40% 28% 16% 2014 2013 2012 Sweden 36% 32% 21% 2014 2013 2012 Denmark The e-commerce market experienced its real breakthrough two years ago. Since then, it has been steadily increasing in all the Nordic markets. 4 out of 10 online customers have used a mobile device to shop. This is the case in the whole Nordic region. In Denmark, mobile commerce has almost doubled in three years. Mobile commerce in Denmark is most popular among parents with young children. 69 percent have made a purchase via a smartphone or a tablet during the past six months. There has also been a breakthrough among young adults within the 25-34 age group (58%). 41

01 02 03 04DANISH E-COMMERCE 05 06 07 08 MARKET SIZE AND GROWTH BN DKK Estimation of the Danish e-commerce market size % Estimat af det danske e-handelsmarkeds størrelse i milliarder kroner. 41.5 BN DKK +6% 47.2 BN DKK +12% 54.4 BN DKK +8% 58.7 BN DKK 2012 2013 2014 2015 E-commerce in Denmark has a turnover of 58.7 billion DKK. That is a rise of more than 4 billion (8%) compared to last year. In three years, e-commerce has risen by 41 percent. The figures are based on an actual increase of about 15,000 online shops in the Nordic region. 42 NORDIC E-COMMERCE 2015

THE DISTRIBUTION OF E-COMMERCE IN DENMARK % How is your online spending distributed? (Last 3 months) 54% Travel & Services 36% Goods 10% Other & Media 4% Other 6% Media 2015 4% Services 50% Travel There is widespread perception that e-commerce primarily focuses on buying products online. However, travel and services account for the largest part of e-commerce in Denmark, with a share of 54 percent. The products segment accounts for a third of all e-commerce. The Danish e-commerce market is completely dominated by travel. Travel purchases represent half of all the money we spend online. 43

01 02 03 04DANISH E-COMMERCE 05 06 07 08 A CLOSER LOOK AT TRAVEL AND GOODS % How is your online spending distributed? (Last 3 months) A closer study of the travel category shows that almost 67 percent of spending is represented by flights and hotels. Large differences can be seen between different age groups. The youngest category, ages 15-24, spend the most money out of all age groups on flights (40% of their consumption), as well as regional trains and bus journeys (15%). On the other hand, the oldest category, ages 55-74, spends 35% of their travel expenses on hotels, compared to the youngest age category that merely spends 2%. The oldest age group spends more money on taxis than other groups, whose average spending is 2% on this category. There are large differences in the consumption patterns of women and men. The number of men who have spent more than 3,700 DKK on electronics in the past six months (11%) is almost four times as large as the number of women. The number of high-spending consumers of clothes and shoes among females (6%) is double the amount compared to males (3%), and is actually even larger within the 35-44 age group (8%). The product segment is fairly equally spread amongst four categories, each with a turnover of about 4.5 billion DKK. Other Cars 10% 5% Taxis 2% Flights 36% Health care 6% Electronics 25% Public transport 9% Travel Interior decorating 23% Goods Trains or buses 7% Hotels 31% Clothing & footwear 23% Home consumables 23% 44 NORDIC E-COMMERCE 2015

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01 02 03 04DANISH E-COMMERCE 05 06 07 08 MOBILE E-COMMERCE CONTINUES ITS MOMENTUM Mobile e-commerce continues to grow rapidly. In three years the share of people that have purchased via a mobile device has grown from 21 to 40 percent. During the past year, mobile e-commerce in Denmark has grown by over 200,000 users. 1.7 million Danes have now made a purchase via a mobile device. The number of mobile purchases has risen from 16.5 to 18.6 million, and trends look approximately the same across the Nordic region. Mobile e-commerce is here to stay. Furthermore, the increase is straight up in almost all age groups. Year after year more people are beginning to purchase via their mobile or tablet. The most common reason to shop with a mobile is that it is always close at hand. A mobile device is always carried with you, even in physical stores. Our consumption patterns continue to intertwine as online and physical channels become more and more integrated. We search online and buy in stores, or the other way around. Competition is stiff. It is clear that the mobile customers who spend the most money online use more than half of their online expenditure on travel. Customers who have spent less than 700 DKK during the past three months primarily purchase music, films and clothing. The reason we prefer shopping online is not primarily lower prices or greater selection, even if they are also important factors. The most important reason of all is that it is flexible, easy and saves time. To make day-to-day life easier, people choose to shop online. This includes both men and women and especially customers shopping via mobile devices. 80 percent of consumers claim that they have purchased at least as much this year as they did the previous year. Everything indicates that the current trend will continue. 46 NORDIC E-COMMERCE 2015

Shopping via mobile devices is increasing % Have you purchased anything via your smartphone or tablet in the past six months? 21% 32% 36% 40% 2012 2013 2014 2015 Over the past four years, the share of Danes who have made a purchase via a mobile device has doubled. 4 out of 10 individuals have made a purchase via their smartphone or tablet at least once in the last six months. Growth continues, however at a slower pace than seen over the past years. The same trend can be seen in all Nordic countries. Consumers of all ages are going mobile % Have you purchased anything via your smartphone or tablet in the past six months? 2012 2013 2014 2015 60 50 40 30 20 10 0 15-24 25-34 35-44 45-54 55-65 66-74 Ages Consumption via mobile devices is accelerating in all age groups, except in the youngest age group who already two years ago experienced their largest rise. More than half of the population aged 25-44 have made a purchase via a smartphone or tablet. The fastest increase in mobile consumption is among older consumers (66-75 years old) where the share of mobile consumption is up by 50 percent compared to last year. The highest mobile consumption rate is seen among parents with young children where 69 percent have used their smartphone or tablet to shop online. The lowest rate is among pensioners; however even in this age group, 15 percent have now made a mobile purchase. 47

01 02 03 04 The mobile always within reach % Why did you shop on your smartphone? DANISH E-COMMERCE 05 06 07 08 My smartphone was closest at hand at the time of purchase I used an app to shop 31% 67% I opened an offer via e-mail on my smartphone 17% I don t own a computer/only internet connection I was in a shop but purchased the product online instead I scanned a QR-code 3% 3% 2% 0 10 20 30 40 50 60 70 80 The most common reason to shop via smartphone is that it is the device closest at hand. Two out of three state this as the main reason. This is an increase of 15 percent since last year. This is most likely because smartphone users are becoming increasingly used to the convenience of having a world of offers accessible at all times The tablet is an important gateway to the internet % Why did you shop on your tablet? My tablet was closest at hand at the time of purchase 74% I used an app to shop I opened an offer via e-mail on my tablet 17% 15% I don t own a computer/only internet connection I was in a shop but purchased the product online instead I scanned a QR-code 4% 3% 2% 0 10 20 30 40 50 60 70 80 Similar to smartphones, most consumers claim that they shopped via their tablet because it was closest at hand. The share for tablets is even larger than those who chose their smartphone for the same reason. The proportion that exhibits this behaviour is actually higher among women than men. Older consumers (over 66 years old) say that they used the tablet when they opened an email and clicked on an offer at a much higher rate than the other age groups. 48 NORDIC E-COMMERCE 2015

APP OR BROWSER? IT DEPENDS ON THE SCREEN SIZE % Have you purchased anything via your smartphone or tablet in the past six months? 29% Tablet app 42% Tablet browser 42% Smartphone app 29% Smartphone browser Consumption patterns differ between smartphones and tablets. It is most common to shop via an app on a smartphone, whereas a browser is used more frequently on a tablet. This is to a large extent explained by the difference in the screen sizes of the devices. It is easier to search, compare and view items on a tablet browser than on a smartphone. 49

01 02 03 04DANISH E-COMMERCE 05 06 07 08 Overall consumption via mobile devices % How is your online spending via smartphone and tablet distributed? (Last 3 months) 53% Travel & Services 33% Goods 14% Other & Media 9% Other 5% Media 2015 4% Services 49% Travel The service segment is dominant on mobile devices as well. We purchase a lot more services (Travel and Services) than physical goods on our smartphones and tablets. However, the travel share is lower on mobile devices than on desktop, most probably because we are less likely to book expensive flights and hotels via mobile. Services vs. retail on mobile devices % How is your online spending via smartphone and tablet distributed? (Last 3 months) Other Taxis 3% 11% Cars 5% Flight 27% Health care 7% Clothing & footwear 34% Public transport 13% Trains or buses 9% Travel Hotels 32% Interior decorating 16% Home consumables 17% Goods Electronics 26% We are not as likely to order flights via our mobiles. However, the share of ticket expenses for public transport is higher. The big difference between desktop and mobile consumers in the retail category is that mobile customers are spending less money on Interior decorating, and more on Clothing & footwear. 50 NORDIC E-COMMERCE 2015

women GENDER DIFFERENCES men IN CONSUMPTION PATTERNS How is your online spending via smartphone and tablet distributed? (Last 3 months) women men 46% 52% TRAVEL 18% 7% CLOTHING & FOOTWEAR 7% 10% ELECTRONICS 5% 11% OTHER 7% 5% HOME CONSUMABLES 6% 5% INTERIOR DECORATING 4% 6% MEDIA 4% 4% SERVICES 4% 2% HEALTH CARE On our mobile devices, travel dominates our purchases. The travel segment accounts for half of all mobile e-commerce consumption. Women purchase more than twice as much Clothing & Footwear as men, while men spend more money on travel. See definitions of all categories on page 50. 51

01 02 03 04DANISH E-COMMERCE 05 06 07 08 WHAT WE SPEND AND HOW WE SPEND IT % How is your online spending distributed? (Last 3 months) 60 1-699 DKK 700-3699 DKK 3700 DKK or more 50 40 30 20 10 0 Electronics Home consumables Interior decorating Travel Media Clothing & footwear Health care Services Other The travel category dominates the e-commerce market, in terms of money. This is due to the fact that travel is strongly overrepresented in the group of consumers who spend the most money online. Amongst industries with a higher price per purchase, the travel industry has had the most success in adapting to e-commerce. When buying a car, for example, we still prefer buying in a store where we get advice, service, and the possibility to test-drive the car. However, with travel, we can just as well do our own research and purchases instead of sitting at a travel agency where someone else does the same job. The top spenders, who have spent at least 3,700 DKK over the past 3 months, spend more than half of their online expenditure on travel. Those who have purchased for less than 700 DKK have primarily purchased media and entertainment, such as renting a movie, buying songs or perhaps subscribing to a streaming service. The largest spenders only use 5 percent of their e-commerce budget on media. 52 NORDIC E-COMMERCE 2015

BIG SPENDERS PURCHASE TRAVEL Other & Media 9% Travel & Services 57% Goods 34% 3700 DKK OR MORE Other & Media 39% Travel & Services 8% Other & Media 25% Travel & Services 24% 1-699 DKK 700-3699 DKK Goods 53% Goods 51% 53

01 02 03 04DANISH E-COMMERCE 05 06 07 08 THE RISE OF ONLINE SUBSCRIBTION SERVICES Subscriptions to products and services online are experiencing broad-based growth. Most common is TV/video streaming services (such as Netflix or HBO). Today, more than one out of three consumers pay for such a service, half of them being in the 15-44 year age range. Men are overrepresented: 41 percent of men compared to 33 percent of women subscribe to TV/video streaming. TV / Video Streaming (Viaplay, Netflix and HBO) 37% 32% Music Streaming (Spotify, Wimp) 14% 10% 2014 2015 2014 2015 51% 51% 49% 27% 21% 18% 33% 19% 13% 10% 5% 1% 15-24 25-34 35-44 45-54 55-65 66-74 Ages 15-24 25-34 35-44 45-54 55-65 66-74 Ages TV / Video Streaming Subscriptions of video streaming services are most common among families with young children (60%). Since last year, subscriptions have become more widespread across all age groups. The fastest growth is seen within the 25-44 age group, where it has increased by 25% in just one year. TV/video streaming is spread relatively equally across the country, with a stronger position in the Copenhagen area and a weaker position in the Northern Jutland area. Music Streaming Music services are also increasing among all age groups. Overall this category has risen by 40 percent since last year. Every eighth Dane subscribes to music today. However, in this regard Denmark has much lower numbers than Sweden or Norway, which is probably due to the fact that Spotify is Swedish and Wimp is Norwegian, naturally drawing higher attention and media coverage of the companies in their country of origin. Paying for music is closely linked to age; the younger a person is, the higher the proportion. Among the older Danes usage of the service is almost non-existent (1%). 54 NORDIC E-COMMERCE 2015

Magazines & Books Groceries 16% 15% 5% 4% 2014 2015 2014 2015 7% 17% 17% 19% 19% 19% 1% 7% 8% 6% 4% 3% 15-24 25-34 35-44 45-54 55-65 66-74 Ages 15-24 25-34 35-44 45-54 55-65 66-74 Ages Magazines & Books Subscriptions to newspapers and magazines increase with age, from 7 percent among 15-24 year olds to 19 percent among pensioners. It is the only subscription product or service that is overrepresented among the oldest age group. An important explanation of this is that they are probably already used to regular deliveries of newspapers, having lived at a time when the media landscape was different. Groceries Subscription to food delivery services is also growing, however at a lower speed. The service is far more common among families with young children. 13 percent of families with young children use these services in order to make everyday life easier, compared to merely 3 percent of families without children and 7 percent of families with older children. It remains to be seen if younger generations will want traditional newspaper subscriptions as they age, or if they permanently wish to access news in a different way. 55

01 02 03 04DANISH E-COMMERCE 05 06 07 08 Why we shop online % What is the most important reason why you shop online? 80 67% 56% 60 56% 58% 2015 40 32% 36% 20 0 Simplifies Lower prices Easier to compare products Larger selection Always open Finding products not available elsewhere Just as in previous years, the main reason for buying online is that it is easy and saves time. This category is rising. At the same time, there is a decrease in the share of those stating that they shop online because it is cheaper. In two years this group has fallen from 61 to 56 percent. Saving time is extremely important among parents with young children. 76% of this group claim that saving time is the reason they choose to shop online. Both men and women want to save time % What is the most important reason why you shop online? women 70 67% 66% 60% 59% 60% 60 51% 53% 55% 50 men 40 30 29% 34% 37% 35% 20 10 0 Simplifies Lower prices Easier to compare products Larger selection Always open Finding products not available elsewhere There is not much difference between men and women s motivation. Men are more driven by lower prices, larger selection and the possibility to compare prices whilst women are slightly more interested in being able to shop whenever it suits them. Both genders value that e-commerce is simpler and saves time. About half of the group mention that the internet offers better product selection. 56 NORDIC E-COMMERCE 2015

Young consumers appreciate a wider range % What is the most important reason why you shop online? Ages 15-24 Ages 66-74 80 60 40 20 0 Simplifies Lower prices Easier to compare products Larger selection Always open Finding products not available elsewhere All age groups agree that the single most important component of shopping online is that it is easy and saves time. However, there is quite a wide variation of opinions when it comes to lower prices and larger product ranges. The older group has much lower requirements when it comes to product range and does not prioritise lower prices to the same extent as younger generations. We shop abroad due to lower prices % Why did you choose an online shop abroad for your purchase? Lower prices than in Danish online shops 59% The product or service is not available in Danish online shops The product or service is not available in physical shops in Denmark Lower prices than in physical shops in Denmark 31% 31% 55% Lower tax/vat The product will be used in the country where purchased Other reason 4% 6% 8% 0 10 20 30 40 50 60 70 The most important reason we choose foreign online shops is that they provide lower prices and a broader product range. The price is somewhat more important than the selection. These preferences are evenly distributed across the country and across all age groups. The largest deviation is that the youngest age group (15-24 years) were driven to explore foreign online shops due to previous experiences in physical stores at home to a larger extent than other age groups (41% compared to 31% for others). Seniors are less interested in hunting lower prices in foreign online shops. 57

01 02 03 04DANISH E-COMMERCE 05 06 07 08 CUSTOMER CASE STUDY: BILLETLUGEN A TICKET TO THE FUTURE The primary business is online Billetlugen started as an online business and has mainly been web-based ever since. Billetlugen sells tickets to concerts, theatre shows and other events. Tickets are available in music stores or theatre venues, however almost the entire turnover of 1,3 billion DKK comes from online sales. How come your are so successful within e-commerce? Our service is widely available and we simplify the online buying process for the consumer. We also succeeded in creating a good platform, which makes it very easy for institutions, theatres and event organizers to sell and distribute tickets. We had an online focus from the beginning and contributed to drive the development forward. In Denmark, we were pioneers in selling online tickets. It was a slow start but eventually sales picked up. Today, we sell more than 4,5 million tickets annually. Do your customers shop from computers or mobile devices? Mobile consumption is definitely growing, however the product is not optimal for small screens. Choosing between 2000 seats in a theatre can be tricky on a smartphone. We are about to launch an app that will make it much easier. Have you identified any interesting e-commerce trends? The most obvious trend is the already strong mobile development. We noticed a clear difference in sales after we launched our mobile optimized website. We started selling mobile tickets at an early stage. At first, we sold SMS tickets and today we offer e-wallet solutions such as Passbook and MobilePay to streamline the purchase process even further. Interview with: Martin Gammeltoft CCO, Billetlugen 58 NORDIC E-COMMERCE 2015

SHOPPING ABROAD IS MORE COMMON AMONG MEN % Have you purchased anything from a foreign website in the last six months? Total 48% Yes Women 43% Yes Men 52% Yes 54% 54% 52% 51% 40% 30% 15-24 25-34 35-44 45-54 55-65 66-74 Ages The share of consumers who shop in foreign online shops is significantly higher among men than women. More than half of all men have made a purchase from a foreign online shop during the past six months. The share of those who purchase from abroad falls substantially with age. It is most common among families with young children (56%) and young people without children (55%). The share is also higher within the Copenhagen area compared to smaller cities and the countryside. 59

01 02 03 04 MOBILE SALES ARE INCREASING DANISH E-COMMERCE 05 06 07 08 Have you purchased more via mobile devices in the last year? 80% Same as now or more 5% Less Nothing suggests that mobile e-commerce is a passing trend. 80 percent of the respondents say that they have shopped at least as much this year as they did in the previous year. Only 5 percent claim that they have decreased their purchases. Mobile e-commerce is expected to increase further over the coming years. 60 NORDIC E-COMMERCE 2015

LARGE women GENDER DIFFERENCES men IN MOBILE SALES In what areas have you increased your shopping via smartphone or tablet in the last 12 months? women men 46% 21% CLOTHING & FOOTWEAR 22% 31% 23% 28% MEDIA TRAVEL 8% 29% ELECTRONICS 18% 15% OTHER 14% 14% HOME CONSUMABLES 15% 8% HEALTH CARE 13% 10% INTERIOR DECORATING 8% 14% SERVICES Men and women s mobile consumption isn t quite the same. Over the past twelve months one in three men increased online electronics purchases, compared to only one in twelve women. More men have also increased their consumption of media. On the other hand, twice as many women have increased their mobile purchases of clothing and shoes as well as of health products. 61

01 02 03 04DANISH E-COMMERCE 05 06 07 08 62 NORDIC E-COMMERCE 2015

Physical media formats are falling % Will you purchase the following products in the coming 12 months? Music Books Newspapers & magazines Music (CD & vinyl) 50% No / will stop buying 9% Buy less 27% Equal or more Books 26% No / will stop buying 9% Buy less 51% Equal or more Newspapers & magazines 42% No / will stop buying 9% Buy less 35% Equal or more The era of the CD is over. Half of all consumers have already stopped buying music on vinyl records and CDs or plan to do so, and a further nine percent expect that they will cut down on their consumption. A fourth of consumers expect that they will continue buying as much as they have or more, however a marginal share of these consumers expects to increase their consumption. The book is more resistant. Half say that they will continue to buy physical books at least to the same extent as before, and only a fourth have stopped buying or have never bought printed books. The share of consumers who have stopped buying printed books is higher among men than women and is higher in the Northern areas of Jutland, Sjaelland and the South of Denmark than in Copenhagen. Consumption of printed books is highest among highearning consumers and among people aged 35-44, while 55-65 year olds are increasingly stopping or planning to stop buying physical books. Consumption of newspapers and magazines falls somewhere in between. One out of three say that they will continue to buy just as much. We can see that consumers with low incomes are more likely to stop buying printed newspapers and magazines compared to those with high incomes. 63

01 02 03 04 05 ONLINE PAYMENTS IN DENMARK 06 07 08 NEW PAYMENT METHODS REVOLUTIONISE E-COMMERCE - AGAIN New technical solutions makes mobile payments even easier. This changes our consumption habits. In last year s report we found that mobile e-commerce was about to take a technological step forward as many big players were about to launch new payment solutions and methods. Now it s happening. Mobile payments such as MobilePay (recently launched in Norway as well) and Swipp are revolutionizing e-commerce in Denmark. In Sweden, MasterCard s solution, MasterPass, is currently being launched, and will soon arrive in Norway as well. These new payment solutions and methods have one thing in common they make online payments easier. The consumer has become more demanding and expects everyday life to be filled with easy solutions. The road from thinking the initial idea to actually buying a ticket or a pair of shoes has to be extremely short. The consumer has become less loyal, and once a payment method has proved to be more difficult than other methods, it will be difficult to ever regain consumers attention. Denmark is further ahead than its Nordic neighbours in mobile payments. For example, the share of people who know of and have used MobilePay has risen by 39 percent compared to last year. MobilePay Online is the name of the new solution that makes it possible for online shops and other online services to receive payments via MobilePay online. This was completed in March, with Dankort as a part of the solution. Now many frontrunners that adapted this payment method at an early stage can report higher sales compared to before the solution was implemented. This is a clear example of how it is possible for online shops to increase their conversion rate, merely by following technological developments. The share of consumers who want to avoid having to provide card details when shopping is smaller in Denmark than in Sweden and Norway. Fewer Danish consumers claim that they would buy more if they could store their card details in a safe and convenient way. To a large extent this can be explained by the fact that mobile payment solutions are already easier to handle in Denmark compared to Sweden and Norway. For example, 3D Secure an extra step in the payment process to improve safety is not compulsory in Denmark. This extra security step can, however, be seen as burdensome and time-consuming in other countries. However, the share of consumers who wish to simplify the payment process is still large in Denmark and it is therefore worth considering for owners of online shops wishing to optimise their business. No less than one in every three consumers says that they would like to be able to save their card details, and the same holds for 44 percent of mobile customers. In fact, more than one in every five Danes (21%) states that they would buy more via mobile if they could avoid entering card details upon each purchase. The mobile is always close at hand a portal to all the stores in the world. The passage from an idea to the actual purchase has never been shorter. The competition for mobile customers largely depends on meeting demand with the right offer, a mobile optimised online shop and a simple payment process. The possibilities are out there grab them! 64 NORDIC E-COMMERCE 2015

CARD PAYMENTS REMAIN THE MOST COMMON % Which payment methods have you used in the last six months? Card 2015 95% 13% 12% 8% Online bank payment PayPal, Payson etc. Invoice Almost all e-commerce consumers in Denmark have used cards when paying online. Out of those who purchased online in the past six months, 95 percent used cards. 13 percent paid via bank transfers and 12 percent with an e-wallet service. Only 8 percent used invoice, compared to 54 percent in Sweden. The numbers are evenly distributed across the country and across age groups. 65

01 02 03 04 05 ONLINE PAYMENTS IN DENMARK 06 07 08 Most prefer to pay by card % Which online payment method do you prefer? 80 70% 67% 66% 60 2013 2014 2015 40 20 0 19% 19% 21% 2% 3% 2% 2% 2% 2% Dankort Card Online bank payment Invoice PayPal, Payson etc. 4% 5% 5% Most consumers prefer paying by card. The distribution between preferred payment methods has hardly changed over the last couple of years. 9 out of 10 Danish consumers prefer paying by Dankort or other payment cards. Cards dominate mobile payments % Which payment methods have you used via smartphone or tablet in the last six months? 2013 2014 2015 100 80 83% 86% 86% 60 40 20 0 11% 11% 13% 6% 7% 5% 3% 5% 4% Card Online bank payment Invoice PayPal, Payson etc. Card payments hold a uniquely dominant position in Denmark and are undoubtedly stronger than in Sweden and Norway. 86 percent of mobile consumers use Dankort or another payment card for purchases. 89 percent of women and 83 percent of men use the card for payments. However, among the younger generation aged 15-24 the share has dropped to 75 percent. So far, the only competition for card payments has been e-wallet services such as PayPal, which is used by 13 percent of Danish consumers and by 22 percent in Northern Jutland. However, for online payments, MobilePay and Swipp are expected to gain a large amount of market share this coming year. 66 NORDIC E-COMMERCE 2015

Payments should be simple and secure % Why do you prefer the following payment option? Easiest Safest Cheapest Billed at a later point 80 68% 60 40 31% 47% 48% 42% 61% 47% 49% 52% 62% 20 0 20% 1% 12% 8% 22% Dankort Card Online bank payment Invoice PayPal, Payson etc. 2% 20% 6% 7% 1% Simplicity and safety are the most common motives when choosing a particular payment method. Dankort users highest priority is simplicity, while users of online bank payments and e-wallets prioritise safety. Out of those who use other payment methods than Dankort, one out of ten states that they find it valuable to pay later. By far the most common reason for choosing an invoice, for the few that do so, is that payment is delayed to a later date. One in every five consumers also indicate that price is an important factor for choosing to use Dankort. Dankort is more popular among women % Which online payment method do you prefer? women men 71% 61% 17% 26% 3% 2% 2% 2% 5% 6% Dankort Card Online bank payment Invoice PayPal, Payson etc. Women are slightly more likely to choose Dankort than men, who on the other hand are overrepresented among users that choose other types of payment cards. One partial explanation could be that men shop considerably more in foreign online shops, where one typically uses international card types such as VISA or Mastercard. 67

01 02 03 04 05 ONLINE PAYMENTS IN DENMARK 06 07 08 MOBILEPAY HAS HAD A BREAKTHROUGH % Which of the following payment methods do you know? 100 Know of and have used Know of but have not used 90 80 70 60 33% 57% 50 40 41% 39% 30 20 66% 10 14% 0 23% 16% 5% 5% MobilePay PayPal Swipp Apple Pay Paii MasterPass V.me New payment methods continue to rise. Four out of ten Danes have now used PayPal, and only two out of ten say that they have never heard of the service. The biggest change since last year is that awareness and use of MobilePay has risen by 39 percent. Only 9 percent of Danes state not having heard of the service. Awareness of Swipp has also increased a lot. The share of consumers who have used the service has increased from 9 to 14 percent. It is perhaps interesting that not even one in four users claim that they have heard of Apple s payment solution. Apple Pay, which admittedly has not yet been released in Denmark, is receiving a lot of attention worldwide. 68 NORDIC E-COMMERCE 2015

MOBILE PAYMENT IN PHYSICAL STORES MUST BE SIMPLE AND SECURE What would it take for you to start paying with your smartphone in a physical store? 16% Secure solution 31% Easy to use 19% Would not pay by smartphone in physical store 30% Quick payment 35% Availability 40% Easy to get started The way in which we pay for goods in physical stores is undergoing a tremendous change. For example, it is already possible to pay with MobilePay in several Danish physical stores, with more solutions underway. For consumers, the most important considerations are that these solutions are safe and easy to use. Both of these options are chosen by at least one third of all respondents. It is also important that the process is fast and that the solution can be used in many different stores. Only one in five respondents claim that they don t want to use their mobile phone when paying in stores. It will be interesting to see how much this will change when various solutions have been launched solutions that gradually become easier, faster and safer. 69

01 02 03 04 05 ONLINE PAYMENTS IN DENMARK 06 07 08 70 NORDIC E-COMMERCE 2015

Mobile customers want to store card details % Would you prefer not having to enter your card details every time you shop online? 35% Yes 44% Yes Having to provide all card details every time you shop online is perceived as a hassle. One third of all users would like to avoid having to enter card details each time when shopping online. Among mobile users the share is considerably higher. 44 percent of mobile customers would like to avoid providing card details during every purchase. That is a 10% rise compared to last year. The proportion is roughly the same in all age groups and across all parts of the country. An opportunity to increase sales % Would you use an online shop more frequently if you did not have to type in your card number for each purchase? 13% Yes 21% Yes 13 percent of consumers state that they would shop more if they could avoid providing their card details with every purchase. Among mobile consumers the share is even higher: 21 percent. This is a 24 percent rise since last year, when the number was 17 percent. The trend is clear: More and more customers wish to be able to store their card details. 71

01 02 03 04 05 ONLINE PAYMENTS IN DENMARK 06 07 08 Many cancel their purchases % Have you cancelled an online purchase in the last 6 months? 37% Yes More than one in every three consumers have cancelled a purchase online at least once in the past six months. The share is highest among the consumers who shop most often on their mobile devices. One explanation is that consumers that shop the most often have higher demands and have started to expect a seamless process where their desired payment method is provided. Clear conditions are important to customers % Why did you cancel the purchase? Unclear conditions 35% Technical problems 25% Insufficient information Low confidence 22% 23% Complicated registration Payment process 20% 20% Not the right payment option 15% Not possible to pick up goods 5% 0 10 20 30 40 The most common reason for Danish consumers to cancel their online purchases is that conditions are perceived as unclear (e.g. total price, delivery conditions, return options, payment conditions). One in four consumers has cancelled a purchase due to technical problems. As an online shop, these factors are important to consider, in order to increase your conversion rate. 72 NORDIC E-COMMERCE 2015

CONSUMERS DEMAND MOBILE ADAPTED ONLINE SHOPS Have you cancelled a purchase because the website was not optimised to mobile devices? 37% Yes CANCEL Almost 4 out of 10 mobile customers have cancelled their 4 purchases av 10 mobilkunder due to difficulties har avbrutit in navigating köp för att on sajten web pages varit that aren t för svårnavigerad optimised for och the otillräckligt small screen anpassad of a smartphone. efter mobiltelefonernas The highest standards små come skärmar. from Andelen consumers har ökat who något are sedan accustomed förra året. to shopping Högst krav via ställer mobile de and vana have konsumenterna, shopped via mobile at least 11 times during the past six months. de We som can handlat also confirm mobilt that minst families 11 gånger with young det senaste children have halvåret. much higher Vi kan demands också konstatera mobile att adapted ungdomar web pages och than unga pensioners. vuxna utan barn ställer mycket högre krav på mobilanpassade sajter än mobilshoppande pensionärer. 73

01 02 03 04 05 06 NORWEGIAN E-COMMERCE 07 08 E-COMMERCE I NORWAY 2015 We are increasing our online shopping; just like last year almost the entire growth is happening on mobile devices, and most people expect to shop as much as now or more in the future. E-commerce continues its strong growth in the Nordic region. In Norway the online market has increased from 51 billion to 78 billion NOK in three years. The past year alone presents an increase of 13 percent. We are witnessing a huge change in which we all take part. The greatest change the last years is that a much larger part of e-commerce is happening on mobile devices such as smartphones and tablets. In three years the share of mobile purchases has almost doubled in Norway. More than a third of online customers (38%) say they have shopped via a mobile device in the past 6 months. The product we spend the most money on is travel. According to customers own estimates, 48 percent of their e-commerce budget is on travel. Travel is the first rather expensive product that is equally efficient to buy online as in physical stores. When we purchase a car we will usually buy it from car dealer whom we trust, who can offer maintenance and service and who perhaps has a model available for test driving. Travel can be quite expensive, but this is not enough reason to use a travel agency. Instead we prefer to do research at home on our computer (not our smartphones or tablets, this is quite clear), compare prices, view videos of different hotels or travel destinations and finally pay with a card. Subscription to video streaming services is the subscription product category that is growing the fastest. More than a third of consumers currently pay for services such as HBO, Netflix or Viaplay, the most common being families with young children. The tendency to subscribe to newspapers, however, increases with age. There is a lot to learn from the data, both for those seeking to understand the times we live in and for the businesses that want to better meet the needs of their customers. For example, one out of four customers cancelling an online purchase does so because their preferred payment option is not offered. In addition, any e-commerce business without a mobile optimised website that is attempting ambitious expansion might want to rethink their strategy. 74 NORDIC E-COMMERCE 2015

THE MOBILE BREAKTHROUGH % Have you purchased anything via your smartphone or tablet in the past six months? +90% 2012-2015 38% 2015 35% 29% 20% 2014 2013 2012 +163% 2012-2015 Norway 42% 2015 +90% 2012-2015 40% 28% 16% 2014 2013 2012 40% 2015 36% 2014 Sweden 32% 21% 2013 2012 Denmark In recent years mobile e-commerce has had a big breakthrough and the trend continues upwards in all the Nordic markets. 4 out of 10 online customers have shopped using a mobile device. This applies to all Nordic countries. Mobile shopping in Norway has almost doubled in three years. In Norway mobile shopping is most common among families with young children. 58 percent of these have in the past six months shopped using a smartphone or a tablet. Among young adults between the ages of 25-34 the number is also high (56%). Mobile shopping is equally common in both lower and higher income brackets. 75

01 02 03 04 05 06 NORWEGIAN E-COMMERCE 07 08 MARKET SIZE AND GROWTH BN NOK Estimation of the Norwegian e-commerce market size % Estimert størrelse av det norske e-handelsmarkedet? +13% 51.8 BN NOK +16% 60.3 BN NOK +15% 69.1 BN NOK 78.1 BN NOK 2012 2013 2014 2015 The Norwegian online market for products and services is valued at 78.1 billion NOK. This is almost ten billion NOK (13%) more than last year. In three years e-commerce has seen growth close to 50 percent. The numbers are based on the actual increase across 15,000 online shops in the Nordic region. 76 NORDIC E-COMMERCE 2015

E-COMMERCE DISTRIBUTION IN NORWAY % How is your online spending distributed? (Last 3 months) 58% Travel & Services 30% Goods 12% Other & Media 6% Other 6% Media 2015 48% Travel 10% Services It is commonly perceived that e-commerce primarily concerns purchasing products online, but the largest category is services. The products category represents only a third of e-commerce. spending the most money online. However, among those spending the least (1-849 NOK in three months), media/ entertainment is the dominant category. The services segment is solidly dominated by travel. Travel sales represent almost half of all our spending online. The share of travel sales is even higher among consumers 77

01 02 03 04 05 06 NORWEGIAN E-COMMERCE 07 08 A CLOSER LOOK AT TRAVEL AND GOODS % How is your online spending distributed? (Last 3 months)? A closer look at the travel segment shows that nearly 70 percent of all purchases are flights and hotels. There are big differences between the various age groups. The youngest aged 15-24 spend four times as much on public transport and twice as much on buses and trains compared to those in the 55-64 age group, but significantly less on hotels. The group that spends the most on flights are people with adult children. Within the products segment, electronics make up almost half of the sales. Men spend on average a considerably large share of their online purchases on electronics, while women are overrepresented in the clothing and footwear categories as well as health products. 4% Cars Trains or buses 8% Public transport 9% Travel 2% Taxis Flights 44% Home consumables 12% Health care 7% Goods Electronics 45% Other 9% Hotels 24% Interior decorating 15% Clothing & Footwear 21% 78 NORDIC E-COMMERCE 2015

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01 02 03 04 05 06 NORWEGIAN E-COMMERCE 07 08 MOBILE E-COMMERCE CONTINUES TO RISE Mobile e-commerce growth continues rapidly. In three years the share of mobile consumers has increased from 20 to 38 percent. In the last year alone, the mobile market in Norway has increased by nearly 150,000 people. Almost one and a half million Norwegian customers have shopped using a mobile device. The number of mobile purchases increased from 17.2 to 18.7 million, and the same trend can be seen across all Nordic countries. Mobile e-commerce is here to stay. Furthermore, the increase is strong in almost all age groups. There are more beginners starting to shop with their mobile phones or tablets each year. The most common reason to shop with a smartphone is that it is the device closest at hand. One is always carrying one s smartphone, even when visiting a physical shop. Our consumption patterns are in the process of getting very mixed up; online is intertwined with offline. We do research online and make our purchases in a physical store, or vice versa. 7 percent of those shopping with a smartphone have visited a physical store while ordering the product online. Competition is stiff. It is clear that among the mobile customers spending the most money online, the largest share 54 percent goes to travel. Customers spending less than 850 NOK in the past three months, however, are mainly purchasing songs, movies and clothing. The reason we prefer to shop online is not primarily lower prices or greater selections, even though these are also important factors. Most important is convenience and saving time. Online shopping has become a way to make day-to-day life better. This includes both women and men and especially customers shopping using their mobile devices. 76 percent of mobile customers say that they have shopped just as much on their mobile devices this year as compared to last year. Nothing suggests that the development is about to slow down. 80 NORDIC E-COMMERCE 2015

More are shopping via mobile devices % Have you purchased anything via your smartphone or tablet in the past six months? 20% 29% 35% 38% 2012 2013 2014 2015 Nearly 4 out of 10 have shopped using a mobile device in the last six months. Since 2012 this share has increased by 90 percent, and the trend continues to point upwards. Mobile e-commerce has had its greatest breakthrough in the 25-34 year age group and among families with young children, where respectively 56 and 58 percent of online shoppers have made purchases on a smartphone or a tablet. Older age groups have not adapted to the technology to the same extent. In the 66 and up age group only a fifth of the online shoppers use a mobile device; however this share is steadily rising. There is also a clear distinction between city and countryside; the share of mobile shoppers in Oslo is almost twice that in the countryside. Mobile shopping is on the rise across all age groups % Have you purchased anything via your smartphone or tablet in the past six months? 2012 2013 2014 2015 60 50 40 30 20 10 0 15-24 25-34 35-44 45-54 55-65 66-74 Age Consumption via mobile devices is increasing significantly across all age groups. More than half of the consumers aged 25-44 have now shopped on a smartphone or tablet. The increase has been the strongest in the oldest age group since 2012, where the amount of mobile shoppers has more than tripled. 81

01 02 03 04 05 06 Proximity is king % Why did you shop on your smartphone? NORWEGIAN E-COMMERCE 07 08 My smartphone was closest to hand I used an app to shop 41% 49% Offer via e-mail on my smartphone 19% In a shop but made the purchase online I scanned a QR-code 7% 7% I have no computer 4% Only internet connection 1% 0 10 20 30 40 50 60 The most common reason to shop via smartphone is that it is the device closest at hand. Half of all respondents state this as the main reason. This is not exactly surprising now that almost everyone has direct access to a world of offers at all times. It is worth noting that 7 percent of consumers have visited a physical store and still ordered the product on their smartphone. As observed already last year, the divide between shop and internet is becoming ever more diffuse; sometimes we do research online and shop offline, other times we do the opposite. It is also interesting that the share of those who state to have shopped with an app is much higher in Norway than in Sweden and Denmark. This is most likely because the Norwegians are considerably further ahead in making payments on their mobile, such as for public transport. The tablet is increasingly the gateway to the web % Why did you shop on your tablet? My tablet was closest to hand 61% Offer via e-mail on my tablet I used an app to shop 17% 20% Only internet connection In a shop but made the purchase online I scanned a QR-code I have no computer 6% 5% 5% 4% 0 10 20 30 40 50 60 70 The majority of those shopping via tablets say that they chose the tablet because it was the closest at hand. At the same time we see that 4 percent are using a tablet because they do not own a PC or any other internet connection. 82 NORDIC E-COMMERCE 2015

APP OR BROWSER? IT DEPENDS ON THE SCREEN SIZE % Have you purchased anything via your smartphone or tablet in the past six months? 30% Tablet app 36% Tablet browser 44% Smartphone app 28% Smartphone browser Those shopping on a tablet use the web browser more frequently, whereas smartphone users prefer to shop with apps. This is due to the screen size. It is better and easier to search, compare and look at products in the web browser on a tablet compared to the web browser on a smartphone. 83

01 02 03 04 05 06 NORWEGIAN E-COMMERCE 07 08 Travel and services dominate sales on mobile devices % How is your online spending via smartphone and tablet distributed? (Last 3 months) O 57% Travel & Services 32% Goods 11% Other & Media 6% Other 5% Media 2015 3% Services 54% Travel The travel segment dominates e-commerce on mobile devices. More than half of the money we spend via mobile is for travel. A closer look at the mobile travel segment shows that most purchases represent flights (28%), followed by public transport (22%) and hotels (21%). Total spending via mobile devices % How is your online spending via smartphone and tablet distributed? (Last 3 months) Cars 7% 6% Other Trains or buses 12% 21% Hotels Travel 5% Taxis Flights 28% Public transport 22% Interior decorating 13% Health care 6% Home consumables 14% Goods Electronics 35% Clothing & Footwear 32% The services segment exceeds the products segment regardless if shopping via computer or mobile device. The difference is greatest among those who shop via computer they spend more than twice the proportion on services. On mobile devices 7 percent more is spent on paying for services rather than ordering products. 84 NORDIC E-COMMERCE 2015

GENDER DIFFERENCES IN women men CONSUMPTION PATTERNS How is your online spending via smartphone and tablet distributed? (Last 3 months) women men 51% 56% TRAVEL 16% 5% CLOTHING & FOOTWEAR 7% 14% ELECTRONICS 7% 5% 5% 5% 6% 4% INTERIOR DECORATING OTHER MEDIA 5% 4% HOME CONSUMABLES 1% 5% SERVICES 2% 2% HEALTH CARE It is clear that both men and women spend the most money on travel. Women are particularly overrepresented in the area of clothing and shoes, which they buy three times as much as men. Men purchase twice as much electronics as women. 85

01 02 03 04 05 06 NORWEGIAN E-COMMERCE 07 08 WHAT WE SPEND AND HOW WE SPEND IT % How is your online spending distributed? (Last 3 months) 1-849 NOK 850-4299 NOK 4300 NOK or more 50 40 30 20 10 0 Electronics Home consumables Interior decorating Travel Media Clothing & Footwear Health care Services Other O Travel dominates the e-commerce market in terms of money. This is because travel consumption is solidly overrepresented in the customer group that spends the most money online. Among the high-level customers those who have spent at least 4,300 NOK travel makes up half of their online purchases. Those who have spent less than 850 NOK have mainly purchased media and entertainment, in other words rented movies, purchased songs and perhaps subscribed to a streaming service. Major consumers spend only 5 percent of their online budget on entertainment. 86 NORDIC E-COMMERCE 2015

BIG SPENDERS PURCHASE TRAVEL % Mangler tekst? Other & Media 10% Travel & Services 61% Goods 29% 4300 NOK or more Travel & Services 7% Other & Media 22% Travel & Services 25% Other & Media 43% 1-849 NOK 850-4299 NOK Goods 50% Goods 53% 87

01 02 03 04 05 06 NORWEGIAN E-COMMERCE 07 08 STRONG INCREASE IN SUBSCRIPTION SERVICES Subscribing to products and services online has increased strongly. The most common is subscribing to streamed video (for example Netflix or HBO). Over one in three consumers pay for access to such services. Streamed music is also increasing, while there is a small decrease in traditional media such as magazines and books. % What products or services have you subscribed to online? 2014 2015 50 TV / Video Streaming (Netflix, HBO) 40 30 20 39% 34% 27% 33% Music Streaming (Spotify, Wimp) 27% 29% 21% 23% 28% 26% 10 2014 2015 2014 2015 0 TV / Video Streaming (eg Viaplay, Netflix 52% 55% 49% and HBO) Musik Streaming (eg Spotify, Wimp) 46% 39% Tidningar och böcker 30 20 32% 24% 10% 31% 20% 16% 4% 15-24 10 25-34 35-44 6% 9% 45-54 55-65 66-74 years 15-24 25-34 35-44 45-54 55-65 66-74 2% 2% years 0 TV / Video Streaming Music Streaming Mat Djurfoder Subscribing to a video streaming service is definitely most common among families with young children and young adults without children. It is more than three times more likely in families with young children than among pensioners. It is more common in the 25-34 age group (55%), after which it decreases gradually with age to 10 percent among those over 66 years old. The percentage of those who subscribe to such services also increases in urban areas; it is most common in the Oslo region (45%). Music streaming is becoming even more connected to age groups. The younger the person the more likely he or she is to subscribe to services such as Spotify or Wimp; from 46 percent among teenagers to 4 percent among pensioners. Music streaming is most popular in the Oslo region, where it is more than twice as common (39%) as in the countryside (17%). 88 NORDIC E-COMMERCE 2015

Newspapers and books Groceries 19% 21% 4% 4% 2014 2015 2014 2015 19% 20% 26% 31% 3% 5% 6% 5% 4% 12% 11% 1% 15-24 25-34 35-44 45-54 55-65 66-74 years 15-24 25-34 35-44 45-54 55-65 66-74 years Newspapers and books The share subscribing to newspapers, magazines and books online increases with age, from 12 percent of teenagers to 31 percent of pensioners in the age group 66-74. This is the only subscription service in which the elderly are overrepresented. An important reason for this is that they are presumably used to a regularly distributed newspaper from a time when the media landscape was different. It remains to be seen if today s younger generation adapts to the traditional newspaper subscription as they age, or if they will be getting their news elsewhere permanently. Groceries Subscription to food delivery is most common among families with younger children, two incomes and a hectic daily routine. 8 percent of families with children purchase food online, compared to Sweden where the rate is 21 percent. In the countryside the food service due to a lack of availability is nearly non-existent (1%), while in the Oslo region 7% subscribe to the service. There are no differences between higher and lower levels of income (both 4%). 89

01 02 03 04 05 06 NORWEGIAN E-COMMERCE 07 08 Why we shop online % What is the most important reason why you shop online? 80 67% 59% 60 51% 45% 57% 48% 40 20 0 Simplifies Lower prices Easier to compare products Larger selection Always open Finding products not available elsewhere Just as before, the most important reasons for shopping online are the fact that it is easy, convenient and it saves time. This category is rising sharply; in a year it has increased by 13 percent. Over time there has been more appreciation of the wide selection of products offered online, while the share of shoppers driven by lower prices has remained more or less the same since 2012. Both men and women want to save time % What is the most important reason why you shop online? 80 women men 60 69% 66% 61% 57% 53% 49% 49% 59% 55% 49% 46% 40 41% 20 0 Simplifies Lower prices Easier to compare products Larger selection Always open Finding products not available elsewhere There are no great differences between men and women s motivation for online shopping. Men are somewhat more motivated by a wider selection of products and lower prices, while the convenience of e-commerce is slightly more important for women. The difference since last year is that both men and women are prioritising saving time to a considerably higher degree. 90 NORDIC E-COMMERCE 2015

Older consumers are the least motivated to save money % What is the most important reason why you shop online? 15-24 years 66-74 years 80 60 40 20 0 Simplifies Lower prices Easier to compare products Larger selection Always open Finding products not available elsewhere We can see that the older group (66-74) is to a lesser degree driven by saving money, while younger consumers prioritise a larger product selection and comparing products. The youngest are more than twice as likely to appreciate a larger product selection than the older generation.it is interesting to note that the variety of products is valued as the most important in smaller places, while people in the Oslo region are not as concerned with it. Generally, the differences are small. Prices and selection drive customers abroad % Why did you choose an online shop abroad for your purchase? Lower prices than webshops at home 65% Product/service not available in webshops at home 61% Product/service not available in physical stores at home Lower prices than physical shop 36% 38% Lower taxes 10% Other Product will be used there 4% 6% 0 10 20 30 40 50 60 70 The most important reasons for shopping in foreign online shops are that the prices are lower and the selection greater. Lower prices are most important for customers in the 35-44 age group. The survey result this year shows an even distribution across the whole country and among all ages. 91

01 02 03 04 05 06 NORWEGIAN E-COMMERCE 07 08 CUSTOMER CASE STUDY: BABYSHOP MOBILE OPTIMISED WEBSITE FOR THE CHILDREN Babyshop started in 2006 by Marcus and Linn Tagesson. Back then they were both 24 years old and had no children of their own, but they had identified children s clothing as a good business opportunity. This was considered inappropriate in an industry that was characterised by enthusiasm and interest, rather than its business aspect. The ambition from the very start was international. My dream scenario was to become the largest children s clothing shop in Scandinavia. But then my husband said: Come on, we ll have to aim to become the best in Europe. They wanted a domain name that was intuitive and easy to find. They bought the name babyshop.se for 7,000 NOK at McDonald s at Slussen from a mum who was planning on setting up her own company during her maternity leave but never got around to it. Babyshop.com was harder. It was owned by General Electric and cost nearly one million NOK. Linn and Marcus had to get a mortgage on their flat. It was the best investment we have made. We wanted every opportunity to grow. The company expanded quickly. Nine years later revenue is nearly one billion NOK and they have 200 employees. They also have physical stores, as they purchased a children s clothing brand with an associated network of shops in Norway, but the focus is still on the online shop and the aim is global. A factor in their success is that the company has been flexible, with a flat organisational structure and an ability to make quick decisions. By making use of their employees knowledge and customer contacts the company has been able to react quickly to feedback, and thereby become better at meeting their customers requests. Another factor in their success is their approach to mobile shopping. In 2009 Babyshop was the first player in the Nordic market to optimise their website to mobile devices. We thought it would appeal to our target audience. We wanted to reach the parents that had the time to browse and who always brought their smartphone along, the ones that sit together in the café and show each other the products they have purchased. I am just like that myself. Today online sales via mobile devices account for 27 percent of our revenue. Linn Tagesson Gründer Babyshop.com 92 NORDIC E-COMMERCE 2015

MORE THAN HALF SHOP ABROAD Have you purchased anything from a foreign website in the last six months? Total 54% Yes Women 50% Yes Men 57% Yes 61% 61% 58% 50% 49% 30% 15-24 25-34 35-44 45-54 55-65 66-74 Age More than half of all Norwegian online customers have made purchases from a foreign online shop in the past six months. The percentage shopping from abroad decreases considerably with age. It is the most common among young adults without children (60%) and among families with young children (58%). The share is also higher in the Oslo region (65%) than in other places. 93

01 02 03 04 05 06 MOBILE SHOPPING INCREASES NORWEGIAN E-COMMERCE 07 08 Have you purchased more via mobile devices in the last year? 76% Same as now or more 10% Less Nothing suggests that mobile e-commerce is a passing trend. 76 percent of the respondents say that they have shopped as much or more on their mobile devices in the past year as compared to the previous year. Only 10 percent state that they have shopped less. Mobile e-commerce is expected to increase further in the coming year. 94 NORDIC E-COMMERCE 2015

women GREAT DIFFERENCES BETWEEN men WOMEN AND MEN S MOBILE SHOPPING In what areas have you increased your shopping via smartphone or tablet in the last 12 months? women men 31% 38% 26% 34% 37% 21% CLOTHING & FOOTWEAR TRAVEL MEDIA 16% 24% ELECTRONICS 9% 21% OTHER 10% 12% INTERIOR DECORATING 19% 3% HEALTH CARE 10% 11% SERVICES 12% 9% HOME CONSUMABLES Women and men s mobile purchases have developed differently. A fourth of the men who have increased their purchases on mobile devices have bought more electronics, compared to only 16 percent of women. The categories that have increased the most are travel, media, as well as clothing and shoes where women are overrepresented. 95

01 02 03 04 05 06 NORWEGIAN E-COMMERCE 07 08 96 NORDIC E-COMMERCE 2015

Physical media formats are decreasing % Will you purchase the following products in the coming 12 months? Music Books Newspapers & magazines Music (CD & vinyl) 46% No / will stop buying 12% Buy less 29% Equal or more Books 26% No / will stop buying 14% Buy less 48% Equal or more Newspapers & magazines 38% No / will stop buying 13% Buy less 35% Equal or more The prime time of the CD is in the past. Almost half of all consumers have already stopped buying music on vinyl or CD or are planning to stop doing so. A further 12 percent are planning on buying less in the future. Hardly anyone plans to increase their purchases within this category. Those who are listening the most to music on CD or vinyl are residents of Northern Norway and between the ages 35-44. The percentage that has completely stopped buying CDs is highest in the oldest age group. The physical book is more resilient. Half say they will continue to purchase books at least as much as they have been, and only a fourth have stopped or plan to do so. The share that has stopped purchasing printed books is 8 percent higher among men. Printed books is strongest among couples with grown children. The consumption of printed newspapers and periodicals is placed somewhere in the middle. One third have stopped buying them, and a third continue as usual. Teenagers are overrepresented among those who say they do not buy printed newspapers. In Sweden and Denmark teenagers are overrepresented among those who plan to increase purchases. There are probably income differences at play, as they assume that they will be able to afford to buy newspapers and periodicals to a higher degree. In Norway only 2 percent of teenagers plan on buying more newspapers and periodicals in the future. 97 97

01 02 03 04 05 06 07 ONLINE PAYMENTS IN NORWAY 08 NEW PAYMENT SOLUTIONS ARE REVOLUTIONISING E-COMMERCE AGAIN It remains pointlessly difficult to complete a mobile payment. This year there will be new solutions to make it easier. That is going to change our consumption patterns. In last year s report we found that mobile e-commerce was about to take a technological leap forward, as several big players were on their way to launch new payment solutions. This still holds true. We have seen the first signs. Apple has launched their new payment solution Apply Pay, but not yet in the Nordic countries. MasterCard s solution MasterPass is also on its way. All the new payment solutions make it easier to pay as they reduce friction. Customers will not have to enter their card information on their phone every time they pay a parking permit or order a book. The main reason why we shop on mobile devices is that it is easy. The more difficult it is, the less likely it is that we will shop in that way. 44 percent of online customers would like to store their card number so that they will not have to enter it for each purchase. Among mobile customers the share is 52 percent. Nearly one in three mobile customers even say they would have shopped more if they did not have to type in their card information every time. We can also establish that one third of customers have cancelled a purchase online, usually due to a confusing payment situation, but also because the payment process was too difficult or if they were unable to pay by their preferred payment method. This is most likely a temporary problem; shops that cannot accept the customers money will eventually be eclipsed by their competitors, in much the same way that shops without mobile optimised websites will lose out because customers prefer to shop on their mobile devices. Today nearly everyone has a smartphone within reach, a portal to all the world s shops. The road from idea to purchase has never been shorter. The battle for mobile customers rides largely on meeting the customers needs with a wide selection, a mobile optimised website and an easy way to pay. The solutions are already in place. More and more e-commerce players have built simple, smart and fast mobile websites. With more of the large payment operators launching new mobile optimised payment solutions, the technology is set for the next phase. 98 NORDIC E-COMMERCE 2015

CARD PAYMENTS REMAIN MOST COMMON % Which payment methods have you used in the last six months? Card 2015 83% 31% 24% 21% Invoice Online bank payment PayPal etc. It remains more common to pay online transactions by card. 83 percent of those shopping online this year have used their cards as a payment option, while at the same time a third have paid by invoice, a fourth by online banking and a fifth by a micro payment solution (for example e-wallets such as PayPal). In Norway there are many more e-wallet users than in Sweden and Denmark. The percentage is higher among those earning lower incomes. 99

01 02 03 04 05 06 07 ONLINE PAYMENTS IN NORWAY 08 We prefer paying by card % Which online payment method do you prefer? 60 57% 54% 54% 50 2013 2014 2015 40 30 20 10 13% 11% 12% 13% 12% 12% 13% 17% 16% 0 Card Online bank payment Invoice PayPal etc. Card payment is also the payment method most consumers prefer. The distribution between preferred payment methods has not changed much in the last few years. More than half choose card above any of the other payment methods. Men prefer to pay by card while more women prefer micro payments such as PayPal. Micro payment, or e-wallet payment, is most common in the 25-34 year age group and decreases sharply in the older age groups. Cards dominate mobile payments % Which payment methods have you used via smartphone or tablet in the last six months? 2013 2014 2015 80 60 65% 64% 67% 40 20 13% 21% 21% 13% 21% 20% 18% 27% 22% 0 Card Online bank payment Invoice PayPal etc. Card is also the most common payment method for mobile transactions. The fact is that more people have paid by card on their smartphone or tablet in the last year compared to any other payment method. This was a clear finding, even when there were several alternatives in the survey question. This is evenly divided between women and men. At a closer look, the age distribution shows that invoicing is more popular with customer in the age group 35-74. Customers under 35 years old prefer paying by card. 100 NORDIC E-COMMERCE 2015

Payment methods should be simple and safe % Why do you prefer the payment option? Easiest Safest Bonus points Cheapest 80 60 40 59% 47% 50% 44% 32% 51% 63% 58% 20 0 24% 19% 18% 9% 10% 12% 2% 4% Card Online bank payment Invoice PayPal etc. Simplicity and safety are the most important motives when choosing one payment method over another. Card users prioritise simplicity first, while invoice and micro payment users put safety first. There are also elements of other motivational factors; one in five card users earns bonus points and adds this into the calculation, and both card and online banking users emphasise savings as a factor. Small differences between women and men % Which online payment method do you prefer? women men 58% 50% 12% 13% 19% 12% 10% 13% Card Online bank payment Invoice PayPal etc. When it comes to preferred payment methods there are smaller differences between Norwegian women and men s preferences, compared with the neighbouring countries. Men prefer card to a higher degree than women. More women choose micro payments, while more men choose invoicing. 101

01 02 03 04 05 06 07 ONLINE PAYMENTS IN NORWAY 08 NEW PAYMENT METHODS HAVE YET TO MAKE A BREAKTHROUGH % Which of the following payment methods do you know? Know of and have used Know of but have not used 100 90 80 70 60 50 29% 55% 40 30 20 10 0 PayPal 16% 3% Apple Pay 10% 2% Valyou 11% 2% mcash 8% 3% MasterPass 4% 2% V.me New payment methods have yet to make a breakthrough in the Norwegian market. PayPal is well known, but awareness has not increased since last year. The new payment methods that have been launched have become a great success in Sweden (Swish) and Denmark (MobilePay). Danske Bank launched MobilePay at the end of the summer in Norway, so it remains to be seen if the Norwegian market also makes the new payment solution a success. Apple Pay is a completely new phenomenon that at the time of the survey was only known by 19 percent of the respondents, which is a low number. The service has launched in the U.S. and the U.K., but not yet in the Nordic market. There is a possibility that by next year there will be a sharp increase in both usage and awareness of this solution. 102 NORDIC E-COMMERCE 2015

MOBILE PAYMENT SOLUTIONS IN-STORE MUST BE SIMPLE AND SECURE What would it take for you to start paying with your smartphone in a physical store? 37% Secure solution 37% Easy to use 26% Would not pay by smartphone in physical store 23% Quick payment 22% Availability 21% Easy to get started What would it take for you to start using your mobile phone for payments instead of other methods such as card or cash in physical stores? Within a short time several new technical solutions will become available to make payments by mobile in physical stores. It is likely that the way we pay for products in physical stores will undergo a dramatic change. mentioned by more than a third of all respondents. It is also important that purchases are fast and that the same method can be used in several different shops. Only one in four says that they would not use their mobile for payments in physical shops. It remains to be seen how many change their minds when the various solutions launch and gradually make it simpler, faster and safer. For customers it is important that these solutions are simple to use and that they are safe. Both considerations are 103

01 02 03 04 05 06 07 ONLINE PAYMENTS IN NORWAY 08 104 NORDIC E-COMMERCE 2015

Most mobile customers would like to store card details % Would you prefer not having to enter your card details every time you shop online? 44% Yes 52% Yes Entering card details every time one makes a purchase is considered a cumbersome and difficult experience. 4 out of 10 would prefer not to type in card information when they are shopping online. Among mobile consumers the percentage is even higher. 52 percent of mobile customers would like to avoid registering their card information with every purchase. 1 out of 3 would shop more via mobile if card details were stored % Would you use an online shop more frequently if you did not have to type in your card number for each purchase? 20% Yes 29% Yes A fifth of all consumers say they would shop more online if they did not have to enter their card details with every purchase. Among mobile customers the number is higher; almost one third (29%) say they would shop more in this case. 105

01 02 03 04 05 06 07 ONLINE PAYMENTS IN NORWAY Many cancel their purchases % Have you cancelled an online purchase in the last 6 months? 08 36% yes Every third customer has cancelled an initiated purchase in the past six months. The percentage is highest among the most frequent mobile shoppers. One likely explanation is that frequent customers are particularly demanding, and expect a smooth process and a wide variety of payment methods. The right payment method is important % Why did you cancel the purchase? Unclear conditions 35% Payment process 29% Not the right payment option 26% Technical problems Complicated registration Insufficient information 22% 22% 22% Low confidence 13% Not possible to pick up goods 6% 0 10 20 30 40 The most common reason for customers to cancel an online purchase is that the purchasing conditions are vague and the payment process is poor. More than one in four customers who have cancelled a purchase have done so because the shop did not offer the customers preferred payment method. It is advisable to offer a variety of payment methods, as it improves the chances of converting visitors into buyers. 106 NORDIC E-COMMERCE 2015

FREQUENT CUSTOMERS DEMAND MOBILE OPTIMISED WEBSITES Have you cancelled a purchase because the website was not optimised to mobile devices? 37% Yes CANCEL Nearly 4 out of 10 mobile customers have cancelled a 4 purchase av 10 mobilkunder because the har website avbrutit was köp not för mobile att sajten optimised. varit It was för simply svårnavigerad too difficult och to otillräckligt navigate on anpassad the small efter screens. mobiltelefonernas The frequent customers, små skärmar. those who Andelen shopped har ökat on a något mobile sedan device förra at least året. 11 Högst times krav during ställer the past de vana six months, konsumenterna, set the highest demands for mobile optimised websites. de Furthermore, som handlat families mobilt with minst young 11 gånger children det and senaste inhabitants of halvåret. Oslo make Vi higher kan också demands konstatera for mobile att ungdomar optimised och websites, unga compared vuxna to utan pensioners barn ställer and mycket those living högre outside krav på the Oslo mobilanpassade region. sajter än mobilshoppande pensionärer. 107

01 02 03 04 05 06 07 08 NORDIC SURVEY E-COMMERCE IN THE NORDIC Online customers in Norway, Sweden and Denmark agree on a lot, but they continue to differ on how they want to pay online. E-commerce in the Nordic countries follows similar patterns. Online consumption is increasing roughly at the same rate in all three countries, and the percentage of mobile consumers has nearly doubled in the last three years. In the whole region the number of mobile consumers increased by 570,000 in the last year, and the number of purchases increased by 5.2 million. But there are also interesting differences. The most obvious is how consumers prefer to pay. Card payments are the most common and popular in all three countries. In Sweden direct payment via online banking and invoicing makes up nearly 25 percent of all purchases, while in Norway direct payment via online banking, invoicing and e-wallet services constitutes almost half of the market. In Denmark card payment dominates completely; 95 percent of customers use card, as do 86 percent of mobile customers. Norway stands out with a higher share of customers preferring to pay by e-wallet services such as PayPal. There are historical and structural reasons to why consumers in the different countries prefer one payment method over another. Often this has to do with legislation and infrastructure. One reason card payments have such a strong position in Denmark is the national payment card, Dankort. The card provider is not permitted to make a profit on Dankort, and this has made it convenient for many physical stores to accept Dankort exclusively. Once customers get used to it, they tend to continue the same payment habit online. It is also important to mention that online card payments are smoother in Denmark, as mobile payments do not need to be verified by the 3D Secure security system. This makes Danish customers less interested in new systems to store card data compared to their neighbours in Norway and Sweden. Despite these differences development looks similar in all three countries. More people are shopping on mobile devices. In all three countries the travel category dominates, but Norwegian customers distinguish themselves in that they are more inclined to purchase travels on their mobile devices. This can be explained by the great app-based public transport solutions on the Norwegian market. The trend is pointing in the same direction. 77 percent of mobile customers in Sweden state that they have shopped at least as much as before, compared to 80 percent in Denmark and 76 percent in Norway. There are no signs that this development is about to stop. 108 NORDIC E-COMMERCE 2015

CONTINUED MOBILE GROWTH IN THE NORDIC MARKETS % Have you purchased anything via your smartphone or tablet in the past six months? +163% 2012-2015 +90% 2012-2015 +90% 2012-2015 42% 2015 40% 2015 38% 2015 40% 2014 36% 2014 35% 2014 28% 2013 32% 2013 29% 2013 16% 2012 21% 2012 20% 2012 Sweden Denmark Norway Two years ago, mobile e-commerce had its big breakthrough. Since then the advance has continued straight upwards in all Nordic markets. Sweden is developing fastest, with 42 percent of those who made a purchase online having shopped on a smartphone or a tablet. Norway and Denmark are catching up. In Norway mobile e-commerce has almost doubled in three years, and the trend is pointing upwards. However, it has slowed down slightly, which can be explained by the lack of flexible payment solutions in the Norwegian market, and because shops have not optimised their websites for mobile devices sufficiently. We can expect that Google s initiative to reward mobile optimised websites will motivate shops in the future. Clearly, mobile devices have changed the conditions for the retail industry.

01 02 03 04 05 06 07 08 NORDIC SURVEY 5.2 million new mobile purchases in the Nordic region Number Estimation of million purchases via mobile devices Sweden Denmark Norway 5% Increase 13% Increase 9% Increase 2014 31.6 2015 33.1 2014 16.5 2015 18.6 2014 17.2 2015 18.7 Mobile e-commerce is increasing regardless of how it is measured. In terms of number of mobile purchases, it has increased by 1.5 million purchases in Norway, from 17.2 to 18.7 million. Overall nearly 5.2 million more mobile transactions have been completed in the Nordic region compared to last year. 570,000 new mobile customers Number Estimation of number of consumers purchasing via mobile devices Sweden Denmark Norway 7% Increase 14% Increase 11% Increase 2 834 000 2014 3 040 000 2015 1 491 000 2014 1 704 000 2015 1 309 000 2014 1 457 000 2015 Not only is the number of mobile purchases increasing, the Nordic mobile consumption market has gained 570,000 new customers during this year. The Danish market has received the most new customers, with a market increase of 14 percent (213,000 consumers). In Norway the market has grown by almost 150,000 new mobile customers. Our calculation method differs somewhat from that used in Nordic E-Commerce 2014. 110 NORDIC E-COMMERCE 2015

Apps are common in Norway % Why did you shop on your smartphone? Norway Denmark Sweden 70 60 50 40 30 20 10 0 My smartphone was closest to hand I used an app to shop Offer via e-mail on my smartphone I scanned a QR-code In a shop but made the purchase online I have no computer / other internet connection The most important reason for respondents to shop on their mobile phone was that it was the closest at hand at the time of purchase. This applies to all Nordic countries. In Sweden and Denmark this is by far the most important reason for shopping on their mobile. However, in Norway it is very common to use apps, which was already clear a year ago. 41 percent of Norwegian customers state that apps are the main reason for shopping on their mobile. In Norway it is very common to purchase public transport tickets on mobile apps. 111

01 02 03 04 05 06 07 08 NORDIC SURVEY NORDIC COMPARISON % What online payment method do you prefer? Card Online bank payment Invoice PayPal, Payson etc. Sweden Web purchase % Mobile % 41 24 24 7 45 16 22 10 0 10 20 30 40 50 60 70 80 90 100 Denmark Web purchase % Mobile % 78 2 2 10 87 2 2 5 0 10 20 30 40 50 60 70 80 90 100 Norway Web purchase % 54 12 12 16 Mobile % 55 9 10 19 0 10 20 30 40 50 60 70 80 90 100 Online payment in Sweden Swedish e-commerce has three dominant payment methods: card, online banking and invoicing. Card payment is on top with nearly 40 percent of consumers, followed by direct payment via online banking and invoice payment, each accounting for 24 percent. Among mobile customers card payment is somewhat more popular and direct payment via online banking is used less. Last year the category of direct payment via online banking increased considerably thanks to Mobilt BankID, which broke into the market. Online payment in Denmark If Swedish e-commerce stands on three legs, in Denmark it stands on only one leg. Card payment, especially the national payment card Dankort, is favoured by 87 percent of consumers, which is an increase from 86 percent in 2014 and a small decrease from 89 percent in 2013. Most mobile customers also prefer to pay by card (77%), but e-wallet services such as PayPal have risen rapidly and are supported by one in ten consumers. This is almost twice as much as last year. 112 NORDIC E-COMMERCE 2015

Online payment in Norway Norway continues to diverge the most with its strong support for e-wallet services such as PayPal. 16 percent of all online customers prefer paying with these services, which is more than those preferring invoicing or direct payment via online banking. Card payment continues to be the most widely preferred, but it does not account for more than half of customers. Additionally, among Norwegian mobile customers e-wallet services are popular (19%). However, this is a significant decline compared to last year (24%).

01 02 03 04 05 06 07 08 NORDIC SURVEY Consumers want to store their card details % Would you prefer not having to enter your card details every time you shop online with a mobile device? Yes Sweden 55% Yes Denmark 44% Yes Norway 52% In Norway and Sweden more than half of consumers want to avoid registering their card details when they shop on mobile devices. Considering the card payment s strong position in Denmark, it is interesting to note that Danish consumers are the least interested in avoiding registering their card details upon each purchase. This is likely to be because paying by the Danish Dankort system is more convenient than making a card payment in Sweden and Norway. 114 NORDIC E-COMMERCE 2015

Stored card data presents an opportunity % Would you use an online shop more frequently if you did not have to type in your card number for each purchase with a mobile device? Yes Sweden 31% Yes Denmark 21% Yes Norway 29% There is reason to believe that a convenient solution for stored card data will boost e-commerce, especially in Norway and Sweden. Almost a third of Swedish and Norwegian consumers say that they would shop more in an online shop if they did not have to register card information upon each purchase. In Denmark the proportion is lower, one in five Danish consumers would shop more if the card data were stored securely. 115

01 02 03 04 05 06 07 08 NORDIC SURVEY Mobile consumption is expected to grow % Have you purchased more via mobile devices in the last year? 100 Norway Denmark Sweden 80 76% 80% 77% 60 40 20 10% 5% 9% 0 Less Same as now or more A majority of Nordic consumers state to have purchased equally as much or more via mobile devices in the last year, compared to the previous year. Twice as many have increased their mobile shopping as those who have purchased less. This concerns only consumers who are already shopping via mobile devices, by adding the hundreds of thousands of consumers who each year begin to use their smartphone to shop online, we can expect significant future growth. Similar mobile consumption patterns % How is your online spending via smartphone and tablet distributed? (Last 3 months)? Norway Denmark Sweden 60 40 20 0 Electronics Home consumables Interior decorating Travel Media Clothing & footwear Health care Services Consumption patterns in the Nordic countries are fairly similar. The only major differences are in the travel segment. Norwegian customers are more comfortable purchasing travel on their mobile phones or tablets. 116 NORDIC E-COMMERCE 2015

SUBSCRIPTION SERVICES ON THE RISE IN THE NORDIC % Vilka varor eller tjänster har du prenumererat på via nätet? Norge Danmark Sverige % What products or services have you subscribed to online? Norway Denmark Sweden 33% 29% 37% 14% 39% TV/Video Streaming 28% Music Streaming 23% 9% 16% 5% 19% Magazines & Books 4% Groceries All subscription services are growing in the Nordic countries, except newspapers and books, and groceries in Norway. Subscription to online food delivery is a service mainly used by those with high incomes, possibly because they are willing to pay a bit more for the convenience of such a service. Sweden is the top subscriber to online food delivery, as several players have been quick at developing efficient solutions in this area. The most common online subscription service is online streaming video services. This service already covers more than a third of consumers in all Nordic countries young families are at the top in this category. The category continued to rise sharply with gains of 22 percent in Sweden and 15 percent in both Denmark and Norway. One explanation for why music streaming is more popular in Sweden and Norway is that both countries have local suppliers (Spotify in Sweden and Wimp in Norway). In Denmark, free streaming services are often incorporated in TV or mobile subscriptions. Online subscriptions to newspapers and books are not as popular as streaming services. It is likely because many are reading free online versions on the newspapers websites.

GLOSSARY Payment options Online bank payment: Payment directly from the consumers bank account by verification in the online bank. Card: Payment via debet cards, credit cards or payment cards. Industries Electronics: TV, computers, mobile phones. Home consumables: Household products, drinks, food and flowers. Interior decorating: Gardening products, furniture and kitchenware. Travel: Flights, hotels, public transport. Media: Event tickets, apps, music, movies and books. Clothing & footwear: Clothes, shoes, accessories, sports equipment. Healthcare: Medicine, pharmaceutical products and beauty products. Services: Insurance, telecom, financial services and public services. Other Store card details: A service where card details are stored upon purchase in order to simplify the following purchase. Frequently applied in subscriptions and to simplify the checkout. 3D Secure: Fraud prevention for online card payments. Also known as Verified by Visa and MasterCard SecureCode. 118 NORDIC E-COMMERCE 2015

Nordic E-commerce Nordic E-commerce is a statistical report providing a detailed view of the e-commerce development, especially focusing on mobile commerce. The survey was completed during the second quarter of 2015 by the research institute YouGov and is based on interviews with more than 5 000 internet users in Sweden, Norway and Denmark. The report can be downloaded on: www.nordic-e-commerce.com About DIBS DIBS offers the widest range of easy and secure online payment solutions in the Nordics. We were founded in 1998 and were online payment pioneers at that time today, we are the leading online payment provider in the Nordics. We were the first to reach 1.5 billion transactions and today we handle the payments of more than 15 000 online shops with annual sales of more than 10 billion euros. ART DIRECTOR: MARCELO ZAGAL DESIGNER: FREDERIKKE GUDMAND PROJECT MANAGER: ELIN MORITZ Each year, 2 500 new online shops chose our solution. Our 100 employees in Sweden, Denmark and Norway continuously work on making online payments easy. 119

DIBS PAYMENT SERVICES KUNGSGATAN 32 111 35 STOCKHOLM DIBS PAYMENT SERVICES GÖTEBORG KYRKOGATAN 25, VÅN 3 411 15 GÖTEBORG PHONE 08-527 525 00 EMAIL SALES@DIBS.SE WEBSITE WWW.DIBS.SE DIBS PAYMENT SERVICES A/S ARNE JACOBSENS ALLÉ 13, 1. TV 2300 KØBENHAVN S PHONE (+45) 7020 3077 EMAIL SALG@DIBS.DK WEBSITE WWW.DIBS.DK DIBS AS HOFFSVEIEN 15 0275 OSLO PHONE (+47) 2155 4400 EMAIL SALG@DIBS.NO WEBSITE WWW.DIBS.NO