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Amazon in Denmark: What does it mean for retail businesses?

19 juni, 2018
louise fruelund hermansen
Louise Fruelund Hermansen

Industry Practice Lead, Retail, Columbus

20. juni 2018

In the beginning of June, the Retail Digital Future Conference took place in Copenhagen and the major topic of the conference was Amazon. Rumors have it that the e-commerce giant is preparing for a launch in Denmark.

Facts are that the e-commerce industry is booming! According to FDIH, “In 2017 a total of 176 million purchases was made online in Denmark with a total consumption of 114.6 billion DKK.’’ This is an upward trend from 2016 by 9% and 14% respectively. Just look at the 3 top reasons why Danes prefer to shop online:

  • Range of choices: 38% of Danes think that online shop items are exclusive and the range of choices is wider.
  • Convenience: 30% of Danes believe that shopping online saves time, comes with the flexibility of shopping anytime and from anywhere, and delivery at your doorstep.
  • Price: 28% of Danes think that shopping online means cheaper items and shopper being able to compare prices easily.

So what would Amazon in Denmark mean for the retail business? The above reasons clearly indicate that it is an advantage-Amazon situation. With Amazon already being, the fourth most used e-commerce site in Denmark, there is both challenging and wonderful time of increased pressure ahead of us. Let us look and some of the reasons why retailers can get riled up over this:

  • Declining valuations  Many leading e-commerce companies will probably witness declining turnover due to Amazon taking the bigger piece of the pie.
  • Return and exchange rules – If the return and exchange rules are not clearly spelled out, businesses run a risk to lose customer trust and loyalty in case of dissatisfaction with the product.
  • Advantage of Amazon Prime – Prime is a capability that makes a difference to customer perspective like no other local players can. The bundled offers would make people go back to buying from Amazon and being a loyal customer.

On the other hand, there's also reasons why retailers should feel excited:

  • Increase turnover by acquiring new customers: Leverage Amazon’s advantage of being the preferred platform for customers to search for products.
  • Increased volume of goods: Even though Amazon takes a big bite of the margin, there is an opportunity for retail businesses to sell a high volume of goods to the customers and source it in an optimal way.
  • Saved operational costs: Handling and shipping is handled by Amazon, so you do not need to worry about that. Therefore, as I mentioned earlier, if you can get the volume up, maybe it is a good thing!

I am estimating that while the e-commerce market is going to expand further, it is going to make the life of brick and mortar retailers tough. It is important for retail businesses to challenge the Amazon way - change the customers’ view on what level of service could be expected from their retailers. It is time for the retail organizations with vision and a strategy to take the role up of delivering exceptional customer experience. If you are not a customer-centric business, put together a strategy to be customer-obsessed!

Kategorier Detail, Digital Transformation

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