Nordic e-commerce penetration will grow for yet another decade

Consumer behavior has changed radically on the back of COVID-19, with online penetration pushing several years ahead of its curve. Consequently, investor interest for the e-commerce sector has increased from already high levels, according to the equity research team at ABG Sundal Collier (ABGSC). Prior to the pandemic, investors asked why there is a lack of profitability in this sector; now, the corresponding question is how high margins can get. With companies proving that operational leverage is for real, and not just a nice part within a larger equity story, we see this optimism as justified.
With an online share of 10 per cent in 2019, Sweden has been lagging pioneer e-commerce countries. Growth rates, however, have been constant around 15 per cent with no signs of deceleration. That said, COVID-19 has fueled sales significantly, with online set to grow by a staggering 35 per cent.
In a survey conducted by Nordic postal service Postnord, 68 per cent of adults aged 18-79 in Sweden said that they had made an online purchase in February. That figure has increased by approximately 10 percentage points due to COVID-19, suggesting that the e-commerce channel gained a large amount of new customers. ABGSC believes that many are likely to keep using the service beyond COVID-19.
“”In our space, we note low penetration rates within Home Improvement, Beauty & Health, Pharmaceuticals and Groceries and predict high growth rates within these categories over the coming years”, says ABGSC analyst Fredrik Ivarsson.
Despite the significant leap in 2020, the e-commerce journey has a long way left to go, in our view.
“We still find Nordic e-commerce penetration low in both relative as well as absolute terms and expect strong growth for yet another decade”, says ABGSC analyst Johan Brown.
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