Cross-Border E-Commerce Expansion: Sweden

Market analysis

Thinking about Sweden out of the cross-border e-commerce context, mountains, fjords and the Northern Lights come to mind. However, in addition, this country is characterized by a high urbanization rate of 88.7%. For comparison – in Germany, it is 77.8%, and in Poland, only 60.2%. The population of this Nordic country is 10.55 million people. The unemployment rate reached 7.9% last year, taking third place among the countries of the Old Continent and exceeding the EU average (6.4%) by 1.5%.

It is worth noting here that the situation looks entirely different if we focus on the age group of 15-24, in which, according to Eurostat data, even 18.9% of the population is professionally inactive. To broaden the context, within the Community, the average result is 13.8%. According to Eurostat, the inflation rate in March 2024 was 2.3%. Which is below the EU average (2.6%) and the eurozone (2.4%).

According to the World Happiness Report, Sweden ranked fourth with a score of 7.37 (on a 0-10 scale) among the countries whose inhabitants declare the highest level of life satisfaction. Finland (7.74), Denmark (7.58) and Iceland (7.53) were on the podium.

Economy

The Swedish economy is based on a high level of industrialization and the export of natural resources, among which iron and wood play the main role. The most important industry segments are automotive, telecommunications and pharmaceuticals. Among companies from the small and medium-sized enterprise sector, according to Eurostat data from 2022 on the number of registered entities, the following top the list:

• technical and scientific industry – 177,938,


• wholesale and retail; vehicle repair – 110,160,


• construction industry – 105,208,


• information and communication industry – 69,184,


• real estate – 51,469.

In terms of GDP, which amounted to EUR 550 billion in 2023, the country ranks eighth in the European Union, while gross domestic product per person amounted to EUR 55.25 thousand in the same period, being the sixth-best result within the Community. We should also mention the import to export ratio in Sweden. According to the WTO, in 2022 the nominal values ​​of the above were almost equal and amounted to

• import: ~ USD 206.2 billion,


• export: ~ USD 197.8 billion.

Importantly, from the perspective of the cross-border e-commerce topic, the value of the first of the above has increased by almost USD 30 billion over the last decade. This means that Swedes are increasingly willing to use goods available for sale outside their country.

Swedish e-commerce: characteristics

Development-wise, online sales in Sweden are not behind other countries of the Old Continent. You can probably guess that the breakthrough moment was the COVID-19 pandemic. According to data published by PostNord, starting from sales value of 87 billion Swedish krona (~8.2 billion USD) in 2019, e-commerce recorded an increase of ~67.8% [59 billion SEK (~5.5 billion USD)] in 3 years, thus reaching a record result of 146 billion Swedish krona (~13.7 billion USD) in 2021.

The next twenty-four months brought a slight regression. The value amounted to 136 and 133 billion SEK in 2022-2023, respectively. Which, however, is not a reason for concern. Despite this difference, the e-commerce segment can boast a stable increase in value, which over the decade (2013-2023) amounted to almost 100 billion Swedish kronor (~9.4 billion USD). To broaden the perspective, the share of the entire retail trade that falls on online sales was 5.5% in 2013, and last year – 14%. The highest result was, of course, recorded in 2021, when e-retail accounted for 16% of all retail sales in Sweden.

The increase in the value of this segment goes hand in hand with the growing number of consumers deciding to shop online. According to Statista, in 2020 almost 5.4 million Swedes made online purchases, and three years later, this number reached 6.8 million. That means that more than half of the population took advantage of the benefits of e-commerce shopping last year. According to estimates, the number of e-consumers is expected to maintain a stable growth rate until 2029. By then, this group will reach 9.36 million people (almost the equivalent of today’s population of this country).

Popular products

What products are the most popular in Sweden? To answer this question, we’ll use statistics on the categories most frequently ordered and generating the highest turnover. In a survey conducted in 2023 by Svensk Handel in a group of almost 25,000 people, 31% of respondents admitted that they had purchased pharmaceuticals or dietary supplements online. Almost the same group (30%) purchased clothing/footwear. The next three spots were taken by the products from the following industries:

• beauty – 18%,


• home electronics – 15%,


• sports and leisure ex aequo with food – 14%.

To complete the picture, the total value of orders in individual categories is as follows (PostNord study, 2023):

• home electronics – SEK 27 billion (~ USD 2.57 billion),


• clothing and footwear – SEK 19 billion (~ USD 1.8 billion),


• food – SEK 15 billion (~ USD 1.4 billion),


• pharmaceuticals – SEK 12 billion (~ USD 1.14 billion),


• home&decor – SEK 8 billion (~ USD 762 million USD),


• DIY – SEK 7 billion (~USD 658 million).

Shopping via mobile devices

A significant trend in Swedish e-commerce is shopping via mobile devices. In a 2022 multiple choice survey conducted by Statista, 69% of shoppers said they use smartphones to shop online. Laptops came second (43%), followed by tablets and desktops (24% and 23% respectively). The DHL Group also shared interesting statistics. We can learn from them the frequency with which residents of Volvo’s homeland made online transactions in 2023:

• once a month – 33%,


• once a week – 26%,


• 2-3 times a week – 17%,


• less than once a month – 15%,


• once a day – 5%,


• more than once a day – 3%.

From the same report, we also learn which delivery methods are most popular with Swedes:

• home delivery – 45%,


• parcel locker – 22%,


• collection point – 21%,


• leaving the package with a neighbour / in a safe place – 12%.

Returns

While on the subject of deliveries, it is impossible not to mention returns. According to data published by Statista, the most frequently returned product category in 2023 was clothing. Almost ⅓ of orders were returned to the sender (sic!). Second place was taken by footwear (17% of packages). The last place – by food and beverages, with a result of 8%. The next three places were tied for accessories, cosmetics and sports equipment (outdoors were also counted in this category), which were returned at 7%. Importantly, 51% of respondents declared that they had not returned any order over the twelve months.

The last aspect important to us are the factors that determine online shopping and the most common problems. In the same report, Statista states that the most important factors in favour of making an online transaction include:

• purchase as a result of searching for the right item, without the prior intention of buying it ad hoc – 52%,


• access to the product reviews – 44%,


• ability of placing daily orders at any time via smartphone/tablet – 35%,


• ability of making occasional purchases via smartphone/tablet – 29%.

As you can see, another study confirms that the Swedes highly value the convenience of transactions on mobile devices.
Let’s now look at the most common complications:

• delivery delay – 21%,


• unsatisfactory (difficult) method of placing an order – 11%,


• difficulty finding the return policy / warranty conditions / other legal information – 11%,


• incorrect / damaged goods – 7%,


• problems when filing a complaint – 7%,


• final cost of the order was higher than originally indicated – 6%.

At the same time, as many as 39% of respondents declared that they had not encountered any problems when shopping online.

Cross-border e-commerce

While it is important to understand the trends prevailing in the local market, from the cross-border e-commerce perspective, the characteristics of cross-border online trade in Sweden are even more important. According to Svensk Handel, the share of cross-border transactions over the last three years has ranged from 14% to even 21%. The highest results were recorded in Q4 2020 and Q2 2021, while the lowest percentage was recorded in Q1 2022. Last year, the results were as follows:

• Q1 – 15%,


• Q2 – 18%,


• Q3 – 16%,


• Q4 – 19%.

What products did Swedes most often buy outside their own country in 2023? Clothing and footwear were the clear favourites (64%). Exactly ¼ of buyers ordered products related to sports, hobbies or broadly understood leisure time. Drinks and food came in third with a result of 18%. The next three top spots were taken by: electronics (18%), cosmetics (16%) and furniture with home accessories (12%).

To better understand this market segment, let’s also analyse the reasons why Swedes make cross-border transactions:

• lower prices – 54%,


• desire to buy a product (brand) not available in their country – 35%,


• wider selection – 35%,


• positive previous experiences – 26%,


• lower shipping costs – 18%,


• higher product quality – 13%,


• faster delivery – 10%.

What factors most often prevent Swedes from ordering an item from another country? The most important ones include:

• additional fees – 51%,


• longer delivery time – 45%,


• fear of fraud – 40%,


• lack of need (ability to find all necessary products on the local market) – 35%,


• preference to support one’s own economy – 31%,


• return costs – 28%,


• doubts related to personal data protection – 24%,


• unknown logistics company handling orders – 23%,


• complicated return process – 21%.

As you can see, there are no less than 5 different categories related to deliveries, returns and uncertainty regarding the entity selling a given product. Fortunately, using the FBA model in sales in the Swedish Amazon store combined with a Transparency membership allows you to easily exclude these factors.

The largest online stores

To present the websites in the e-commerce segment in Sweden as accurately as possible, let’s start with a general list of the largest e-stores. Then, we’ll present a list of key sales platforms, and finally, characterize the local Amazon domain.

A multiple choice survey conducted on a group of over two thousand people between March 2023 and April 2024 shows that the most popular e-stores are:

• Apotea.se – 51%,


• Amazon – 36%,


• Apoteket.se – 30%,


• Zalando – 29%,


• CDON – 23%,


• H&M – 22%,


• Elgiganten.se – 21%.

The remaining sites received less than ¼ responses and therefore, we will not present them here. However, you can find the full list at this link. The ranking is certainly not surprising – it matches the previously presented results of the popularity of individual industries in e-commerce. Which is why four of the six largest domains are for pharmaceuticals and fashion. It is important that the list include only two horizontal marketplaces (specializing in the sale of a wide range of product categories – in contrast, a vertical platform would be, for example, Decathlon, which specializes in trading in a specific category), of which only Amazon took a place on the podium.

Individual websites

To better understand the sales dynamics on platforms in Sweden, we will also look at data published by SimilarWeb. From their statistics, we can read the percentage of visits on individual websites:

• Amazon – 19.66%,


• clasohson.com – 12.74%,


• temu.com – 11.34%,


• aliexpress.com – 8.97%,


• ebay.com – 7.72%.

To complete the picture, let’s also check the GMV (gross merchandise value – gross value of goods sold in a given period) generated by marketplaces in 2023. As eCommerceDB states in its report, on Amazon this value reached approximately USD 3.29 billion. In second place was Tradera with a result of 648 million. The next in the ranking was Zalando (525.5 million USD). It is impossible not to notice the huge difference. It definitely confirms the importance of the global e-commerce giant on the Swedish market. The next two places were taken by Media Markt (205.6 million USD) and eBay – 149.7 million USD.

From the same report, we can also read which product categories were most popular last year on the largest sales platforms. Considering Amazon’s hegemony, we will focus only on the goods that are the most popular on this marketplace. These are:

• sports and leisure items – 36.7%,


• electronics – 36.2%,


• DIY industry – 8.6%,


• fashion – 8%,


• home&decor – 4.5%.

Cross-border e-commerce. Is it worth considering expansion to Sweden?

Certainly yes. This country is characterized by relatively high trust in e-commerce, and cross-border e-commerce accounts for about ⅕ of online sales. At the same time, by selling on Amazon, your products become part of the offer of a key player on this market. Thanks to the support of the platform, you’ll minimize the risk of reluctance to buy due to the most common reasons among Swedes, such as expensive or long deliveries (FBA), or uncertainty regarding the seller (Transparency).

Think it through

However, remember that the decision to start foreign expansion into a given market should be made based on a detailed analysis of the sales potential of your product category. Therefore, before starting sales, make sure to use professional support to minimize the risk of failure.


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