E-COMMERCE DEVELOPMENT 2021

E-commerce growth despite extreme comparative figures

The pandemic year 2020 was extreme from an e-commerce perspective. The sector grew by 40 percent and tens of billions of Swedish kronor of consumption were shifted from physical stores to e-commerce. E-retailers faced the huge challenge in 2021 of once again trying to increase their sales figures.

Nevertheless, 2021 was another relatively strong year for e-commerce, with growth reaching 20 percent. One explanation is the coronavirus pandemic, which was more protracted than many might have first imagined. The first quarter, where comparative figures were still weak, was also extremely strong. Furthermore, consumer behavior has gradually changed and previously unaccustomed consumer groups have embraced digital behaviors.

Even more impressive are the amounts themselves. E-commerce now has such high net sales that even 20 percent growth represents around SEK 24 billion. This in turn means that e-commerce represented around 45 percent of the growth in total retail – mostly because total retail had a strong year. The total e-commerce share is therefore around 16 percent.

However, e-commerce growth slowed down in the fall, especially in the fourth quarter, in which the negative growth rate was -1.2 percent. This was because last year’s fourth quarter was the strongest we have recorded in the E-barometer, making it extremely difficult for retailers to produce further growth this year. For example, grocery retail grew by an astonishing 136 percent in Q4 2020, so it was not surprising that growth in the sub-sector was negative in the fourth quarter of the year.

How the sub-sectors fared during 2021

The year 2021 was an unusual year for the e-commerce sectors. It started extremely strong in the first quarter and has since fallen sharply for many sub-sectors as the comparative figures became increasingly tough.

Grocery retail, which became the winning sector of the year, is a clear example. From triple-digit growth in the first quarter, sales fell to 3 percent in Q3 and negative growth in Q4. But despite the weak finish, overall sales were still so strong that the sector topped the list.

Another success story during the year was the home electronics sector. This was somewhat unexpected, as the sector is one of the most mature online. The e-commerce share in 2020 was already 43 percent. With an annual growth of 23 percent, the e-commerce share for 2021 climbed to 51 percent. However, there have been sporting events and popular product launches during the year, and the sector probably also benefited from the absence of other consumption. If 2022 means more travel, eating out and going to concerts, and many people upgrading expensive capital goods such as cell phones, computers and TVs, consumption could be affected in the future.

One sector in which we had expected a drop in e-commerce share was fashion retail. However, stores have not recovered sales to the extent we expected, and the sector as a whole is still somewhat below pre-pandemic sales levels.

More people are once again making purchases in a physical store

Consumer purchasing habits saw a clear change in 2020. In the previous year (2019), 64 percent of consumers stated that they made their most recent purchase in a physical store. In the following year there were more or less as many people who made their most recent purchase in an online store as in a physical store. In 2021, the physical store was once again dominant – although not quite as much as in 2019. 

This illustrates how the effects of the pandemic are beginning to fade and consumers are to some extent returning to previous habits. Older consumers were more likely to shop in physical stores in 2021. But there are also differences among e-commerce consumers. Young and middle-aged women are much more likely to use their cell phones for e-commerce than men, who prefer desktop or laptop computers as their main purchasing channel.

Swedes choose Denmark over the US online

We have been measuring consumers’ online purchases from abroad for many years. In recent years, the share of foreign purchases has been declining. One reason is, of course, the coronavirus pandemic, which has disrupted the entire global logistics apparatus; but it is also a matter of foreign market participants establishing themselves in Sweden. Zalando established a warehouse in Sweden a few years ago, and then Amazon followed. This enables a greater proportion of products traditionally purchased online from abroad to be consumed domestically.

The shipping problem was particularly clearly symbolized in 2021 by the cargoship Ever Given, which managed to get stuck in the Suez Canal, blocking thousands of other ships carrying goods to Europe. Long-distance e-commerce from Asia is also one of the areas that has declined the most in recent years, along with UK e-commerce following Brexit.

Instead, the e-commerce imports that have increased the most are those coming via our southern neighbors. Denmark has grown in popularity among consumers in recent years and this year made it into the top four importing countries. Germany has also grown, probably at the expense of the UK.

Consumers want more live shopping in online stores

The phenomenon of live shopping – a live display of products with interactive features for viewers has been growing rapidly in recent years and has made its way onto the list of what consumers want to see more of. Today, 10 percent of consumers surveyed say they wish online stores would do more live shopping. Young women (18–29 years) are particularly interested, with as many as
17 percent wanting to see more of it. Men aged 18–29 also appreciate live shopping, with 15 percent wanting more of it in online stores.

The ability to ask questions and buy the goods directly without leaving the broadcast creates added value for consumers. In addition, live shopping helps to create a closeness to the brand, just as a visit to a physical store does. Live shopping also enables retailers to use their expertise and build trust among consumers. If done correctly, it also invites additional sales of products that go with the product in question, which can benefit both the consumer and the retailer.

Young consumers are willing to pay for faster delivery

Sustainability is on the agenda and is predicted to become an increasingly important factor in future deliveries – at least if you ask consumers. In previous barometers we have described how many consumers say they could imagine waiting one to two days extra for their item if the delivery was made more sustainable/eco-friendly.

But while consumers say they are willing to wait a little longer for a good thing, rapid delivery is important. Some 28 percent of consumers surveyed in this year’s survey said they would be willing to pay more for same-day delivery. This service is particularly important among younger people – 37 percent in the 18–29 age group compared to 10 percent in the 65–79 age group. It illustrates that long-term sustainable delivery cannot compromise other delivery values such as speed and convenience – especially among younger consumers. Instead, companies must develop these qualities in parallel.

Source: The E-barometern Q2 2022