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This is a packed episode. I take a look at some recent changes related to the Swedish e-Commerce market, including the current decline of H&M, the rumored entry of Amazon in Sweden and AliExpress.
What should H&M do to sell more online? Will Amazon crush all competition in Sweden? Is AliExpress in Sweden to stay? Listen to the episode to find out.
KEY TAKE AWAYS
- The status quo in the Swedish e-Commerce market is changing.
- H&M is struggling globally, and are trying to tie their stores together with their websites (omni-channel)
- Use videos to describe your products on product landing pages.
- Product descriptions are important, use nice copywriting to feature your products. Net-A-Porter is one example.
- Segment your social media accounts if you are targeting vastly different customer groups
- Connect inspirational content to your product landing pages.
- Amazon is coming to Sweden, it’s not possible for all generalist e-tailers to compete with Amazon.
- Niche e-tailers can definitely compete with Amazon if they offer what their customers truly want in a quicker and better way than Amazon.
- Another way to compete with Amazon is to become very local. Utilize local market trends and payment options.
- Amazon and Amazon Marketplace can also be leveraged to reach a wider audience.
WHAT’S GOING ON IN THE SWEDISH E-COMMERCE MARKET?
TRANSCRIPT
Hi everyone and welcome!
Today we will talk about e-Commerce in the Nordics, and more specifically Sweden. I was visiting some friends and family this Christmas and New Year’s. With the news in Sweden it’s evident that there is a lot going on in the e-Commerce area in Sweden. I’m not sure if we are seeing disruption, but there are many larger companies who seem a little bit afraid.
The talk on the town of course is H&M, their stock price has been declining 45% within the last year. According to themselves and analysts, H&M haven’t been great at adapting e-Commerce at the pace they need to do. They are also right now in my opinion losing market share to ASOS and Zalando.
H&M is really a global brand, but in Sweden it’s an icon. It’s like up there with the king, IKEA and midsummer. Of course as a Swede it’s a little bit sad seeing the H&M decline right now. A lot of Swedes are invested in H&M and so on.
Here are a few tips that I think H&M can do to improve their e-Commerce and hopefully sales. When you look at the response from H&M management regarding what they are trying to do to catch up within e-Commerce. They have been writing in their report that they want to improve their omni-channel experience.
They want customer’s to be able to try to the items in the store to make their final decision. H&M has a really big store footprint, so they have to leverage that to get customers to buy things from them. Although I don’t think it’s nearly enough.
Go into the H&M website, any language version. Compare it to ASOS and you will see some interesting things.
For example on the product pages on H&M they still don’t have any videos on the garments they are selling. On ASOS you can not only see pictures of the different items, but also see the actual garment being worn by a model in a video. So you will see what the actual item feels and seems like in the real world.
That’s a really nice feature, and I think it’s something H&M should adapt immediately in order to catch-up. H&M has also started to offer free shipping and returns, I think this is good and ASOS has been offering it for a while. ASOS countered with offering next day delivery for 225 SEK, about 22 euros per year. I think it’s an interesting concept since you can get your fashion the next day, and also renders the physicial stores a little bit useless.
Then I don’t think H&M is great at Facebook, I think they are stuck on principles that worked on Facebook a couple of years ago. If you look at ASOS, they are using a lot more video content and also have a chat box that opens up messenger so you can ask questions and contact customer support. H&M doesn’t have this, which is an area for improvement.
Another thing I think is interesting. If you go into the H&M website and click their Instagram account links, they will have the same account regardless of if you are shopping for women or men clothing. If you look at some of their competitors, for example ASOS (again) they will have one link for men and one for women. It’s an interesting segmentation that H&M can adapt as well.
Content is king, they say! Looking at the content side on H&M I think they are OK. They have their magazine, the problem is that they call it a magazine. It’s not really a magazine but rather an inspirational part of the website. So maybe they should think about the name there.
If you go into their product page the content is very basic, especially the product descriptions. I think this is common cross all generalist fashion retailers. They don’t have a lot of descriptions and other kinds of inspirational content connected to their product pages.
If you look at Net-A-Porter, which is one of my favourite online fashion retailers, they have a lot of interesting descriptions on their products. Where they really have great product copy with each and every product.
Of course Net-A-Porter has a lot more expensive products, so maybe it wouldn’t make sense for H&M and ASOS to do this kind of things. But at least for the garments that are more expensive, I think they should do this to kind of win the SEO war and create content that is helpful for their audience.
OK so I hope that these tips will help H&M a little bit on their way.
To the next topic then. In the Nordics right now there is a rumour going around that Amazon is coming… Yes they are going to open up in Sweden, and a lot of Swedish e-tailers are afraid of this. There was even an interview in the daily business newspaper in Sweden with an e-tail CEO, who said when Amazon opens in Sweden they are basically…..well I can’t say the word. But it’s not going to be great.
I think this kind of approach to Amazon is wrong, of course if you are a generalist e-tailer you really need to step up your game when Amazon is entering the market. I think a lot of the generalist e-tailers in Sweden have become quite fat and happy. They do not offer free shipping and returns, the content is a bit stuck in early 2005. Where you could get away with almost anything. I think they haven’t really progressed as they should have.
However if you are a niche online retailer in Sweden, I do not think that you need to be that concerned. As long as you are really catering to what your customers wants and needs from you. So there are of course a lot of e-Commerce businesses that have thrived in markets where Amazon are dominant.
I mean look at Zappos in the US. They came up when Amazon was dominating, but they did one niche, sneakers. Zappos did it really well, with great customer service, good content and a great experience.
I think there is still that kind of opportunity for any company, really. It just means that when Amazon is entering your market you can’t continue with what you have always have done. You have to think through this and understand what niches you can compete in. Trust me there are niches where Amazon is not good, for example sneakers (obviously). One of the niches are fashion, where they are not great either. One of the reasons for this is that Amazon still have one interface for every product when you buy it. Regardless of if the product is fashion, DIY, furniture, the interface doesn’t really work. So they are not able to tailor the interface to every product category, YET.
Another opportunity to compete with Amazon is to become very very local. As I said before Amazon have the same kind of experience and layout in every market they go into. They think in away that Italy is the same as the US is the same as the UK, France and Germany. But of course there are local differences that you as a smaller local e-tailer can leverage.
For example you can use local payment options that Amazon haven’t adapted yet. You can use local trends that Amazon is too slow to react on. Try to leverage those trends quicker than Amazon.
If you can’t compete with Amazon, you can always join them. Of course Amazon is a big e-tailer and they have a lot of traffic. So if you are selling some types of products, I would advise you to go into Amazon and see what features you can leverage. They have good fulfillment and marketplace options, where you can sell goods on.
I still think in Sweden though that the Amazon Marketplace will not be that successful as the market is currently dominated by Blocket and Tradera.
But there are still opportunities to work with Amazon as well, so keep that in mind.
So another talk on the town in Sweden is AliExpress. AliExpress is really Alibaba’s webshop where they offer cheap manufactured Chinese goods in EU-countries with a delivery time of about three to four weeks.
This service has really flooded the national post in Sweden, and they have decided to implement a handling fee of every package from this service. From the beginning when AliExpress entered Sweden, a lot of people thought that why should I buy my flashlight from a local e-tailer when I can buy it from AliExpress. Wait three to four weeks and get my flashlight, for basically nothing.
I think that’s relevant, but now with the handling fee it’s not that valueable. You also have to wait a couple of weeks to get your item, and most people don’t plan their purchases in that way just to get something cheaper.
I actually don’t think AliExpress is a big threat right now. However if AliExpress cuts their delivery time to just a few days, then it’s a totally different ball-game.
That’s it for today, I hope that you enjoyed this episode.
I hope to see you very soon again, have a great day!