At the Malmö offices of online department store CDON, preparations have long been afoot for the Swedish launch of the retail giant Amazon. Scrawled on a giant whiteboard in the main meeting room are the words: “Bezos backs out! Amazon gives up the battle for the Nordics!”.
“This is from a brainstorming game we did with staff during after work drinks, months ago,” explains Alexandra Jerrebo, the company’s press officer, clearly somewhat embarrassed. “It was just for fun.”
Judging by what happened on Amazon’s launch last month, their wishful thinking no longer seems quite so far fetched. The Seattle-based giant had cheerfully named its launch “Project Dancing Queen”, after the song by the Swedish pop group ABBA. When Amazon finally happened at the end of last month, however, it didn’t look much fun.
For reasons known only to Amazon itself, the Argentine rather than the Swedish flag was placed next to the word Sweden on the site’s country picker. Then there were the disastrous automatic translations that saw a cat-themed hairbrush described using the Swedish slang for ‘vagina’ (clearly the result of a direct translation of ‘pussy’), a children’s puzzle featuring yellow rapeseed flowers described as having a “sexual assault flower motif”, and football shirts labeled as “child sex attack shirt”.
“It was very easy to laugh about what was what happened,” says Paul Fischbein, who chairs Fyndiq, Sweden’s answer to the online bargain marketplace Wish. “It was so way off, it was extremely poorly executed. They weren’t ready for a launch. That was clear.”
Less obvious than the mistranslations, but no less perplexing for Fischbein, was the way the pricing had been currency-converted from other Amazon sites so that Google’s Pixel 4 phone, was priced at 7,661 kroner and 78 öre (£675.11), using the Swedish version of cents that no local retailer ever would. He also pointed to the surprising absence of same-day delivery or Amazon Prime.”A company like Amazon will, for sure, fix these things, but it was a very embarrassing day for them, that’s for sure,”he says.
With its vast scale and market share in its core countries, you might expect Amazon to lay waste to the retail landscape in a small country like Sweden, whose 10 million people represent a market roughly the size of Michigan. The company currently has about 44 per cent of the e-commerce market in the US, and about 30 per cent in the UK and Germany. If it could achieve the same levels in Sweden, local rivals like CDON risk being wiped off the map. Despite that the leaders of Swedish e-commerce companies are remarkably sanguine. “We’ve been waiting for this for years,” says Hermann Haraldsson, chief executive of online clothes marketplace Boozt.
The way he sees it, Amazon is not competitive in the mid- to premium-range clothing business space where Boozt operates. Many prominent international brands are refusing to sell through Amazon’s platform and every sign that leading Swedish clothing brands will do the same. And he believes Boozt can more than match Amazon on customer service.
“We have one warehouse located very centrally, so we can actually serve the majority of our customers the same day, and it’s free shipping and free returns,” he says. “So even if they were to introduce some kind of [Amazon] Prime free next-day delivery, it won’t be better than the offer our customers get today.” CDON’s chief executive Kristoffer Väliharju is certain that the arrival of Amazon will change the Swedish marketplace, but he doesn’t expect to be squeezed out. “Worrying about Amazon is like worrying about Covid-19.” he says. “It’s a market adaptation. You just need to relate to it.”
Like Amazon, CDON has shown its ability to adapt. On the stairwell walls in the company’s sparse offices hangs a framed DVD of the 2008 ABBA film Mamma Mia, alongside framed CDs from AC/DC, the Swedish band The Knife, and the Wii game Just Dance, all from the days when it was mostly an online retailer of CDs and DVDs. They are relics of a business that has over the last decade vanished almost completely.
“Is it a threat? I would say that Amazon is more of an opportunity,” Väliharju says. “All of a sudden, 60,000 retailers in Sweden will ask themselves, ‘how do we relate to marketplaces?’. Since Project Dancing Queen was announced, CDON’s marketplace has actually seen, he boasts, “an accelerated intake of new merchants”. Väliharju is betting on CDON’s closer relationships with retailers in Sweden, Denmark, Norway and Finland.
“Amazon is very good at taking care of the consumers, but what we hear from our merchants is that they’re not as good at dealing with merchant needs. And we would like to be the merchants’ best friend,” he says.
CDON has worked closely with Nordic retailers to develop the new market platform, it launched last month, and is slowly stopping selling its own wares on the platform to avoid competing with its users.
Amazon, he said, did not so far seem to have succeeded in getting that many Swedish brands or retailers to sign up to use their platform. “It sounds like they’ve been struggling. I don’t know what their ambitions were, but there are rumours in the media about slower-than-anticipated pick-up rates.”
Amazon declined to comment for this article, explaining that it was concentrating on Swedish media, but at the launch it said it had signed up some big local brands, like Electrolux, Lagerhaus, OBH Nordica, Ellos, BRIO, the publishers Bonnier, and the toilet and tap company Ifö.
In interviews with Swedish media, however, the company said it had only about 10,000 products sourced from Swedish merchants.
“That’s an extremely low number and a good indicator on the interest from Swedish companies is fairly low,” Fischbein says. “If you compare with a company I’m involved with, Fyndiq [a bargain online retailer similar to Wish], we have over 10,000 mobile chargers sourced from Swedish companies, and over two million products.”Even if Amazon is able to appeal to more Swedish vendors, dominating the market will still be an uphill battle. Amazon is also launching at a time when, thanks in part to coronavirus, Swedish online retailers are enjoying extraordinary growth.
“E-commerce in Sweden is expected to grow between 40 percent and 50 percent this year, and that also means that e-commerce is making a lot of money,” Storåkers says. “So there is really a lot of room for Swedish e-commerce companies to meet price competition from Amazon.”
As a result, he does not expect Amazon to be able to get anything close to the market shares it has in the US, Germany and the UK, where it has been operating for more than 20 years. “They launched when the e-commerce market in general was very, very young in those markets,” he says. “If you look at the recent launches, like in Australia, Turkey and the Netherlands, they have only been able to take a [small] per cent of the market. So I would say that the best guess is that they take a [small] percentage of the market here.”
On the whiteboard in CDON’s meeting rooms, right under “Bezos backs out”, are the words “employment rights”, suggesting another problem Swedish retailers hope will hamper Amazon’s plans. If the words of Handels, Sweden’s main retail union, are anything to go by, they’re right.
“Amazon is quite well-known for having bad working conditions, as well as, frankly, union-busting, and that’s just not how we do it in Sweden,” asserts John Linde, the political coordinator handling Amazon’s launch. Amazon has so far dodged its Swedish union problem by using a warehouse in Eskilstuna near Stockholm, operated by the German logistics firm Kuehne + Nagel, which already has a collective bargaining agreement with the Swedish Transport Worker’s Union.
But if it wants to operate its own warehouses, probably essential if it wants to expand, it may have to accept a unionised workforce, something it has so far refused to do in Germany, the UK or the US. Linde points out that the American toy retailer Toys R Us, a similarly staunch opponent of unions, was eventually forced to do exactly this back in 1995, following months of strikes. “Of course, we hope that it doesn’t have to come to a conflict,” Linde adds. “But if it does, we won’t back down.”
If there’s a bright side for Amazon to its bungled Swedish launch, it’s that it briefly distracted the local media from examining the deeper issues that may hamper its growth. If it doesn’t play its cards right, Project ‘Dancing Queen’, could end up looking more like a Waterloo.
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