OPINION: Sweden is a real catch for Amazon – but is the feeling mutual?

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OPINION: Sweden is a real catch for Amazon – but is the feeling mutual?
Tech entrepreneur Sïmon Saneback. Photo: Annika Derwinger Falkuggla

From The Local's archive: As Sweden is wooed by Amazon and faces its retail Waterloo, Scandinavia should spurn the global superpower, writes tech entrepreneur Sïmon Saneback.


Opinion piece first published on September 23rd, 2020.

Jovially dubbed 'Project Dancing Queen', retail superpower Amazon's entry into the small nation of Sweden will happen soon, and just as the country's mid-pandemic economy is at its most vulnerable. After a long flirtation with the e-commerce giant, Sweden will finally face its Waterloo – as Amazon attempts to forever change its retail market – potentially sweeping department stores and medium retailers off their feet. 

Amazon seems to be serious: a hidden test-site for its Swedish portal was accidentally discovered by a Finnish developer, with a launch tipped to be Amazon Prime Day, if not sooner. Sweden's retailers may understandably tremble, given Amazon's clout. With its worth equivalent to the GDP of New Zealand, it might seem as if a privatised state were poised to invade – indeed the move has attracted intense criticism, particularly from left-leaning commentators. 

A gateway into Scandinavia, Sweden would be a real catch for Amazon. Something of a Trojan Horse, could shake the entire Nordic market with its low prices and high standards of customer care. Nordic culture is quite Americanised and it would not be surprising if, in a few years, Amazon's ecosystem becomes part of common life – catching up with the eight in ten American households signed up to Amazon Prime.

This will also bring much-needed competitiveness to Scandinavia, widening access for retailers, which will greatly appeal to consumers. In Sweden, particularly, Amazon could cause a stir by offering alternatives to the mostly Swedish or Nordic brands on the shelves. It could break up Sweden's oligopoly of powerful local families, which tightly controls the retail market and limits entrance from outsiders. 


A warehouse in Eskilstuna, which rumours say is set to house Amazon in Sweden. Photo: Fredrik Sandberg/TT

Yet, Sweden represents one of Amazon's biggest challenges – managing huge resources in a small nation, a new language and currency, and the effect of Sweden's relatively high 25 percent VAT on prices. The Titan-like status of Amazon makes it easy to forget that in some other areas, like China and much of Europe, its overtures have been less than successful.

Another retail giant, Apple, tried – and failed – to settle in Stockholm, after buying premises for 129 million kronor ($14.6 million). The proposed flagship store was rejected by the local authorities in 2016 – officially to protect Kungsträdgården Park, but commercial interests may also have been at stake. A restaurant now rents the space from Apple, which has now severed ties with the city.

To its favour, Amazon is fairly well-acquainted with the Swedes, who are not generally enamoured of giant marketplaces ( being another big name that has bowed out). Amazon mainly sells in Sweden through its German portal, with often eye-watering shipping costs. It competes with Swedish platforms like Elgiganten, with profits already in excess of 1 billion kronor. With Amazon's profile relatively low in Sweden, it could try to buy out at least one large Swedish e-commerce store in a bid to gain footing.

But rather than marketplaces, Sweden's unique direct-to-customer brands, often selling in sports and fashion, seem to fare better with its citizens. Amazon needs its medium and large players, in order to attract third-party sellers, which represent around 40 percent of its reseller revenue. So far in Sweden, there has been limited big-name interest in marketplaces and the concept has mostly been associated with local niche players such as CDON and Fyndiq. Elgiganten, for example, has one major IT retailer on its marketplace, Inet, which suggests Amazon might stumble here.


Will Amazon be successful in Sweden? Photo: Helena Landstedt/TT

Alternatively, Amazon will likely thrive in its irresistible opportunity for smaller Swedish retailers. Potentially, its power in reaching out to consumers will make opting-out unfeasible. It relies on low prices, alongside fast delivery, to attract cash-strapped customers, while squeezing profit margins for sellers. It reserves the right to set prices and fees through ever-changing algorithms, while prioritising its own products. As both platform and seller, it is the real winner.

Perseverance is, after all, Amazon's strength. While it thrives on long-term losses, its real interests are not in retail. Its true profits come from web hosting through its data cloud platform. Amazon registered its Web Services Stockholm in 2010, with sales of 907.5 million kronor in 2019. Its national profile is also boosted by Audible and Amazon Prime Video, amid the success of Storytel, Netflix, HBO Nordic as well as the recently launched Disney+. Swedish retailers might only dream of operating on a level playing field. There are stark choices: join, adjust, or get left behind. Even Ikea has made a groundbreaking deal with Amazon.


Friction, meanwhile, will result from Amazon's distaste for strong trade unions. Amazon, notorious for its unforgiving warehouse working conditions, seems unlikely to respect trade union rights. And Sweden is a nation that proudly protects the rights of employees. In 1995, for example, Toys'R'Us was blockaded into entering a collective agreement. With Sweden's trade union movement firmly opposed to Amazon and the enormous political pressure the authorities are under, a similar stand-off is expected.

Danish trade unionists have also expressed alarm. The Association for Danish Internet Trade (FDIH) points towards the Swedish tax breaks granted to Facebook, in exchange for the company creating new jobs, very few of which materialised. As Amazon beckons, the organisation warns of favourable and competition-distorting conditions. In anticipation of this threat, it could follow in the footsteps of other Scandinavian organisations in joining forces with a fellow employers' association, Dansk Erhverv.   

It is clear that an Amazon revolution could irrevocably harm Sweden's retail landscape. The Swedish labour market is preparing itself to resist the onslaught of PR campaigns and mounting political pressure from the retail superpower. We should all ask ourselves whether 'healthy competition' is really what it seems. Will it mean the winner really takes it all – as chunks of Swedish profit margin disappear into the pockets of Jeff Bezos? 

Sïmon Saneback is an award-winning tech entrepreneur with experience in e-commerce and a frequent keynote speaker around Europe. He is a founding partner of Wellstreet, a Stockholm-based venture capital firm, and has been part of the Advisory Board for Klarna, Bambuser, PostNord, Bring (Posten Norge), OKQ8 and Hemtex, among others.


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Anonymous 2020/09/23 14:19
"Nordic culture is quite Americanised". I came from a place very americanised, São Paulo, Brazil. I can garantee that Nordic culture is far away to be americanised and IT IS THE BEST OF THIS REGION!

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