In 2016, 62% of the Nordic consumers shopped online every month. And the way they shop is changing. One of the fastest growing trends is shopping from foreign websites, which has increased 5-fold since 2012, to reach 36% in 2016.
A catalyst for continued growth is the recent EU regulation of banning GEO-blocking, which entered into force in December 2018.
What are the implications for online retailers and pricing once cross-border shopping increases?
Every price difference creates an opportunity for customers to buy the same product at a lower price from another market. Meaning that this revenue is at risk.
We conducted a pricing study to investigate how much revenue is at risk for a typical online reseller. We collected real price points online from company X - a leading Swedish retailer selling interior design and consumer electronics in the Nordics.
This is what 2017 looked like for company X, month by month. The study shows that the effects from cross-border business can be substantial, considering both local price differences as well as currency fluctuations. At worst, this company's whole EBIT would be gone.
How much of your revenue could be at risk?
To be able to cope with the evolving market conditions there are a few important questions you need to have the answers to:
- Who are your online customers?
- What are their behaviors and value perceptions?
- What impact do your local price differences and currency rate fluctuations have on your revenue at risk?
- Do you have the tools and capabilities to mitigate the risks?
Contact us to learn more about how Capacent can help improve your pricing!
If you face pricing-related challenges or aim to re-design your pricing strategy do not hesitate to contact us for more information on how we can help you on your path towards pricing excellence!
Nora Härme is a Senior Manager and the Pricing Lead of Capacent Finland. She has 15 years of experience from Revenue Management & Pricing within passenger transportation, both air and rail. Our Pricing team combines pricing experience with strong BI & analytics to tackle customers’ pricing challenges all the way from defining, planning and piloting to hands-on implementation.