Norwegian e-commerce purchases +32% following April, driven by rational needs rather than emotional wants

Data from AfterPay Insights’ research into the e-commerce behavior of 3,400 Norwegian consumers shows that purchases are up +32% compared to before the corona outbreak.

In contrast to the other countries analyzed by AfterPay Insights, online consumers in Norway show the most opposite behavior when it comes to e-commerce. They are skeptical when they project how they will shop in the future, but in reality still continue to increase purchasing online. Norwegian consumers are also very driven by rational motives to shop online and an increasing number of consumers think it is important to support local physical shops.

The +32% increase of online purchases is largely driven by existing online shoppers buying more. Both infrequent- and heavy shoppers have increased e-commerce purchases, and our research reveals that only more frequent online shoppers are prone to shifting purchases from brick and mortar stores to online in certain categories - this is especially noticeable in the food categories.

Heavy shoppers only make up 9% of all Norwegian online shoppers, which is a lower share than seen in the other countries analyzed, but they account for 43% of all online purchases. Heavy shoppers in Norway have high demands on merchants and have a tendency to be less satisfied with merchants than medium and light shoppers. In order to attract and retain these heavy shoppers’, merchants need to focus on managing reliable and fast delivery. In addition, merchants must also find ways to help these shoppers overcome their worry about the risk of getting contaminated by ordered packages.

Significant increase in e-commerce purchases since the corona outbreak

The increase in e-commerce purchases in Norway started in the beginning of April. In mid-April they were up +27% compared to before the corona outbreak. Following the second half of April, e-commerce purchases are now up +32% compared to before the corona outbreak.

Dividing the Norwegian e-commerce shoppers into groups by online purchase frequency reveals some interesting insights.

First of all, we can see that the share of heavy shoppers (having made 5 or more purchases during the last two weeks) has almost doubled - from 5% of the online shopper base prior to the corona outbreak to 9% by the second half of April. From a merchant perspective, heavy shoppers are a relatively small but critical segment. This segment only represents 9% of Norwegian online shoppers by the last weeks of April, but they stand for 43% of all online purchases. Not only has the heavy shopper segment increased in size, but their share of total purchases has also increased from 28% at the end of March to 43% by the end of April.

And at the other end of the spectrum, the share of infrequent online shoppers (having not made any purchases during the last two weeks) has decreased over time, i.e. they have also started making more online purchases.

The merchant critical heavy shopper segment is over-represented among consumers aged 25-44, holding a full-time job with a higher income. Six out of ten consumers in this segment are women, and it is over-represented among families with kids living in urban areas. As heavy shoppers have increased from 5% of online shoppers preceding the corona outbreak to 9% at the second half of April, there has also been a shift in the demographic composition of this segment. Most notably, in Norway the inflow to this segment are working parents with kids at home living in urban areas.

The medium shopper segment (as defined by having made 2-4 online purchases in the last 2 weeks) has also increased somewhat in number of consumers. These consumers are represented among all age groups, except 65+, where they are highly underrepresented. They are also over-represented among working women.

The light shopper segment has a demographic profile that resembles that of the average Norwegian online shopper. The no purchases segment is over-represented among older consumers (aged 55+) and consumers in the post-family life stage. The disposable income of consumers in the ‘no purchases segment’ is also lower compared to the other shopper types. The average age of consumers in this segment has also shifted over time to become even higher, and the income has shifted to being even lower.

Why are Norwegian consumers changing their e-commerce behavior?

Since the outset of the corona outbreak, the two main drivers of increased online shopping in Norway have been to avoid to meet other people in physical stores and the convenience of shopping from home (due to spending much more time at home)
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During the first half of April, we saw a slight increase in consumer motivation to shop more online due to rational, physical reasons (stores being closed and a limited availability of products in physical stores) – and at the same time a decrease in more worry driven reasons (avoiding meeting people in physical stores). At the end of April, these motivations have stabilized to the level we saw in the second half of March.

The one driver where we see the clearest shift is in ‘cannot leave home due to need of taking care of myself or family member’ which has decreased continuously in importance since the second half of March.

Deep diving into the purchase frequency segments, heavy shoppers’ increase in purchases is to a larger extent driven by necessity; a relatively high share of heavy shoppers motivate their increase in online purchases by ‘cannot leave home due to need of taking care of myself or family member’ and ‘I have a higher need for certain products/services due to being at home more’. Heavy shoppers are on the other hand less driven by the fact that prices are cheaper online.

At the start of the corona outbreak, Norwegian consumers claim the main reasons for making less e-commerce purchases to be that they are careful spending money due to the general financial uncertainty in society along with wanting to consume less in general.

However, by the second half of April we see a quite a dramatic shift in motivations for making less purchases online. Wanting to consume less in general (‘don't see a need to shop on my normal consumption level’) has increased in importance, and also consumers’ desire to support local physical stores. The direct virus-related worries have decreased in importance. This includes the concern that packages delivered might be contaminated as well as the risk to get exposed to virus when picking up packages.

As the inherent trait of a heavy shopper is to shop more online, consumers in this segment also need to encounter heavier barriers in order to make a conscious decision not to shop online. But their change in online purchase volume is also driven by other factors compared to medium- and light shoppers.

The most important barrier, by far, for these heavy shoppers is the concern that ordered products might be delayed or not delivered at all. The second most important barrier to make an e-commerce purchase is the worry about packages being contaminated by the virus. This is on par with wanting to consume less in general and being careful spending due to the financial uncertainty in society.

How have Norwegian consumers’ worries developed since the corona outbreak and what is the impact on e-commerce?

For Norwegian consumers, worries about personal health have been level since the start of the corona outbreak. But their worry about personal financial situation has increased slightly, from 35% of Norwegian online shoppers at the second half of March to 38% by the second half of April.

Without a doubt, the level of worry about the corona outbreak has a powerful impact on consumers’ e-commerce behavior.

A general conclusion is that the more worried a consumer is about corona from a health as well as financial perspective, the more online purchases that consumer does. Heavy shoppers are the most worried, followed by medium shoppers and light shoppers. Notable is that Norwegian shoppers are more worried about the health perspective than their personal financial situation.

For a deep dive on worries and the impact on e-commerce purchases, look into our earlier blog. 

How have Norwegian consumers’ purchases in product categories developed since the corona outbreak?

Some categories increased directly following the corona outbreak and have since continued to increase. These are Fashion, Hobby articles, Media/entertainment and Home décor/furniture.

Other categories were negatively affected directly following the corona outbreak, decreasing in number of purchases, but have since bounced back and show a steady increase. These are Gardening tools, Sporting goods, Cosmetics/beauty, Electronics/telecom and Kitchen appliances.

The other categories have not been affected to the same extent i.e. have not shown that dramatic changes in number of purchases. Some of these were negatively affected showing a decrease in online purchases directly following the corona outbreak, and they are still in red numbers following the second half of April. These are Travel/transportation, Tickets, Pet food/supplies and Hardware/building materials.

Other categories increased directly following the corona outbreak, and have since then performed fairly stable. These are Health/health food products, Toys, Take away food along with Food/Groceries.

Deep-diving into shopping frequency, analytics show that consumers’ share of online purchases made within the categories Food and groceries as well as Take away food is correlated to online purchase frequency. The conclusion here is that you have to be a quite frequent online shopper (heavy shopper) in order for you to shift your food purchases from offline channels to online.

Will Norwegian consumers shop more or less in May?

In comparison to the Netherlands and Germany, Norway sticks out as the only country where the share of consumers claiming that they will decrease online purchases in the month to come exceeds the share claiming that they will increase purchases. But as we have seen in the previous waves of analytics, despite this negative projection, Norwegians still go on to increase their number of online purchases in the month that follows.

Another key difference in Norway versus the other countries is also that the share of consumers indicating how many e-commerce purchases they will make is stable over time. This means that Norwegians basically make the same projection about their future purchases in the second half of April as they made at the second half of March.

As might be expected, heavy shoppers are more positive to increasing their number of online purchases compared to the other shopper segments. But heavy shoppers have also changed their projection for future purchases the most – in a negative way. Here we see both an increase in the share claiming they will decrease online purchases, and a significant increase in the share claiming they will decrease purchases.

Based on the above, our projection is that online purchases will continue to increase in Norway during May. At which rate is, however, more difficult to estimate.

Which products will Norwegian consumers buy more or less in May?

For most categories, the rate of recent growth is in line with the expected growth that we predicted in early April. But there are some exceptions. Home décor, Kitchen appliances, Toys, Sporting goods and Gardening tools have all shown an increase in purchases recently, but the future outlook is pointing towards a dampened rate of growth. And for Tickets as well as Travel/transport, the outlook continues to look very gloomy.

As described above, the main reason for the 32% total increase in e-commerce purchases in Norway is that current e-commerce consumers have started to buy more – as opposed to the increase being driven by offline consumers switching to online purchasing. 

Norwegian consumers indicate higher demands on merchants

When analyzing our latest data on the full online consumer base in Norway, the most important driver for choosing an online merchant is having previous experience of the webshop, followed by the webshop offering the lowest price and the reassurance that the webshop is secure.

We see a clear link between the number of online purchases made and the amount of demands put on merchants. The ranking of the demands is similar across the different segments based on online purchase frequency, with some interesting differences.

Analyzing the share of consumers who state if needs have become less or more important, the overall conclusion is that all demands on merchants have become more important. Compared to before the corona outbreak, the hygiene needs are the ones that have increased the most in importance – that is familiarity with the website, that the website is secure and offers the lowest prices.

These demands have increased the most for all purchase frequency segments (heavy shoppers, medium shoppers as well as light shoppers). 

In addition to this, Norwegian heavy shoppers have also increased their demands on merchants regarding delivery; both when it comes to the delivery being reliable, flexible as well as fast. Heavy shoppers also - to a higher extent - demand better customer service and better display of in-stock information. During the second half of April we also see heavy shoppers’ needs regarding merchants’ website security increase.

How are Norwegian consumers’ changing demands affecting merchant performance?  

Norwegian consumers’ satisfaction with how merchants’ currently deliver is highest regarding the payment process, followed by low price, secure website and products in stock. The lowest levels of satisfaction are measured regarding the return process.

But the aspect that has decreased the most since the corona outbreak is consumers’ satisfaction with fast delivery time.

Light shoppers are the least satisfied segment overall. They are particularly less satisfied with the range of products offered online, the payment process, shipping and delivery and the return process.

Merchant considerations:

Medium shoppers’ are the most satisfied overall. They are relatively more satisfied with the width of the range of products offered by merchants, shipping and delivery and the payment process. If there is something that can be improved for this segment it is regarding fast delivery time, where their customer satisfaction has decreased lately.

Merchant considerations:

Heavy shoppers are more satisfied with merchants’ payment process. But they are considerably less satisfied with shipping and delivery and fast delivery time –their satisfaction with fast delivery time is critical as it also has decreased lately.

Merchant considerations:

What is next?

Coming up next is a deep dive into consumers perception of ‘security’. We will also focus more on identifying key characteristics of the light, medium and heavy shopper segments. Watch this space for more updates!