Norwegian consumers are most positive towards increasing purchases in online Fashion in September. This could significantly impact overall September online purchase volumes. Norwegian consumers also project to shift more purchases from brick-and-mortar stores to online channels in September.
Our second half of August research – now covering more than 12.800 interviews with Norwegian online shoppers – reveals that Norwegian consumers made more online purchases at the end of August compared to the temporary low at the beginning of the same month – of which we saw an indication in our August outlook.
The total number of e-commerce purchases made by consumers is now up +23% compared to the purchase level in mid-March. And since consumers’ attitudes related to future e-commerce purchases have been stable throughout July and August, we can conclude that consumers’ attitudes are not the root cause of the fluctuation in e-commerce purchase levels. It seems more like external forces are at play here, among them certainly the summer seasonality effect.
The fluctuations in Norwegian online purchase development are driven by the share of Heavy Shoppers in the marketplace. Heavy Shoppers currently comprise 7% of Norwegian consumers, but they conduct 35% of all online purchases. Another driver for Norwegian e-commerce growth is the inflow of new consumers who shift purchases from brick-and-mortar stores to online, the overall online shopper base in Norway has grown from 47% of consumers in mid-march to 62% of consumers by the end of August. And looking at product categories, Fashion and Food have been most successful in attracting new consumers since mid March.
We are currently in an exciting phase of e-commerce development as we come out of the summer season. We will continue monitoring these changes and will bring you the continued ‘autumn-story’ in the next month.
Norwegian consumers claim they want to consume less overall has been consistent for the past three months, creating a trend. But at the same time, Norwegian consumers say they want to shift more purchases from brick-and-mortar stores to online channels. And overall Norwegian consumers are positive to increase online purchases in the many categories during September. Here, Fashion sticks out. Even though online Fashion purchases have stayed strong during the summer, it is also the category that Norwegian consumers are most positive towards when it comes to increasing purchases in September.
Other categories that Norwegian consumers say they will likely purchase more of in September are Beauty/Cosmetics and Groceries as well as Health/Health food products. The categories that have increased the most Norway are Fashion +69%, Hobby articles +60%, Take away food +53% and Toys +50%, and consumers project to buy at the same level or more in these categories during September. Tickets and Travel/Transport, however, are at -66% and -44% respectively to date. This differs from, for example, The Netherlands where these two product categories have almost recovered to normal levels.
Bear in mind, this graph does not take category size into account. For example, Toys only stand for 3% of all online purchases in Norway while Fashion, being the largest category, accounts for 23% of all online purchases.
We see that the share of consumers having made at least one online purchase in several product categories was dramatic. In Food/Health Food, for example, only 9% of consumers were buying Food/Health Food online prior to corona, and within a couple of weeks this figure doubleled to 18% of all consumers.
And Fashion/Cosmetics’ journey is also impressive, but more gradual. 18% of Norwegian consumers were regular online shoppers in Fashion/Cosmetics’ prior to corona, and by the first half of May 26% of Norwegian consumers were buying Fashion/cosmetics online. However, Travel/Tickets has suffered hard, starting out with 11% of online shoppers. This dropped almost overnight to 4%. It has been a long road to recovery since then, at 7% by the second half of August.
If we leave the product category perspective, and zoom out to Norwegian e-commerce as a whole, we again see that the overall share of consumers having made at least one online purchase shows a sudden initial inflow – from 47% of consumers pre corona to 61% of consumers by the second half of April. This inflow of new online consumers then stabilized and is - at the end of August - at the same level (62%), but it is – both from a category as well as an overall view – a driving force behind the online purchase development in Norway.
The other force at play is existing online shoppers buying more. In mid-March, the share of Norwegian consumers that made 5 or more online bi-weekly purchases was 5%. During the initial development phase, the share of Heavy Shoppers almost doubled to 9% of consumers at peak purchases during the second half of April.
Both of these factors have affected the overall e-commerce purchase development in Norway, and Heavy Shoppers are especially important from a merchant perspective. This is evident as Heavy Shoppers stand for a disproportionately large share of purchases; at the second half of August 7% of Norwegian consumers were Heavy online Shoppers, but they stand for 35% of all online purchases in Norway.
As mentioned above, Norwegian e-commerce grew initially and has since declined, but both the increase and the decline has not been as dramatic as seen in Germany and The Nethrlands. However, our analytics of the overall e-commerce purchase development, along with the changes in consumer motivations for purchasing online, reveal three distinct development phases – so far.
In the first development phase, directly following the corona outbreak, we see a boom in e-commerce purchases that peaks during late Apil when Norwegian consumers made +32% more online purchases compared to their purchase behavior in mid March. The key drivers for this growth are being locked-down at home in combination with reduced access to restaurants and stores. Barriers to purchase online also exist, primarily the fear of picking up the virus from packages, but these barriers are not strong enough to dampen the e-commerce purchase boom.
In the second development phase, during June and July, the e-commerce purchase growth dampened to a total growth of around +20%. During this period, the key drivers for purchasing online also changed. Convenience and findings lower prices online grew as a key motivators, at the same time as the lock-down driver decreased in importance. In addition, a not to be underestimated barrier to purchasing online also emerged during this period, and that was consumers wanting to support local physical stores.
From the second half of July and through August, the third development phase, e-commerce purchases started fluctuating in Orway and total growth per the second half of August is at +23% compared to before the outbreak. What forces are at play here? We will know more when we have gathered data from the first half of September, so stay tuned.
Norwegian consumers are generally been more worried about their personal financial situation than their health. This is the opposite compared to German and Dutch consumers, who express a larger worry about their health than their personal finances. In mid-March, 35% of Norwegian consumers expressed being worried about their health, and the same share expressed a worry about their personal finances. After the second half of April, consumers were significantly less worried, and worries about health decreased more than worries about personal finances.
But from the first half of August, Norwegian consumers' worries about both their health and personal finances increased significantly. What to expect as a result? Is there a time lag that will result in changed consumer behavior during September? We are monitoring this, so keep posted.
Norwegian consumers’ satisfaction with merchants underwent quite dramatic changes during the initial phase of the pandemic. Overall, the conclusion is that the e-commerce eco-system managed the increase in volume, but delivery time suffered in the early phase.
As consumers' satisfaction with delivery time improves following the peak in purchases in the second half of April and still recovers at a continuous rate, we can see that merchants have managed to improve their processeses significantly. By the second half of August, relative customer satisfaction levels across the main dimensions measured have evened out. I.e. there is no specific aspect of customer satisfaction where merchants now are underperforming in Norway.
Up next are detailed analyses of completely new subjects for AfterPay Insights at the end of September. We will take a closer look at Returns, the upcoming High Season and we will revisit Fashion. Stay tuned!