UK logistics companies should target Nordic countries

UK logistics companies should target Nordic countries

By Mark Elward, Managing Director of DK Fulfilment

Consumers in the Nordic countries – Finland, Denmark, Sweden and Norway – have embraced online shopping with the same enthusiasm as their counterparts across mainland Europe.

Indeed, according to ‘E-commerce in the Nordics 2014’ – a report by PostNord, a leading logistics company in the region, almost one-in-three Nordic residents shops online each month.

But while e-commerce has become an accepted feature of everyday life for many Scandinavians, the region’s online retailers are paying prices for their order fulfilment services that most, if not all, European internet traders would never accept.

In my experience, web-based retailers across Scandinavia are spending, on average, over twice as much more for their storage, pick, pack and dispatch services than comparable UK or mainland Europe-based firms.

Of course, things are, generally speaking, more expensive in Scandinavia than most other places: for instance, Sweden, next to Norway, has the highest priced food in Europe, costly utility services and one of the highest rates of income tax in the world.

However, arguably the main reason why online retailers on the other side of the Baltic Sea are charged prices for logistics that would make their European contemporaries blanche is the lack of competition in the Nordic supply chain arena.

There are little more than a handful of major 3PL companies operating in the region. As a result, the pressure to cut margins when bidding for business is nowhere near as intense as it is in the UK and across the rest of Europe where the markets are saturated and cost efficiency is a key deliverable.

The relative absence of rivalry has, it could be said, led to a degree of complacency across the Scandinavian logistics scene which many UK-based logistics services companies feel they are well placed to exploit.

At DK Fulfilment we believe that Finish, Danish, Swedish or Norwegian retailers can save up to 70 per cent on some shipping routes by establishing a fulfilment centre in the UK – or, indeed, another country in mainland Europe, such as Germany.

That’s right. Extraordinary as it seems, we can demonstrate huge savings for Scandinavian e-retailers who store their products in a UK or European warehouse and ship them to Scandinavia compared with fulfilling orders to Scandinavian countries from a warehouse in Scandinavia!

The ability to provide fulfilment solutions that stand up well to every reasonable efficiency comparison, for anything up to 70 per cent less than Scandinavian retailers are happily paying their local logistics partners, has encouraged many UK logistics companies to focus on the Nordic online retail fulfilment market. This should be good news for the region’s e-retailers.

DK Fulfilment will be attending the Nordic E-Commerce Summit in Malmo next month (November 4-5). Visitors to the event can discuss DKF’s range of fulfilment solutions on stand number 53.

www.dkfulfilment.co.uk