E-commerce in Sweden
New VAT rules benefit Swedish online retailers.
Sweden’s e-commerce market is one of the most well developed in Europe. Prior to the outbreak of the coronavirus pandemic in 2019, e-commerce accounted for 11% of the total retail market. By the end of 2020, this figure was 14%. A characteristic feature of Swedish consumers is their high propensity to try new technological solutions. One example of this is that the Swish direct payment method is one of the most popular payment solutions in the country. Another explanation for the popularity of the payment app is that the new credit legislation introduced in 2020 meant that the invoice is not permitted to be preselected as a payment option.
Impact of the coronavirus pandemic
In Sweden, the pandemic accelerated the process of e-commerce taking larger and larger market shares. Swedes have been spending more time at home and as a result, e-commerce growth has increased for product categories such as furniture and home furnishings, building products and home electronics. Fashion, on the other hand, has seen slower growth due to the reduced number of physical meetings between people. Most e-retailers feel that the coronavirus pandemic has been positive for their sales. Only nine percent feel it has been very negative.
In October 2020, Amazon launched its Swedish e-commerce website. Initially, it was widely criticized for inaccurate translations and a relatively small product range. Despite the criticism, four out of ten Swedes were interested in shopping from the website, and a few months after the launch, twelve percent had purchased something from Amazon. The second most popular marketplace is C2C auction site Tradera, where furniture and home furnishings was the most popular product category in 2020.
New VAT rules
On July 1, 2021, the European Union introduced new VAT rules for e-commerce. The rules mean that VAT is paid in the country in which the consumer is located. Simplification of VAT reporting is the reason for the change, but the new rules may also have other effects for Swedish e-retailers. As Sweden’s VAT is the second highest in Europe, Swedish e-retailers are becoming more competitive in relation to other European online retailers, as VAT is paid in the country in which the consumer is located.
Source: E-commerce in Europe 2021