Marting Granberg

Many online stores are in trouble, warns an e-handels expert: - To underperform in an extreme market

Marting Granberg

Martin Granberg from Priceindx helps several of Sweden's leading retailers with their pricing strategies.

Many online stores have focused too much on growth and too little on their costs, says Martin Granberg from Priceindx.


Everyone has heard that prices have increased and that Norges Bank is steadily raising the key interest rate to spare us increased inflation.

It is debated whether it is imported inflation and whether interest rate increases will have the desired effect, but one thing everyone agrees on and that is that much has become more expensive, and most likely will become much more expensive.

Much moves in cycles, or ups and downs. It is when things are going well that you have surplus and breathing space to prepare for worse times.

During the corona period, most online stores have increased turnover in a growing channel that e-commerce has really been in the last two years.

During this period, many online store owners have focused hard on growth and expansion, and not always on their own "house" and the fixed costs they have.

We as a society were built through cycles and have been something that most had to learn the hard way. If you run a fast-growing online store, but don't have the work with the more boring bits of cost optimization, then the growth can cost more than it tastes.

By not focusing on negotiating contracts and streamlining processes and/or not having reached the volumes required to be able to negotiate, and instead having to take both product and shipping suppliers' increases immediately, you will suddenly not be able to sell at competitive prices.

This happens at the same time that larger and more experienced players with large inventories can postpone price increases because they have a lot of goods in stock and in this way can sell at a lower price a little longer before each price increase.

This means that the smaller companies that have had room to grow in the last two years will quickly lose market share and liquidity. The big question is whether these companies, which have grown rapidly in a single faster growing market, are interesting to buy up or whether they have actually underperformed in an extreme market. This quickly makes them victims of takeovers at bargain prices.

Common sense dictates that there will be some consolidation (again), but also that many who are looking for buyers will get far from the sums they hope for and have been able to get historically, precisely because you have not built a stable foundation at the time you had a long respite – in the cycles we know always come.

Read article at springboard.no

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