Sweden In-depth Country Analysis
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Sweden In-depth
Country Analysis
Work Project presented as part of requirements for the
Award of the Management Masters Degree from NOVA –
School of Business and Economics
January 22nd 2020
SME Competitiveness and Internationalization Field Lab carried
out under the academic supervision of:
Professor Emanuel Gomes
Professor Pedro Teixeira
25936 Matilde da Silva Conde Belo
The threats associated with the six environments being analyzed are extremely low. Political, economic and legal factors are highly favorable for the refurbished smartphone industry. Moreover, consumer preferences,
aligned with environmental and technological forces, represent the ideal environment for a company operating in the industry, aiming to follow a global strategy with Sweden as the target market.
5. In-Depth Country Analysis 1 2 3 4 5 6 7 8 9
5.3. Sweden In-depth country analysis: Country Overview
Political Economic Social
Sweden has a parliamentary representative democratic constitutional monarchy1. Sweden’s GDPpc is one of the highest in EU, 54,356$ in 2018, with a 1.8% growth.6 Current population of 10 063 308 inhabitants.11
Swedish last longing politically stable government of minorities have created a high Low inflation (1.7%) and long-lasting healthy banking system, except for 1990’s when the 87.9% of the population live in urban areas.11
economic performing country with open market policies, encouraging entrepreneurial country faced a severe financial crisis.7
Gini index of 25.70% in 2018.12
activities and large flows of investments.2
Highly competitive and diverse economy by being an export-oriented country with trade
The country population present a high willingness for high technological and home
Sweden is a member of EU and apart from EU single market and trade agreements for its surplus.8
connected devices.13
state members, the country does not include any other Free Trade Agreement on its
The currency is the Swedish Krona with relatively low fluctuations in the market for the
own. As an EU state member, with free trade of people, goods and services within the The school system is Sweden, despite national governmental directives and norms, is
past couple of years.9
Schengen area is highly beneficial for exports/imports between Portugal and Sweden.3 highly decentralized.14
The Swedish average labor taxation is between 40-50%.4 However, the country can The country had an unemployment rate of 6.4% in 2018 and a labor force participation
The typical Swedish consumer considers price followed by quality as the main purchasing
rate of 69.20%.10
provide free healthcare and education for all EU citizens living in the country. For this decision factors. Other concerns are sellers’ know-how regarding product features and
matter, county councils all over the country have shared responsibility to ensure these Although there are no minimum wages legislation, the country has a highly competitive after-sales services.15
rights, under a decentralized healthcare and education systems.5 labor market, with an average salary of 133.60 SEK/hour.10
Sweden has a high rational driven purchasing behavior, with 53% of Swedes searching
for information, online, before buying.15
Technological Legal Environmental
72% of the Swedish population is considered to have ready access to any connected Alongside with EU directive on WEEE, the Swedish government is hardly trying to Swedish environmental protection policies are among the strongest ones in EU, allowing
device.16 promote circular economies on consumer goods. No country specific legislation are Stockholm’s CO2 emissions per capita to be one of the lowest within OECD metro
implemented regarding this matter. Studies have proven that, although there is a areas.22
The main digital leading companies in Sweden, within e-commerce in 2018 and 2019 are
corporate tax rate decrease for companies with circular products, a Value Added Tax
electronic goods, pharmaceutical and clothing companies. 17 Greenhouse gas emissions have been strongly decreasing in the past years, without
decrease is necessary.20
compromising economic growth however, solid waste recycling treatment is considered
Swedish e-commerce volume is expected to reach 50%-75% of country’s total consumer
Sweden average wages are relatively high, increasing labor costs for refurbishment, and to not reach its full potential. 22
goods sales by 2035, mainly for electronics, clothing, shoes, books and furniture,
similar VAT taxation between circular and primary markets, require low economic
representing a market of 67 billion Swedish kronor in 2017.18 Government effort to combine technology and sustainability have led to the
margins for resellers with the attempt of charging low prices to the consumer who is,
development of the Eco-innovation Observatory. 23
Swedish internationally agreed information and communication technologies ranked 11 generally, high price sensitive in this industry. 20
in the ICT Development index in 2017.19 There are several Student Sustainability Associations among most universities in Sweden.
Minimum warranty regulations, can improve consumer’s confidence in refurbished
These student’s groups are responsible for promoting activities with strong
smartphones. The country has a 3-year minimum warranty however, the Swedish
environmental impacts as well as measure those results, are highly conscious and aware
government allows producers to decrease this time frame if product’s lifetime
of sustainable brands and products (a country advantage Forall Phones could benefit
expectancy is lower.20 This can be considered as a major advantage for refurbished
smartphone companies since their product offer has a lifetime expectancy of 12-24 from if Forall Family is leveraged to international markets). 24
months.21
Sources: Available in References Section.
62Although Forall Phones has no privileged contacts in the country, the company can benefit from Swedish agents, government agencies and associations, that are highly concerned in promoting a competitive and trade-
oriented environment in the country. The government’s overall effort to help fostering the presence of international companies represents large opportunities for small enterprises with poor international experience and
lack of Swedish market knowledge.
5. In-Depth Country Analysis 1 2 3 4 5 6 7 8 9
5.3. Sweden In-depth country analysis: Contacts
Agents and Distributors1 Government Agencies and Embassies Associations and Organizations
Allow Forall Phones to obtain market knowledge with low financial
Students Sustainable Action Associations in most of
risk and commitment. Some recommended agents and distributors The Portuguese Embassy in Sweden and the Swedish Embassy in Portugal,
the the country’s universities. These associations
are: that can represent a bridge between both markets.
aim to create awareness for climate change and
The Swedish Agent: Sales agent of global environmental issues, promoting second-hand
brands in Sweden goods usage and circular economy.
The Swedish International Chamber of Commerce2 , member of the largest
business organization, aiming to develop and improve trade from and for
Sweden. The main organizational focus has been ensuring sustainable
GlobalXtend Limited: specialist sales group business growth, while fostering environmental concerned activities/ Local Chambers of Commerce6 under the guidance
focused on business development and business. of Swedish Chambers of Commerce Association.
internationalization in Europe. The The local CCs are located in most Swedish counties
company has highly trained Agents and and regions such as:
partnerships with large distributors. Business Sweden3 is a Government agency responsible for fostering and • Stockholm Chamber of Commerce (CC)
helping Swedish companies to expand internationally as well as foreign
companies aiming to invest and establish their businesses in the country. • Ostsvenska CC
Castpoint is a Norwegian company with
• Wermland CC
large operations in Sweden. The company
is known for providing export companies • Jonkoping CC
The Swedish Trade Organization4 has a strong focus on electronic
with the market knowledge, resources and • Norrbotten CC
agent contacts needed to successfully companies and aims to promote competitiveness for this sector in the
export to Scandinavian countries. Swedish market by helping international companies to operate in the • West Sweden CC
country.
• Central Sweden CC
ScandiConnet provides market entry
strategies and consulting services for The Swedish Companies Registration Office5 is a governmental institution
companies aiming to establish their designed to help international and domestic companies to start their Letters of Inquiry
business in Nordic countries. The business. The agency provides guidance regarding legislation and
company’s know-how and variety of Written in Swedish is preferred. However, according to English
bureaucratic requirements to start a business in the country.
industries expertise are considered a great Proficiency Index, Swedes are the worlds’ third non-native best English
asset for companies that require their speakers, with 86% of the population fluent in this language7.
services. Therefore, Letters of Inquiry written in English are also an acceptable
possibility.
Sources: 1. Global Trade.net; 2. Sweden International Chamber of Commerce website accessed at https://www.icc.se/icc-english; 3. Business Sweden website access at https://www.business-sweden.se/Export/; 4. Swedish Trade Organization website accessed at https://www.svenskhandel.se/; 5.
Swedish Companies Registratio Office website accessed at https://www.bolagsverket.se/; 6. Trade Support Organizations available at https://www.globaltrade.net/Sweden/Trade-Support-Organizations/expert-service-provider.html; 7. The Local (2016). Swedes world's third best non-native English
speakers. Retrieved from: https://www.thelocal.se/20161115/swedes-worlds-third-best-non-native-english-speakers
63The major Swedish players in the refurbished smartphone market have strong in-house refurbishment processes and follow a multi channel approach placing their products online and in stores. From the benchmarking
analysis, no player is above Forall Phones in all four considered dimensions. Bluecity is considered to have better price and warranty conditions, but worse product diversity and reviews.
5. In-Depth Country Analysis 1 2 3 4 5 6 7 8 9
5.3. Sweden In-depth country analysis: Competitor Analysis
Founded in 2011 Founded in 2017 Founded in 2016
HQ Location: Stockholm Founded in 2013 HQ Location: Stockholm HQ Location: Malmo (originally from Denmark)
Geographical Coverage: Sweden and UK HQ Location: Orebro Geographical Coverage: Sweden, Denmark, Finland, Geographical Coverage: Sweden and Denmark
Business Description: In-house refurbishment of iPhones, Geographical Coverage: Sweden Netherlands and Germany Business Description: In-house refurbishment of
Samsung and Huawei; Smartphones repair services Business Description: In-house refurbishment of iPhones Business Description: Refurbishment of smartphones technological consumer good and home appliances
Product Offering: Apple, Samsung and Huawei Product Offering: Apple refurbished smartphones Product Offering: Refurbished Apple (80% of total Product Offering: Used and refurbished Laptops, tablets,
refurbished smartphones Distribution Channel: Online Sales product offer) and Samsung smartphones smartphones from Apple and Samsung, home appliances
Distribution Channel: Online Sales and 4 physical stores Distribution Channel: Online Sales and 3 physical stores Distribution Channel: Online Sales and 1 physical store
Reviews
Founded in 1995 Swappie AB
5
HQ Location: Taby 4.5 Mobilgallerian Sweden AB
4 Blue City Sverige AB
Geographical Coverage: 87 countries
Founded in 2017 3.5
Business Description: Refurbishment of hardware 3 Phonehero
HQ Location: Stockholm (originally from Finland)
products (the company’s main focus) such as PC, 2.5 Inrego
Geographical Coverage: Belgium, Bulgaria, Spain, 2
monitors, server and network devices, and technology Refurbly
Netherlands, Ireland, Italy, Austria, Greece, Croatia, 1.5
accessories and parts, especially to the B2B segment. The 1 Forall Phones
Latvia, Lithuania, Luxemburg, Malta, Portugal, Poland,
company also sells refurbished smartphones (a small 0.5
France, Sweden, Germany, Slovakia, Slovenia, Finland, Warranty 0 Product Div ersity
percentage of sales) mainly iPhones and Samsung Galaxy
Denmark, Czech Republic, Hungary, Estonia
smartphones, especially for the B2C segment.
Business Description: In-house refurbishment of Apple
In-house refurbishment of iPhones Limitations: Refurbly’s reviews were obtained from Facebook
Smartphones
Product Offering: Refurbished PC, monitors, server and due to lack of information available on Trustpilot; Inrego’s
Product Offering: Refurbished iPhones
network devices, technology accessories and parts, and average price is assumed to be the country’s estimated
Distribution Channel: Online sales
smartphones average price since there were no stock availability for the
models considered at the time of this analysis therefore, there
Distribution Channel: B2C segment with online sales, B2B
was no price displayed on the company’s website.
segment with direct sales
Graph 1: Benchmarking Analysis
Price
Sources: : Company’s websites accessed in October 2019: https://phonehero.se/begagnade-mobiler; https://swappie.com/se/kopvillkor/; https://mobilgallerian.se/kat/mobiltelefoner/ ; https://www.bluecity.se/telefoner/begagnade-iphones; https://refurbly.se/; https://www.inrego.se/. 64With an Herfindahl-Hirschman Index of 35%, the Swedish refurbished smartphone industry could be considered as highly concentrated and with low attractiveness. However, the largest players with 21% and 51% market
share had inferior sales volume when compared to Forall Phones in 2018 (approximately €1M and €3M, respectively). Therefore, and since the Swedish market is estimated to be larger than the Portuguese one, there is an
extensive market gap with unfulfilled customers’ needs, increasing this industry’s attractiveness and opportunities for companies aiming to enter the market.
5. In-Depth Country Analysis 1 2 3 4 5 6 7 8 9
5.3. Sweden In-depth country analysis: Competitor Analysis
Methodology
In order to obtain each competitor total sales and market share, data from Orbis regarding 2018 was gathered.
To consider all Swedish competitors in this analysis, a proxy with the primary global smartphone market was conducted1. In the first quarter of 2019, this market total sales were mainly attributed to seven large players (Apple, Samsung, Huawei, Oppo, Vivo, Xiaomi and
Realme). However, 21% of market share belongs to other smaller players. Therefore, the same market share was attributed to other Swedish competitors that were not considered in this analysis, in order to create the most accurate total sales for the refurbished
smartphone industry in Sweden, due to lack of data for this matter.
Limitations:
Some competitors sell other refurbished products rather than only smartphones. For those, a proxy was considered:
- Bluecity sells several electronic consumer goods. Since the market share of the typical Swedish consumer of electronics goods in 2018 for smartphones is 40%2, the percentage of total sales corresponding to this industry is assumed to be the same.
- Inrego sells refurbished Hardware products, being PC, monitors, server and network point of sales and technology accessories and parts the largest share of revenue – as presented in the company’s website. However, refurbished smartphones are also considered in
the company’s product portfolio. Considering 40% smartphones’ share of total revenue does not seem reasonable (the estimate used for Bluecity), as the company has few models available (only iPhone SE, 4, 5, 5S, 5C, 6 and 6S, and three Samsung models) that are
old versions of smartphones, usually sold at extremely low prices with low demand. Therefore, refurbished smartphones are expected to have low sales volume and, due to lack of data availability, only 5% of total sales are assumed to belong to the sales of these
products.
TOTAL SALES (2018) MARKET SHARE(2018) Mobilgallerian Sweden AB
7000 000 100% Swappie AB 3% Key Takeaways
6416 056 2%
Blue City Sverige AB From the market share analysis one could conclude that the
90% Other Competitors 1%
6000 000 21% Swedish market is highly concentrated. Yet, when evaluating
80%
Phonehero (the competitor with the largest market share) total
5000 000 70% sales in 2018 were €3 272 009. Comparing both, the Swedish
60% and Portuguese market size, it would be expected that such
4000 000
Refurbly market share would represent larger sales, as Swedish
3272 009 50% 1%
3000 000 consumer trends and purchasing behavior is stronger than the
40%
Portuguese one. However, Phonehero sales in 2018, are
2000 000 30%
slightly lower than Forall Phones total sales in the same year.
1358 472 1348 120 20% Phonehero Therefore, it is believed that Swedish market presents a large
1000 000 Inrego 51%
10% unfulfilled market gap, given the country’s market potential
21%
215 828 98 368 80 983 42 276 size (larger than the Portuguese one).
- 0%
le s er o eg o rs AB B bl y AB HHI:
s a eh Inr tito en ie A fur ig e
tal on pe ed app Re r
To Ph om Sw Sw y Sve 35%
rC ian C it
the lle r e
O a Blu
Graph 2: Industry Total Sales in 2018 bilg Graph 3: Industry Market Share in 2018
Mo
Sources: 1. Counterpoint (2019). Global Smartphone Market Share: By Quarter. Retrieved from: https://www.counterpointresearch.com/global-smartphone-share/; 2. Statcounter (2019). Desktop vs Mobile vs Tablet Market Share Sweden. Retrieved from: https://gs.statcounter.com/platform-market-
share/desktop-mobile-tablet/sweden
65Although Swedish players have in-house refurbishment processes, high product quality and low prices, they lack acknowledging how to position themselves in the market regarding product diversity and how to promote and
properly communicate. The temporary competitive advantage of having the capability to create a community can be leveraged to the Swedish market, allowing Forall Phones to create a sustainable competitive advantage
with Forall Family’s resource.
5. In-Depth Country Analysis 1 2 3 4 5 6 7 8 9
5.3. Sweden In-depth country analysis: Competitor Analysis
Phonehero Swappie Mobilegallerian Bluecity Refurbly Inrego
Competitors positioning and internal
• Ability to ensure 1-day delivery in • Apple certified • Lowest average price in the • Longest warranty program • Free delivery services • ISO certified for quality,
analysis
Sweden refurbishment process market - 357€ offer among competitors – • Focus on content marketing with environment, and others
• Highly efficient refurbishment • RAM improvement on the • Strong anti-robbery testing for 3-year warranty for each Refurbly Blog where procedures, • B2B and B2C operations, being
Strengths
process due to accumulated smartphone software and smartphones bought to product sold. and environmental concern B2C the focus
Alignment with the refurbished knowledge developed with operational system refurbish, increasing • Highly attractive and easy posts are shared regularly • Strong international presence in
smartphone industry1 smartphone repair services offer • Strong international consumer’s trust on the to navigate website • High product quality and 87 countries (mainly with the B2B
• B2C and B2B operations presence product source • Free delivery services for refurbishment procedures segment)
• Allows consumers to sell their old • iPhone focus • Allows consumers to sell their total purchase volume knowledge, since the owner • Refurbishment expertise due to
smartphones • Allows consumers to sell old and used smartphones above SEK800 company is only focused on extensive sales volume with
their old and used smartphones repair services. refurbished hardware products
smartphones
• Strong after-sales service
Price
The company recognizes that • Is only able to ensure 3-day • Worst reviews among The business strongly relies on • Reviews are not available on • Poor stock availability regarding
refurbished smartphone sales are delivery services in Sweden competitors (4/5 on Trustpilot) in-store sales due to home Trustpilot (the largest consumer memory and rank within the
compromised by the competitive prices (high delivery time with several dissatisfied appliances product offer. Since source of companies’ reviews) same smartphone model
Weaknesses
in repair smartphones services. The considering Swedish customers’ reviews the company only has 1 store in • Poor social media presence • Only sells old iPhone versions
consumer is more willing to repair its average delivery for E- • The company is constantly Sweden, the business potential (iPhone SE, 4, 5, 5S, 5C, 6 and 6S )
Graph 4: Key Industry Players
Positioning old smartphone rather than buy a commerce among Swedish under stock-out situations – is not fully exploited in this that are not the most attractive
1 Alignment with the refurbished smartphone “new” refurbished one, if there is a home-based companies) poor inventory management country and demanded by customers
industry considers product quality and diversity of
refurbished smartphones, and the fit with each large price difference between both • Highest average price in the
company’s business focus. Combining these options. market - 577€
elements, each company position on the vertical
business
axis represents its ability to meet consumers unique Smartphone repair services Refurbished iPhones Refurbished Apple and Samsung Home appliances and consumer Refurbished iPhones Refurbished Hardware products
Core
demand preferences in this industry.
Smartphones electronic goods
Key Takeaways
From the competitors’ analysis , opposite to the Portuguese scenario, high quality in in-house refurbishment is not a differentiator factor for Forall Phones as some have well developed processes to reduce costs and time requirements. Moreover, their marketing efforts are
mostly allocated to SEO and content marketing focused on environmental trends and concerns. However, they lack emotional and personal marketing communication channels, such as a community of strong influencers and shapers. Therefore, the temporary advantage of having
the competence to create this resource in Sweden, could ensure the company with a sustainable competitive advantage to overcome the Swedish competitive environment. Finally, from competitors’ position in the industry, Forall Phones is clearly in advantage, by combining the
key elements that drive the company’s perfect alignment with this industry requirements, with slightly above the country’s average price – a better positioning than the remaining competitors.
Sources: : Company’s websites accessed in October 2019: https://phonehero.se/begagnade-mobiler; https://swappie.com/se/kopvillkor/; https://mobilgallerian.se/kat/mobiltelefoner/ ; https://www.bluecity.se/telefoner/begagnade-iphones; https://refurbly.se/; https://www.inrego.se/. 66The Swedish refurbished smartphone industry market potential was forecasted until 2025, using the chain ratio method. It is expected that the sales growth rate for all firms operating in this industry is, at least, 5.95%,
reaching €600M of market sales potential by 2025.
5. In-Depth Country Analysis 1 2 3 4 5 6 7 8 9
5.3. Sweden In-depth country analysis: Market Sales Potential
Methodology
Industry Market Potential: Total population x smartphone penetration x 40% x willingness to buy refurbished smartphones
With 2019 data, it was first calculated the total smartphone users (total population 10-69 years old1, multiplied by smartphone penetration rate2). This number was multiplied by 40% as it is expected that each year, 40% of the total smartphone users would acquire a new
one - the average smartphone consumer buys a new smartphone in each 12-18 months3. Finally, out of the total population of smartphone users that would acquire a new device per year, their willingness to buy refurbished smartphones4 was considered to estimate the
ones that would consider refurbished smartphones an option. From this calculation, the Industry Market Potential for 2019 was estimated. In order to obtain the forecasts on Industry Market Potential, a 1-year and 5-years CAGR was estimated from potential market size
between 2014 and 2019. However, and due to lack of data available for consumers willingness to buy refurbished smartphones and product’s life cycle (40% considered), both variables were considered to be the same between 2014-2019, being Total population (10-69
years old) and smartphone penetration the only variables changing during this time frame.
The Market Sales Potential was obtained from the Industry Market Potential and the country’s average price. In order to obtain the country’s average market price, an average of all models available at the companies’ websites was considered (a weighted average of
each model quantity sold was initially seen as a more accurate hypothesis however, lack of data and similarity between each competitor price availability led to this proxy) – as previously mentioned, Inrego average price was not able to be computed therefore, this
competitor’s price was not considered for this analysis.
The exchange rate at 16/11/2019 of 1€ = 10.67 SEK was considered.
Industry Market Potential: Forecasted Market Size Forecasted Market Sales Potential
1,600,000 700,000,000
631,728,983
1,361,485 596,251,989
1,400,000 600,000,000
1,285,026 562,767,333
1,212,861 531,163,127
1,144,748 501,333,768 Industry Market
1,200,000 962 514
1,080,461 500,000,000 473,179,583 Potential in 2019
1,019,784 446,606,496
962,514 1-year CAGR 7.85%
1,000,000
400,000,000
5-year CAGR 5.95%
800,000
300,000,000 Market Average Price €464
600,000
Market Sales Potential
€ 446 606 496
200,000,000 2019
400,000
100,000,000 Table 1: The Swedish Refurbished smartphone industry estimated data
200,000
- -
2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025
Graph 5: Industry Market Potential in 2019 and forecasted for 2020-2025 Graph 6: Market Sales Potential in 2019 and forecasted for 2020-2025
Sources: References Section. 67The expected market growth matches consumers and industry trends regarding willingness to buy refurbished smartphones, e-commerce sales and the heavy smartphone usage rate. Low entry barriers and large market
gap, mainly due to players lack of promotion, proper positioning and brand awareness, represent a highly attractive environment for international companies operating in this industry aiming to do business in the country.
5. In-Depth Country Analysis 1 2 3 4 5 6 7 8 9
5.3. Sweden In-depth country analysis: Market Sales Potential
Consumer Behavior
Entry Barriers
Sweden scored 12th position in Ease of Doing Business rank in 2019. The
Purchase Decision: The typical Swedish consumer is highly price sensitive and considers price and quality the main purchase decision factors. Other concerns are sellers’ know-how
country scored 98.04% in ease of Trading Across Borders, with an
regarding product features and after-sales services availability. There is a strong trend of rational driven purchases, with 53% of the population searching for products’ information online
average of 2 hours as Border Compliance, and a score of 94.69% on ease
before buying. Products’ brand is not a purchase decision factor, as the typical Swedish consumer is increasingly less brand loyal.10
of Starting a Business.1
E-commerce preference: E-commerce is expected to represent 50-75% of consumer goods total sales in 20353 due to increasing trend in online shopping (Growth of 16% in 201710).
From the PESTLE analysis, favorable Legal and Political environments
Main Concerns: Sweden is one of the top countries combining health and consumption. Natural products, second-hand goods and shared assets platforms for cars or housing, are among
(especially as a member of European Union) lower eventual entry
the strongest trends on consumers demand.10
barriers for EU state member companies aiming to do business in the
country. Moreover, the regulation alignment with EU policies, decrease
Industry Trends
eventual legal issues that Forall Phones could face when entering
Sweden, as being an EU company, standards and regulations are
Smartphone usage: The Swedish smartphone market, primary and secondary, has an average of four million quantities sold yearly1,, with 21% of smartphone users looking at their phone
at least fifty times a day4. Therefore, it is a country with a large smartphone usage rate, with a strong preference for iPhones - 62.48% of total smartphones sold in 2018 were from common between both the Portuguese and Swedish industries, as no
country specific laws are instituted.
Apple2.
Circular Economy: The second-hand market is drastically expanding especially for online purchases, as the Swedish consumer is progressively attracted to the circular economy and its
environmental impacts5, with 34% of the population buying secondhand goods a few times a year and 12% at least once a month.6 These attractive figures for the industry, allowed the
Key Takeaways
From the market sales potential analysis, in 2025 this industry, if fully
retail sale of second-hand goods revenue (in store) to reach 194 million dollars in 2018 and is expected to decrease to 189 millions of dollars by 2023.7 This forecasted in-store revenue
exploited, is expected to reach 600M€. Moreover, the country has a
decrease is aligned with the rise of online sales of second-hand goods. Finally, trade-in programs are common among companies, with most competitors providing the consumer with the
large market gap meaning that current competitors lack to fulfill
possibility of selling their used smartphones.
consumer’s needs. It is believed that poor advertisement about the
Corporate Examples: Two of the largest native global companies have developed strong initiatives to promote circular economy such as H&M and IKEA8 . In fact, the first one recently
product characteristics and availability, lack of communication and brand
announced its 2030 vision of having 100% business circularity.
awareness are the main reason for such market gap, representing a large
The industry trends and consumer purchasing behavior forecasts represent some pull factors for Forall Phones in the Swedish refurbished smartphone market mainly due to second-hand opportunity for companies aiming to operate in the Swedish refurbished
market attractiveness, sophisticated smartphone demand, heavy smartphone usage rate, and e-commerce sales growth – Forall Phones e-commerce platform is one of the company’s smartphone market.2
resources that can be leveraged to international markets.
Although current industry total sales volume of €6.4M is largely bellow the country’s estimated market sales potential, the need to educate consumers regarding this industry is not an
issue. Inrego (one of the largest competitors in the country) has developed a €27M business9 around refurbished technology and hardware products in Sweden, building the market for
used and refurbished IT equipment. Therefore, it is believed that Swedish players selling refurbished smartphones have not yet fully exploited this market, leading to a large market gap
and unfulfilled consumer needs.
Sources: References Section. 68Although Forall Phones average price is above the country industry average, the Swedish consumer’s willingness to pay increases when the right vision and mission are properly communicated. Moreover, considering low
market penetration rates for the period of analysis, the company’s market share can reach 42% by 2025 – a result of low intensity of the competitive environment.
5. In-Depth Country Analysis 1 2 3 4 5 6 7 8 9
5.3. Sweden In-depth country analysis: Company Sales Potential
Intensity of the Competitive Environment
• The Swedish competitive environment has a medium-high rivalry within competing players: although there is a high industry concentration (HHI=35%) with one large player with 51% of market share, as previously explained, that market share is a result of low total
sales volume in the industry, increasing the belief of the existence of a large market gap. Moreover, most companies have average prices above the industry average, leading to a poor competition on prices.
• There are no established networks however, some players, initially considered as suppliers, present forward integration in the supply chain – Refurbly’s mother company is a smartphone repair services company that recently started selling refurbished products.
• The most common distribution channel is online sales, increasing distribution competitiveness in access to distribution channels if if E-commerce is the most suitable entry strategy for Forall Phones. However, this issue can be easily overthrown with a strong social
media presence and online marketing efforts.
Pricing Market penetration timetable
Forall Phones average is price is 503€, 39€ more expensive comparing to the market In order to obtain the company’s market penetration timetable, it assumed a market reach of 40% and a conversion rate of 1.8% - the average conversion rate on online
average price of 464€. The refurbished smartphone consumer is highly price marketing for computer and electronics industry2 .
sensitive. However, a recent study conducted in Sweden has proven that, although Therefore, Market Penetration timetable was estimated, with variables increasing at the 5-year industry CAGR, with the following formula:
2019 2020 2021 2022 2023 2024 2025
price sensitivity is high, willingness to pay for refurbished smartphones is above the !"#$%#&'( )'*+$# ,&-$ . /0% . 2.4%
Market penetration rate* = 0,72% 0,76% 0,81% 0,86% 0,91% 0,96% 1,02%
!"#$%#&'( )'*+$# ,&-$
current industry average price. In fact, this number can be extremely close to new
*Assuming that Potential Market Size and Market Reach are growing at the estimated 5-year CAGR between 2019-2025, and conversion rate is constant at 1.8% during the analyzed period.
smartphone’s price if ecological, sustainable and environmental concerns are Forecasted Sales
Considering the estimated Market Penetration for 2020-2025, Forall
addressed by the refurbished smartphone company.1 Phones expected Market Share is the following (assuming that each €8,000,000.00
competitors sales growth is the industry estimated 5-year CAGR): €7,000,000.00
€6,000,000.00
Mobilgallerian Sweden AB 357 € Forall Phones Market Share €5,000,000.00
45% €4,000,000.00
Phonehero 378 €
40% €3,000,000.00
Country Av erage 464 € €2,000,000.00
35%
€1,000,000.00
Inreg o 464 € 30% €-
2020 2021 2022 2023 2024 2025 2020 2021 2022 2023 2024 2025
Refurbly 481 €
Graph 8: Forall Phones Forecasted Market Share 2020-2025 Graph 9: Forall Phones Forecasted Sales Volume 2020-2025
Forall Phones 503 € *Sensitivity Analysis for 2025 Market Penetration is available in Appendix 1.
Blue City Sverige AB 526 € In order to increase Market reach, the company needs to properly allocate its Marketing efforts to the desired target segment. Also, to increase conversion rate the company
Swappie AB 577 € needs to: create brand awareness and rational feeling among consumers regarding the company’s product offer; have a sustainable and green positioning, emphasizing the
environmental benefits of refurbished industry; create a strong reputation promoting the youth, passionate and ambitious team/ collaborators.
- € 100 € 200 € 300 € 400 € 500 € 600 € 700 €
Graph 7: Price Benchmarking
Sources: 1. Olsson, Daniel (2018). Student Sustainability Consciousness: Investigating Effects of Education for Sustainable Development in Sweden and Beyond. Retrieved from: https://www.diva-portal.org/smash/get/diva2:1257928/FULLTEXT02.pdf; 2. Conor Bond (2019). Conversion Rate Benchmarks.
Retrieved from: https://www.wordstream.com/blog/ws/2019/08/19/conversion-rate-benchmarks
69Market entry conditions are highly attractive for foreign companies aiming to establish their business in Sweden. Being an EU based company Forall Phones benefits from documentation and regulations low requirements, as
production and product standards are common between both countries. Moreover, ease of Registration and access to financing methods represent attractive non-tariff barriers. As for tariff barriers, the country is under EU
legislation meaning that Forall Phones goods would be subject mainly to the Swedish VAT rate.
5. In-Depth Country Analysis 1 2 3 4 5 6 7 8 9
5.3. Sweden In-depth country analysis: Market Entry Conditions - Tariff and non-tariff trade barriers to enter the market
When a foreign company aims to enter the Swedish Market and establish itself in the country, it can do so through a limited liability company or a registration of a branch. Legally, the last one is only seen as an expansion of the foreign company rather than a Swedish company.
However, it is subject to Sweden’s laws and regulations. Moreover, when establishing a company, the minimum capital requirements for private entities is 50 000 SEK, equivalent to 4 753,62€.
If the most feasible strategy for Forall Phones to enter the market is through collaborative modes rather than FDI, partnerships are also highly regulated, and the existence of a written agreement is not one of the requirements. Although JV are not recognized as legal entities by the
Swedish law, it is possible to establish a legal partnership with co-operation terms. The Swedish law names it as Contractual joint ventures, Partnership joint ventures or Corporate joint ventures. As for financial incentives, the country has regional investment subsidies for companies
aiming to establish their business in regions under the regional development program of the Swedish Government.
Registrations2 Technological products exported to Sweden, if produced under European Union standards, have no
As an EU based company, in order to export to Sweden, Forall Phones should consider the following restriction or constraint when entering the Swedish market. European Union efforts to harmonize standards
documents : Commercial Invoice; Customs value declaration (if total export volume per shipping is above
5 among state members, have facilitated international trade among its countries. Some specific EU standards
Import and
Export that Forall Phones can benefit from were developed and available at: European Committee for
€20K); Freight Documents depending on transportation method selection (Bill of Landing for on board Documentation Regulations and
transports, FIATA Bill of Landing for combined means of transport, Rail Waybill, Air Waybill, Road Waybill); Standards3 Standardization; European Committee for Electronical Standardization; European Telecommunications
ATA Carnet; Packaging List; Single Administrative Document. Standards Institute.
The country ranked 2nd in the Logistics Performance index in 2018, with a 3-days average of imports lead-
As an EU company, Forall Phones can get access to financing from Sweden’s banks. However, one should
time6. Since Forall Phones aims to keep the refurbishment process in Portugal, having access to proper
Payment and consider that although interest rates are considered to be low4, may not be the best option for the company
distribution and transportation to import its products in the country is crucial. To keep up with the Transportation Financing
Methods given its fragile financial situation.
competitors’ average delivery time and given the product’s characteristics, imports via airplane are the best
Moreover, the Swedish Marginalen Bank is able to offer EU guaranteed loans for companies with “cultural
option. For that, the country has several airports and air cargo companies such as: Euroglobe Shipping and
and creative sectors”. Despite Forall Phones current product offer does not allow the company to obtain this,
Transport; Global Logistic Group; Buyers Logistics Scandinavia AS; Onex International; Enter Global Logistics. Tax Burden and
Tariff Barriers2
eventually, in the future, product development or a shift in the core business may allow the company to be a
Moreover, within the country, transportation can be ensured by Postnord (a local player). Also, there are
possible candidate.5
large transport operations by DHL and Chronopost.
The Swedish corporate tax rate is a flat rate of 21.4% and there are not additional corporate taxes for companies regarding their location, such as municipal tax rates. The Swedish VAT is aligned with EU policies and is applied for all goods and services produced in the domestic market as
well as for companies importing to the country. The VAT is 25% for the majority of goods however, there are goods with lower VAT rates (eg. 12% on food products). Also, apart from the country’s VAT, Sweden has a tariff barrier regarding Customs Duty – a tariff depending on the good’s
value that should be paid to the shipping company. This value ranges from 0-25% over the invoice price (including shipping and insurance costs).
Sources: 1. Thomson Reuters (2019). Establishing a business in Sweden. Retrieved from: https://uk.practicallaw.thomsonreuters.com/ ; 2. Sweden Standards for Trade (2019) in Export Government; 3.Trading Economics (2019). Sweden Interest Rate; 4. Breidthardt, A. (2019). EU-guaranteed loans to
strengthen Sweden's cultural entrepreneurs; 5. European Commission Trade Helpdesk (2019). Documents for customs clearance. Retrieved from: https://trade.ec.europa.eu/tradehelp/documents-customs-clearance; 6. World Bank (2019). Domestic LPI performance. Retrieved from:
https://lpi.worldbank.org/domestic/performance/2018/C/SWE/R/ECA/I/OEC 70Conclusion
Country Overview Contacts Competitor Analysis Market Sales Potential Company Sales Potential Market Entry Conditions
• Favorable economic and • Existence of several agents and • Despite having an HHI of 35%, • The industry sales potential is • Considering aTo ensure its industry position, Forall Phones has to leverage the Forall Family’s impact on consumers and to increase the product mix. Also, the company needs to
improve its relationship with suppliers in order to pursue a global strategy, taking advantage of circular economy legislation and trends.
3. Analysis of the Company’s Situation and Global Readiness 1 2 3 4 5 6 7 8 9
3.8. TOWS Analysis
Strengths Weaknesses
1. Great focus on a specific product to become the 1. Lack of product mix
Literature Review: The TOWS analysis was used to develop specialists of the industry 2. Lack of scale
strategic options that consider all the internal-external factors 2. Educational Expertise 3. The firm relies mostly on one big supplier
identified in the SWOT analysis. 3. High diversification of refurbished iPhones 4. Weak country-specific advantages
4. Forall Family
5. Ability to increase customer’s perceived value
Opportunities (S1, O1) Take advantage of its iPhone product focus to leverage the (W2, O4) Take advantage of beneficial legislation practiced in other
1. Refurbished premium smartphones industry growth growth of the premium smartphone industry growth. European Countries by expanding abroad.
2. Customers increased awareness of device manufacturing
(S2, O2&O4) Use the previously acquired educational expertise to (W1, O2&O3) Increase portfolio mix to capitalize on the trends of more
environmental impact
help in the transition of European countries toward the circular conscious shopping regarding the environment and increasing demand
3. Increasing demand for alternatives to pricey new devices economy and further increase awareness of smartphone for cheaper alternatives.
4. European countries are trying to accelerate the transition manufacturing environmental impact.
to the circular economy
(W1&W2&W4, T1) Establish a partnership with Apple to become one
(S3, T1) Try to provide an even higher diversity of iPhones with
of the company’s official refurbishers, learning from official and
great quality to outperform Apple’s limited supply or become
Threats certified processes to increase scale and product mix, by overcoming
Apple’s refurbisher representant.
1. Apple-certified refurbishment the weak country-specific advantages, leveraging factor conditions.
2. Increasing competition (S4&S5, T2&T3) Gain the trust of customers in Portugal and abroad
(W3, T5) Improve relationship with its supplier in order to obtain an
3. Hard to build trust through Forall Family, to compete with the increasing competition
exclusive contract, or decrease supplier’s dependency by establishing
and to increase further the customer’s perceived value.
4. Global iPhones’ sales are decreasing y-o-y new partnerships.
5. Supplier Power (S2, T3) Educate consumers on product quality through Forall
(W1, T2&T4) Increase product mix by refurbishing iPads, MacBooks,
Family, to attract and retain the ones with high uncertainty
mitigating the iPhone’s sourcing risk, also being able to keep up with
avoidance towards refurbished products.
competitors with wider product offer.
32From the 49 pre-selected countries, 30 will remain to be further analyzed since they fulfill all the requirements. The next steps aim to find the most attractive countries,
out of the selected 30 ones, for Forall Phones business.
4. International Market Selection 1 2 3 4 5 6 7 8 9
4.1. Selection Criteria
Pre-selected Countries Selected Countries In the meetings with the client, it was expressed that Forall
Phones had a geographical preference to expand to
Europe. Thus, 49 countries were considered at the
beginning of this analysis.
When selecting variables to proceed with the country
clustering and ranking, it was necessary to further exclude
countries since there was a lack of data for a considerable
amount of variables (more than 7 variables had no values
for those countries). From the 49 pre-selected countries,
30 remained to perform the cluster and ranking analysis.
The final set is constituted by: Austria, Belgium, Bulgaria,
Croatia, Czechia, Denmark, Estonia, Finland, France,
Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia,
Lithuania, Luxembourg, Malta, Netherlands, Norway,
Poland, Portugal, Romania, Slovakia, Slovenia, Spain,
Sweden, Switzerland, United Kingdom. It is interesting to
mention that, most of them are part of the European
Union and, for that reason, have low barriers to trade,
which is important for the entry strategy developed for
Forall Phones. Additionally, Cyprus, one of the 28 members
of the European Union, was not included due to the
missing data on Market Intensity and Receptivity variables.
Map 2: Possible countries for Forall Phones Internationalization
33At this stage, 30 variables were selected to study the market opportunities of the 30 countries. Each variable was assigned to one of the 8 dimensions of the Market
Potential Index (MPI).
4. International Market Selection 1 2 3 4 5 6 7 8 9
4.1. Selection Criteria1 Literature Review: The Market Potential Index (2019)3 is composed of 8 dimensions. For the purpose of this analysis,
Variable Category2 the same categories will be used to conduct the next steps of the International Market Selection. The MPI provides
guidance on how to rank the countries in order to find which international markets the company should enter.3
Commercial Infrastructure variables evaluate the ease of access to
Market Size is the first dimension studied in order to assess the market
potential for Forall Phones in different countries. The variables inside
Commercial distribution and communication channels and indicate the
Market Size attractiveness of a market for Forall Phones, from the viewpoint of
market size indicate the relative importance of the country’s market. Infrastructure
commercial infrastructure.
Market Intensity includes variables that express the dynamics of a Market Receptivity represents the extent to which the international
specific market, like the measurement of private expenditures and Market markets are open, in terms of imports, cultural characteristics and
Market Intensity the GDP per capita (PPP), which are important for Forall Phones to Receptivity beliefs, to foreign companies like Forall Phones.
prosper.
Market Growth Rate is also a dimension of market opportunity and tries Economic Freedom includes macroeconomic indexes that are crucial to
Market Growth to reflect the average annual growth rate of the industry. It is an Economic create an overview of the political and economic situation of the
Rate additional measure of the attractiveness of the market: growing markets Freedom selected countries. It measures dimensions like trade freedom, tax
are more appealing for Forall Phones. burden and judicial effectiveness.
Market Market Consumption Capacity tries to measure the spread of the Country Risk indicators are helpful to understand the risk of investing
consumption base. Neither poor nor rich are attractive for Forall Phones: in each country. Countries with low risk are more attractive to Forall
Consumption middle-class consumers that have a reasonable degree of spending Country Risk Phones since political and commercial instability are threats for all
Capacity capacity are the most attractive. businesses.
Source: 1.Variables of each category available in Appendix 7 and Data in Appendix 9.; 2. Cavusgil, S. Tamer (1997). Business Horizons: Measuring The Potential Of Emerging Markets: An Indexing Approach. 1st Edition; 3.
Global Edge (May 2019). Market Potential Index (MPI) - 2019. Retrieved from: https://globaledge.msu.edu/mp 34From the Country Cluster Analysis, it was possible to group the countries in 6 clusters and with the Ecosystem Analysis, it was possible to evaluate how the countries
were related to each other within the clusters. According to our analysis, clusters 1 and 2 can be excluded since they do not present an attractive business environment
to Forall Phones.
4. International Market Selection 1 2 3 4 5 6 7 8 9
4.2. Preliminary Screening: Cluster Analysis1
Dendrogram Ecosystem Analysis
The vertical axis represents the distance between the clusters, whereas the horizontal represents the
name of the countries. Using a distance of 3, it was possible to form 6 clusters of countries that are A considerable poor result in LPI and a medium-low Disposable Income per
1 Household link these countries within the same cluster. Therefore, this cluster is not
similar in some of the 13 variables chosen for the analysis.
attractive for Forall Phones and can be excluded in this initial stage.
These two countries are very similar regarding Urban Population and its growth,
Medium Disposable Income, Gini index, GDP growth, Cultural Distance, Ease of
2 Doing Business, Economic Freedom, Country Risk and LPI, and perform the lowest
values in most of those mentioned variables. Thus, this cluster can be excluded.
Selected Variables: Although Urban Population is quite different among the countries, there has been
Market Size
Urban Population 3 a similar positive growth in this variable. Moreover, all of them have been
Market Growth Rate associated with a low Country Risk.
Urban Population Growth,
GDP Growth
Market Consumption Urban Population growth has been increasing at the same rate (an average of 0.99%).
Capacity
Medium Disposable, 4 Moreover, Political Risk is low for all countries. Finally, a good performance in LPI is
Income per Household, also a characteristic of this cluster.
Gini Index
Commercial Infrastructure
Logistics Performance,
Index (LPI) These countries are in the same cluster due to a small Urban Population. Besides,
Market Receptivity 5 they all have a positive increase in this variable.
Cultural Distance, Trade as
a Percentage of GDP, Ease
of Doing Business
Economic Freedom This cluster is represented by countries with similar values concerning high Urban
Economic Freedom Index
6 Population and its growth, large Medium Disposable Income, attractive Political
Country Risk
Political Risk, Country Risk, Risk and LPI, but with low Trade (as a % of GDP).
Commercial Risk
1 2 3 4 5 6
Scheme 2: Country Clustering - Dendogram using Ward Linkage
Source:1. Methodology available in Appendix 8 35The Country Ranking Analysis was completed using the recommendations from Global Edge on how to create a Market Performance Index. For each of the eight
categories, several variables that explain its impact on each market were selected. Firstly, the eight categories’ weights were defined according to the MPI. Then, for the
variables, the weights were equally distributed between them. Finally, as suggested by the client, the most important for Forall Phones got more ponderation.
4. International Market Selection 1 2 3 4 5 6 7 8 9
4.3. Preliminary Screening: Country Ranking Analysis1
Literature Review: According to Global Edge2, a Market Performance Index for a company aiming to pursue a global strategy should have eight variables categories with specific weights associated.
Therefore, the variables were categorized in the eight proposed categories, as mentioned in section 4.1, attributing them the suggested weights.
Together with the client, it was decided that variables more closely related to the refurbished smartphone industry should be given a bigger ponderation. Also, in the Commercial Infrastructure category,
the individual variables that compose the Logistics Performance Index were considered, since the company believes that some should have higher weights than the ones attributed by the index.
Thus, the weight of the categories and each variable is as follows:
Market Size Market Intensity Market Growth Rate Market Consumption capacity
25% 15% 12.5% 12.5%
• iOS Penetration: 10%
• Urban Population: 3.75% • Willingness to buy refurbished
• Urban Population Growth: 5%
• Possession of Smartphones: 3.75% • GDP per Capita PPP: 7.5% smartphones: 5%
• iPhone Trend on Google searches: 5%
• Active Social Media Penetration: • Internet Use: e-commerce activities: • Medium Disposable Income per
• GDP Growth: 2.5%
3.75% 7.5% Household: 5%
• Tertiary Educational Attainment: • Gini Index: 2.5%
3.75%
Market Receptivity Economic Freedom Country Risk
Commercial Infrastructure 10%
10% 7.5% 7.5%
• Logistics Competencies: 2.5% • Cultural Distance: 2%
• Custom: 1.5% • Environmental Performance Index: 2%
• Economic Freedom Index: 3.75% • Political Risk: 2.5%
• Infrastructure: 1.5% • Willingness to import second-hand
• Political Freedom Index: 3.75% • Country Risk: 2.5%
• International Shipment: 1.5% goods: 2%
• Commercial Risk: 2.5%
• Tracking and Tracing: 1.5% • Trade as percentage of GDP: 2%
• Timeliness: 1.5% • Ease of Doing business: 2%
Source: 1.Methodology available in Appendix 8; 2. Global Edge (May 2019). Market Potential Index (MPI) - 2019. Retrieved from: https://globaledge.msu.edu/mp
36Matching the country ranking with the country clustering, it was possible to observe that the cluster number 4 presented the most countries in the high positions of the
ranking. Hence, it was decided to perform a country ranking analysis on this cluster, from which the 5 most attractive countries to perform an in-depth analysis were
obtained: Denmark, Switzerland, Sweden, Norway and the Netherlands.
4. International Market Selection 1 2 3 4 5 6 7 8 9
4.4. Selection of the highest potential countries
Country Ranking1
Rank Country Cluster Match of Country Clustering and Why selecting a cluster?
1 Denmark 4 Countries in the same cluster are more
Country Ranking
2 Luxembourg 5 similar between themselves, which allows
3 Switzerland 4 for a more standardized international
4 Sweden 4 Cluster 3
strategy.
5 Norway 4 11 – Finland, 17 – Czech Republic,
6 United Kingdom 6 18 – Estonia, 19 – Portugal, 21 – Slovenia,
7 Netherlands 4 22 – Slovakia Cluster 4 Country Ranking
Perform in-depth analysis on
8 Germany 6
the top 5 countries:
9 Ireland 4 Cluster 4 Rank Country
10 France 6 1 – Denmark, 3 – Switzerland, 4 – Sweden,
1 Denmark Denmark
11 Finland 3 5 – Norway, 7 – Netherlands, 9 – Ireland,
12 Iceland 5 13 – Belgium, 14 – Austria 2 Switzerland
13 Belgium 4
3 Sweden Switzerland
14 Austria 4 Cluster 5
15 Spain 6 2 – Luxembourg, 12 – Iceland, 16 – Malta 4 Norway
16 Malta 5 Sweden
5 Netherlands
17 Czechia 3
18 Estonia 3 6 Ireland Norway
19 Portugal 3 Cluster 6
6 – UK, 8 – Germany, 10 – France,
8 Belgium
20 Italy 6
21 Slovenia 3 15 – Spain, 20 – Italy 9 Austria Netherlands
22 Slovakia 3
Table 6: Cluster 4 Country Ranking
Table 5: Country Ranking
Source: 1. Data available in Appendix 9.
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