- As parent company of Adevinta, Schibsted wins too from ECG acquisition
- Transactions focused on payment, delivery in general goods, digital contracts in autos
- Aiming for No. 1 in Swedish recruitment, Finnish real estate
Schibsted just got bigger. Adevinta’s June acquisition of EBay Classifieds Group (ECG) has a direct ramification on the Nordics marketplace operator, which now holds 33% of the Class A shares of the company it spun off in 2019.
Aside from the inherent value these new assets bring to Schibsted, the Oslo-based company has also expanded its Nordics footprint through the transfer of ECG’s Denmark-based classifieds (read more about the Adevinta / ECG deal on page 31) for $330 million U.S. Schibsted now has a leading position in the country, adding the No. 1 horizontal Dba.dk and the No. 1 auto vertical Bilbasen.dk to its stable.
Listed on the Oslo Stock Exchange since 1992, Schibsted is set to see a minimal change in its market capitalization — at $10.7 billion U.S. as of mid-June — as a result of the deal, since no new shares are being issued.
In relation to the deal, the company stated: “Danish operations will be financed through a bridge loan with up to three years maturity, committed by a consortium of some of our core banks. We have simultaneously received a pre-consent for a temporary waiver of our financial covenant for our existing financing. The acquisition will increase our financial gearing, but we have the clear goal to reduce NIBD / EBITDA back again to within the target range of 1-3. The bridge loan will be paid down primarily through a future disposal of Adevinta shares.”
The deal underpins Schibsted’s strategic ambitions in the Nordics, while ensuring Adevinta continues to be a lucrative international marketplace operator for the company.
The company is implementing a three-pronged strategy to evolve its impressive portfolio into an even bigger force across the Nordic markets, with a particular focus on developing transactions.
Schibsted is expanding and consolidating its present leading positions, and implementing transactions to transform the businesses into a next-gen marketplaces. Considering its expertise in the region, Schibsted is well placed to succeed, despite some obstacles in Finland and Sweden.
In Finland, Denmark, Norway and Sweden, Schibsted runs the No. 1 horizontals — Tori and Oikotie (Finland); DBA (Denmark); Finn (Norway), and Blocket (Sweden). They’re not just market leaders; they have unassailable dominance and only nominal competition.
Schibsted has not rushed to push transactions. It’s taking a methodical approach. However, it is probably the world leader among traditional marketplaces when it comes to online automotive transactions, with an exquisite, well- developed offer at Finn autos.
“At present, the focus is to increase adoption, not monetization,” Robin Suwe, SVP of Schibsted’s Nordic Marketplaces division, told the AIM Group.” We believe transactional offerings will be a big part of future growth, not the only part, but this will be a significant contributor.”
Splitting off distribution and e-commerce
Schibsted has reorganized its business with this in mind, spitting off the division for growth companies, called Schibsted Next, and placing distribution and e-commerce under its Nordic Marketplaces division, which Christian Printzell Halvorsen has led alongside his job as CEO of Finn.no since 2019. (He’s stepping down from his role at Finn; the changes are effective July 1.)
“I see great opportunities in the borderland between our marketplaces and my new area of responsibility within distribution and e- commerce,” Halvorsen told local media.
The move opens up new ground for Schibsted’s marketplaces.
“The distribution network offers a unique advantage in the transformation into next- generation marketplaces, where we aim to take on the entire customer journey, including transactions and shipping,” the company said in a news release. “At the same time, our marketplaces may expand our opportunities within e-commerce.”
Most of the transaction work has been done in Norway and Sweden so far. The properties in Finland remain traditional classifieds operations for now. Schibsted is especially busy developing payment and shipping services across general goods.
“In general goods, we are much stronger in meet-up categories, like furniture, home and garden, in terms of GMV,” Suwe said. “We see a lot of growth in the shippable categories, such as electronics and fashion. We see a lot of opportunity in terms of making it more e-commerce to unlock supply and to increase monetization.”
Total GMV for general goods across Schibsted stands at around $3.2 billion U.S. annually, according to the company.
Delivery has been a major growth area for Schibsted. The company has been particularly innovative in providing a shipping option for consumers in Norway and Sweden: it transformed its newspaper delivery system into a fulfillment network.
“You can have items delivered with your morning newspaper,” Suwe said. “You can place a parcel on your front porch, or in the mailbox, and the newspaper delivery person will pick up the parcel and get it sent.”
Schibsted is open to different methods and providers, believing offering maximum choice to the consumer is key.
The company currently charges fees across all shipping options for general goods, but Suwe understands that it will be difficult to maintain this model over the longer term. “The consumer has a perception that shipping costs should reduce. E-commerce already offers a lot of free shipping, so there is considerable price pressure there,” he said.
Demonstrating the challenges in delivery is Schibsted’s recent decision to shut down its in-house shipping service Svosj. The service was established in 2019 and offered free shipping on purchases at partner online stores. The concept, similar to Amazon Prime, was the first of its kind in the Nordic region. However, it was built to serve the e- commerce segment and its closure has no real impact on Schibsted’s logistical capabilities in c-to-c.
Schibsted benefits from Nordic consumers’ high levels of trust in and adoption of payment systems. A widely used digital bank ID system in the region encourages consumers to pay online. This paved the way for the company to roll out sophisticated payment systems developed by local banks at marketplaces in Norway and Sweden. Payments are instant; there’s no additional charge for the buyer.
Is fraud an issue?
“Fraud does occur, but the users seem to think the risk is manageable. Our solution has to be better than the outside-the-site experience. That means having buyer insurance,” Suwe said.
Schibsted handles buyer insurance through escrow. The company also has a pilot collaboration in Sweden with an insurance startup that offers full buyer protection on an item, ensuring the item is as described and in full working condition.
Transactions in autos
Financing in autos is core to Schibsted’s transaction strategy.
“We see finance as a very important part of our mobility offering — both as a way to facilitate payments and to offer finance solutions,” Suwe told us.
In Norway, Finn has created a service where a digital contract is the main entry point to the transaction. It helps streamline documentation, change car ownership online and enhance trust among consumers, enabling the marketplace to mediate deals in c-to-c via escrow.
Finn is also running a marketplace pilot in car subscriptions, aggregating suppliers and comparing providers.
“We see that we can drive a significant part of the leads. From a user perspective, we’re seeing a shift from ownership to usership taking place. The pandemic has increased the need for more convenience and flexibility,” Suwe said.
Strong businesses to build growth
Blocket.se in Sweden and Finn.no in Norway hold some of the highest levels of population penetration among marketplaces globally.
Finn.no dominates all verticals, while Blocket’s only weakness is in real estate, where it has given way to Hemnet.se. Even in Finland, which remains a difficult market for Schibsted, it has a dominant position in general goods.
Schibsted already generates strong earnings at those marketplaces, and expects to grow them with additional services. Revenue from its Nordic marketplaces division reached NOK3.2 billion ($341 million U.S.) in 2020, with a marginal increase on NOK3.1 billion in 2019 – — respectable considering the global impact of the pandemic.
“Leveraging our current core is a key value- creation lever. This means pricing, packaging, the user journey and our offering to professional consumers,” Suwe said.
Schibsted has singled out autos as a priority area. The category is already the biggest revenue generator for Nordic Marketplaces, responsible for about 30% of revenue.
“We’ve placed some big bets on motor. Our first realization is that coming from a world where the classified position is winner- takes-all, we now see several attractive positions open up in the market,” Suwe said.
C-to-b has been one area of expansion. Schibsted has had success here with Nettbil, the Norway-based car-auction business in which it holds a majority stake. By auctioning private-party cars to dealers, Nettbil has offered users convenience and a way to maximize returns. Dealers like it as a way to build stock.
However, Schibsted’s role in Nettbil will probably end soon. Schibsted was ordered in May by the Norwegian Competition Tribunal (NCT) to sell its 67% stake in Nettbil, which it acquired in 2019. “The main argument was around market competition: Was there competition between Nettbil and Finn, or whether this was a complementary service that actually created more competition [in a larger market, between dealers]. We obviously have a different opinion from the NCT. We will now evaluate our options before we conclude” Suwe told us.
Schibsted must now find a buyer for Nettbil that is acceptable to the competition tribunal, or appeal the decision to a higher instance.
In general goods, Suwe is optimistic that Schibsted is at the forefront of e-commerce adoption in the Nordics. The company takes a “green” approach, an attitude that is particularly strong in the region.
“As general goods become more like e- commerce, it will open up other opportunities,” Suwe said. “Within fashion and electronics, sustainability and circularity is becoming more important. We are linked with that, and will benefit from it.”
Expand and consolidate
A priority for Schibsted is to add new No. 1 positions. The biggest potential is in the following areas:
- In Sweden, Schibsted could become No. 1 in recruitment. It’s currently the No. 3 by April monthly visits of 1.4 million with its two offers, recruitment vertical JobbSafari.se and Jobb.Blocket.se from Blocket. At No. 1, at 6.8 million visits in May, is state-owned Arbetsformedlingen.se, followed by the combo of se.Indeed.com / SimplyHired.se, both owned by Recruit Holdings, which generate 2.3 million visits per month. Considering the small traffic gap, it’s possible Schibsted could take the No. 2 spot during the next year. In real estate, Schibsted has given up on for-sale real estate, which publicly listed rival Hemnet dominates. “Following our inability to acquire Hemnet, we decided to exit the for-sale market and focus on rentals,” Halvorsen, head of Nordic Marketplaces, told us last year. Progress in rentals has been solid, particularly in the short-term vacation market, where Schibsted has become a genuine competitor to AirBnB.
- In Finland, the company is targeting a No. 1 position in real estate, although “we see big potential in Finland going forward all verticals. The Schibsted playbook — investing more in product and tech — can increase monetization and customer satisfaction,” Suwe told us. Through its two horizontals, Tori.fi and Oikotie.fi, Schibsted is a strong No. 2 in real estate, behind Alma Media’s collection of real estate verticals, led by Etuovi.com. This will be a long play; success may depend on which company can develop stronger transaction-led products and win over the country’s real estate agents. The No. 1 position in autos was essentially decided by Alma Media’s acquisition in March of the leading marketplace, Nettix (see table). “We believe there is room for Tori to take a strong, profitable No. 2 position in auto classifieds, and to branch out into other areas like b-to-b, b-to-c and subscriptions,” Suwe told the AIM Group.
- In Denmark, Schibsted now has two leading positions following Adevinta’s acquisition of EBay Classifieds Group: the No. 1 horizontal Dba.dk and the No. 1 auto vertical Bilbasen.dk. There is room for growth in both recruitment and real estate. Jobs are dominated by state- owned vertical JobNet.dk and publicly listed JobIndex.dk. In property, agent- owned Boligsiden.dk has the No. 2 position. These rivals will be hard to displace without m-and-a.
With access to a highly tech-savvy audience and mature economies, Schibsted’s three- pronged approach is building the foundation for a hybrid of e-commerce and classifieds.