2020 featured a number of substantial themes. CDON achieved a critical mass of connected merchants and customers and finished the year with over 1,500 connected merchants. Listing the company on the Nasdaq First North Growth Market put us in the right place to focus completely on our own operations. The transformation of CDON from e-merchant to the leading marketplace in the Nordic region was completed when we changed our technological platform. That laid the foundation for continued scalable growth and personalized customer offerings as well as AI and automation. Society was impacted hard by COVID-19, which at the same time accelerated the underlying shift from physical to digital commerce.
Over 50% of global sales are made on marketplaces
For several years, global e-commerce outside the Nordic region has been dominated by sales in digital marketplaces. Over 50 percent of global online sales are currently made via marketplaces. Amazon is one of the largest marketplaces in the world and for several months local marketplaces have grown alongside Amazon, such as Allegro in Poland, Bol.com in the Netherlands, and Cdiscount in France. The Nordic region has a lower proportion of sales via marketplaces than many other countries. As a market-leading digital marketplace, CDON benefits from the underlying shift towards e-commerce generally and towards marketplaces specifically. A digital marketplace allows external merchants to sell their range on a collective digital platform, which benefits both consumers and merchants. Consumers have access to a wide range at better prices and with the opportunity to buy from several merchants at the same time, while merchants have a wider and larger audience and have access to the marketplace’s different tools to drive and optimize their sales.
Starting and operating a marketplace involves dealing with substantial barriers to entry. In order for a marketplace to function, basic liquidity in terms of connected merchants and consumers is required concurrently. When a marketplace has reached sufficiently abundant liquidity, it constitutes a self-enhancing ecosystem that merchants will want to connect to so as to reach more customers, which produces more products and better prices. The wider offer range increases the marketplace’s appeal further and more customers are attracted to the platform. CDON has passed the critical mass of merchants and consumers, and the operation is now run on a strong and flexible platform that enables us to continue to develop the ecosystem in a scalable manner. The next step for us is to fill the gaps in the customer experience that continue to limit customers’ perception of the robustness of the platform. This is going to be a substantial area of focus in 2021 and we will be developing our organizational structure and our operation to accelerate our development here. As the lifetime value of our customers increases, we will also be increasing our rate of investment in marketing.
Sustainability is an increasingly important aspect of the business
We also have an important job to do in terms of sustainability. We strive to contribute to a circular economy. We collaborate with sustainability partners to minimize our own climate impact relating to returns management. In e-commerce, running data centers is something that has considerable climate impact. We strive to ensure that our marketplace is primarily run on renewable energy.
A great vote of thanks
Finally, I would like to express sincere thanks to our customers, merchants, and partners for your continuing trust in us. I would like to thank all our employees for their enormous commitment and the hard work that is done on a daily basis to continue to build CDON. Together we will continue to be the driving Nordic e-commerce force.