Tips for tapping the German e-commerce market.
Internet Retailer , Internet Retailer
"Germany offers great potential for e-retailers looking to expand sales beyond their home markets. However, retailers would be wise to do their homework before selling in the country as German online shopping habits are distinctly different from those in much of the rest of the world," says Nadine Späth, consumer goods and e-commerce expert at Germany Trade & Invest, a government-backed agency that promotes Germany as a business and technology location and helps international companies establish a physical presence in the country.
Germany boasts the most Internet users in Europe with 54 million of its residents online regularly. Online sales in the country totaled 39 billion euros ($54 billion) in 2013 and are set to top 100 billion euros ($137 billion) in 2020. Companies looking to take advantage of this vast potential should note that German shoppers are often regarded as being risk averse.
For example, German consumers often prefer to be invoiced for online purchases rather than pay up front. Traditionally, German catalog companies have sent customers an invoice with their orders to be paid via bank transfer—a practice that carried over into online shopping. Germans often tend to avoid using credit cards or incurring debt. "In fact, the German word for debt—schuld—also means guilt," Späth adds.
Not having to pay up front means that the return rate is higher in Germany than elsewhere. In an attempt to combat this, ever more e-retailers across Germany are adding tools to help shoppers understand products better before they buy. U.K. apparel retailer Asos Plc, which has recently set up sales and logistics operations in Germany, displays the measurements of the models that showcase its wares in videos to help shoppers envision how products will look on them.
A major development is the introduction of the new European Consumer Rights Directive on June 13, which will enable retailers in Germany to charge for return shipping. "However, a recent survey found that nearly 60% of German online retailers won't charge for returns despite the change. So even though the law is on their side, online retailers might not impose it," Späth says. Furthermore, German consumers are increasingly adopting alternatives to paying by credit card, such as PayPal, SOFORT, ClickandBuy and giropay.
Despite these differences, Germany is an attractive investment location thanks to a highly developed logistics infrastructure that makes it easier for companies to offer extra benefits such as same-day delivery, high productivity rates, internationally competitive tax conditions, steady wage levels and a highly educated workforce. At the same time, Germany offers open and transparent markets with no distinction made by German law between German and foreign nationals regarding investments, incentives or the establishment of companies.
So it is clear that Germany offers huge potential for online retailers and service providers. However, a little preparation before entering the market goes a long way to understanding and appealing to German shoppers. "We are here to help companies understand the German marketplace and find their way in Germany entirely free of charge," Späth says.
Sponsored By: Germany Trade & Invest
For more information visit www.gtai.com/e-commerce, or visit Germany Trade & Invest at IRCE Chicago from June 10-13, 2014, at booth #223.