How is the E commerce market Growth in Germany ?

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GREATEST E-COMMERCE CUSTOMER

POTENTIAL WITHIN EUROPE

With more than 51 million (94 percent of internet users

aged 14+) digital consumers in 2014, Germany enjoys

the greatest e-commerce customer potential within

Europe – making it the clear continental leader. Beyond Europe, only China, Japan and the USA record

higher digital consumer numbers. The A.T. Kearney’s

Global Retail E-Commerce Index 2015 identified Germany as Europe’s second largest online market, behind the UK – but with almost triple the UK’s current

growth potential. European online retail sales will

reach EUR 234 billion by 2018; with a compound annual growth rate (CAGR) of 12 percent for the period

2013 to 2018. Just under half of all online retail sales

across the EU-7 will be from online purchases made

using a smartphone or tablet by 2018.

SIGNIFICANT MARKET VOLUME INCREASE

Together, German B2C multichannel online and mail

order business generated total turnover of more than

EUR 49 billion in 2014. Accounting for more than EUR 41

billion of this sum, e-commerce generated more than

85 percent of total industry turnover. Germany’s e-commerce sector represented nine percent of the nation’s

total retail industry (EUR 457 billion) in 2014 with the tendency positive. The German E-Commerce and Distance

Selling Trade Association (bevh) has forecast that the

e-commerce volume will grow by 12 percent in 2015 to

reach revenue of almost EUR 47 billion. According to the

Association of the German Internet Industry (eco), more

than half (53 percent) of German GDP generated in 2017

will be e-commerce related (compared to 37 percent in

2012). These numbers highlight the significant potential

within the German B2C e-commerce market.

GERMAN ONLINE RETAILERS GOING INTERNATIONAL

Amazon is the leading online retailer in terms of number of online shoppers and e-commerce turnover in

Germany. All-rounders – such as Otto, Tchibo and Conrad Electronics – have dominated the top 10 online shop

rankings in Germany for years. However, companies

that focus on one specific product category – such as

Zalando, Cyberport, H&M, and Notebooksbilliger.de –

are gaining more revenue and taking their places.

Many German online retailers are already engaged in

international business. Of the surveyed members of

the bevh, almost 90 percent conduct online business

beyond national borders. Twenty-eight German e-commerce companies are represented in the list of the Top

100 European E-Commerce Companies in 2014. Nearly

half of those companies who do not currently generate

business abroad are working on their international expansion.

 

E-COMMERCE TRENDS

The overall trend set to dominate industry development

in the next year can be best described as a move towards personalization: the defining of a unique, emotional, yet flexible shopping experience. With the continuing development of technical solutions allowing for

ever more interactive shopping models, e-commerce

seems predestined to fulfill such expectations. Personalized marketing and customized approaches based on

individual consumer requirements will gain in importance. E-retailers will make more and more use of the

substantial consumer information streams available to

them (“Big Data”) to form set digital identities for their

respective target groups.

 

TARGETING DIFFERENT SHOPPING BEHAVIORS:

FEMALE COMMERCE

“Female Commerce” or “She-Commerce” refers to

the lucrative women’s market for e-commerce products and services. With the relative buying power of

women higher than ever before, e-commerce companies who focus on individual female demands, shopping behaviors and decision-making processes will

be more successful than those retailers who adopt a

“one-approach-fits-all” solution. Subjective factors including anecdotal experience and emotional responses

to products are as much an important source of information for women as hard product facts. Social media

platforms (including YouTube, blogs, Instagram, and

Twitter) therefore have a significant impact on female

purchasing decisions. The more specific, individualized

information an online retailer can provide to its female

target group, e.g. through brand ambassadors, the

higher the purchase likelihood.

 

SERVICE APPS – TIME SAVING AND CONVENIENCE

GoButler, Shopwings, Hello Fresh, Delivery Hero,

John’s Bell, ZipJet, Helpling, James,bitte – these are

all successful start-ups mirroring a trend that can best

be described as time-saving and convenience services.

Time is a very valuable commodity. Those start-ups

offering day-to-day services, e.g. cleaning, pick-up and

deliveries, flight and travel bookings, restaurant reservations, event planning etc. have experienced huge demand and substantial growth in 2014. Other apps focus

on convenience in terms of the online shopping experience, e.g. price comparison, mobile shopping lists including notification of price changes per selected item,

and couponing.

 

FUTURE TREND OUTLOOK

Augmented reality, edutainment and serious games will

become more important. Virtual fitting of clothes and

accessories, virtual home furnishings visualizers, and

video glasses will become widely implemented by 2016.

Researchers forecast that the average workload per

person will have doubled by 2030, taking into account

the demographic changes in Germany which will see

one-in-three Germans being 65 years of age or older.

 

DIGITAL POINT-OF-SALE STRATEGIES

Consumers are increasingly demanding multichannel

transactions including browsing, buying, and returns as

well as pre- and post-sale services. They want to decide

where, when and how to shop. In order to be successful

in the retail industry, it becomes increasingly important to combine different sales and marketing channels

to optimize overall digital presence. Enabling seamless cross-touchpoint experiences, customer journey

mapping will be important to target the increasingly

multi-touchpoint shopping behavior of customers.

Many German retailers have not yet seen the need for this

and have failed to adapt their presences accordingly.

However, pure online players are increasingly turning

to stationary shopping solutions next to their online

presence. Rather than creating a competitive situation,

both channels are taking advantage of the other for mutual benefit.

“Click and Collect” is one way to combine the worlds of

offline and online shopping. Typically used for smaller

items in the past, this model has recently made the

leap into the home furnishings market (e.g. IKEA’s pre-

packed for in-store collection service for online orders).

Collective Click and Collect stations are becoming

more and more popular, e.g. shopping centers offering click and collect stations in their parking garages.

Customer service and convenience plays a major role:

fitting rooms, return service, free parking etc. These

models are still at a very early stage in Germany.

 

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