Intro Germany
In Germany, e-commerce is a booming and offers rich prizes to any company that can give German consumers what they want: a good deal.
Germans, famously, have money to spend. The country’s average per capita income is $US 50,419, around 20% higher than average income in the eurozone [1]. The country’s economy is set to grow at a rate of 2.1% in 2022, rising to 2.7% in 2023 [2].
The IMF may revise these rates downwards, under the influence of inflation and other headwinds, but so far forecasting bodies, including the European Commission, aren’t predicting any economic outlook worse than slightly slower growth [3]. Even in the face of economic uncertainty, the German labour market remains tight, with unemployment at just 2.9% [4]. Bad news for employers but good news for businesses hoping for consumer confidence to quickly rebound.
Germany’s e-commerce market
German e-commerce is worth $US 122 billion [1]. Germans buy 20% of all retail purchase online and complete 41% of all purchases on a mobile device [1].
The average online shopper spends $US 1,462 with cross-border and German e-commerce merchants every year [1]. 37% of German online shoppers buy from merchants outside Germany [1], spending an annual total of $US 18.7 billion [1]. The most popular German e-commerce categories are Electronics & Media (27%), Fashion (24%) and Toys, Hobby & DIY (22%) [1].
According to recent estimates, the German e-commerce market grew by 15% in 2020 [5]. Older demographics are now shopping online. More than one in three German e-commerce users in 2020 was over 60 years of age [5].
Germans now spend more than 12% of their disposable income online and 75% say they’ll continue to shop online as much, or more than, they do now, even after the pandemic is over [5]. There’s no sign of these changes kicking into reverse now that restrictions are largely over, with Germany’s federal economic development agency describing online shopping as “the new normal” [6].
Payment methods in Germany
The most popular German payment methods are, if you’re used to markets dominated by cards, alternative payment methods. The most popular local payment method in Germany is bank transfer, which Germans use in 34% of all online payments [1]. They use e-wallets in 29% of online payments, a range of local and minor payment methods in a further 19% and cash in just 4% [1].
Germans use credit and debit cards in just 14% of online transactions [1]. In the card market, local schemes dominate with a massive 75%, Visa has only a 13% share, MasterCard 11%, and American Express 1% [1].
Enabling and limiting factors
Germany is ranked number one in the World Bank Logistics Performance Index, which measures the speed and quality of carrier delivery (taking in factors such as the quality of the customs services, the infrastructure and the quality of the postal and carrier services) [7].
In a recent survey, Germans were the second-most satisfied (after the Austrians) with the post-purchase experience — and specifically with delivery — of any consumers in Europe [8]. This is despite the average delivery time in Germany being 2.6 days, compared to 3.7 days in Austria [8].
Since 202, more German retailers have moved to a multi-carrier, multi-modal logistics strategy [8]. Despite this, 43% still rely on a single carrier to deliver their e-commerce shipments to consumers [9].
100% of German adults have a bank account and 54% have a credit card. Internet penetration is 96% and smartphone penetration 79% [1]. In 2017, the country adopted a national broadband plan, the aim of which is to lay a nationwide gigabit fibre network, serving every community, by 2025 [10].
Footnotes:
- Original PPRO research
- https://www.imf.org/en/Countries/DEU
- https://ec.europa.eu/info/business-economy-euro/economic-performance-and-forecasts/economic-performance-country/germany/economic-forecast-germany_en
- https://www.destatis.de/EN/Themes/Labour/Labour-Market/Unemployment/_node.html
- https://www.gtai.de/gtai-en/invest/industries/digital-economy/german-e-commerce-market-grows-610422
- https://www.gtai.de/en/invest/industries/consumer-industries/online-shopping-the-new-normal-stationary-retail-to-grow-800804
- https://lpi.worldbank.org/international/global
- https://www.parcelperform.com/insights/e-commerce-delivery-report-german-uk-consumers
- https://ecommercenews.eu/ecommerce-shipping-in-germany-2021
- https://digital-strategy.ec.europa.eu/en/policies/broadband-germany
