If your company is looking to expand into international e-commerce, Germany is an exciting potential market. Germany is currently the fifth largest e-commerce market in the world, with a revenue of US$109 billion in 2021 — a number that has increased dramatically since 2019. Germans are cautious consumers, but once you’ve gained their trust, they are loyal customers. Although, as with any expansion into a new market, there are details that must be attended to, the revenue potential is great. But — like anything that is worth doing — it is worth doing right. In this article, we will explain what e-commerce businesses need to keep in mind when setting up shop in the German e-commerce market.
The country of Germany and its population
Germany has a population of over 83 million, making it a relatively large target market. It is centrally located in Europe, which makes it an ideal location for logistics service providers — in fact, it was rated the best logistics location from among 160 countries in 2016. Germany serves as an ideal hub for delivery to additional European markets.
What many don’t realize is that Germany has still not entirely recovered from the division between East and West Germany. Even so many years after reunification, there is still a distinct economic difference between the former East German states and the former West German areas. Average incomes in the former East are, generally speaking, lower than in the former West, and unemployment is higher. Nonetheless, the former East German states are slowly catching up, and the e-commerce market is strong overall.
Languages in Germany
In Germany, the vast majority of the population (95%) speaks German as their native language. Although there are many German dialects, these are generally only used in spoken language. Several million inhabitants speak Turkish or Russian as their native language, and there are also relatively high numbers of Polish, Kurdish, Italian, Greek, Arabic, Dutch, Serbian, Croatian, Spanish, and English speakers.
About 55%–63% of German residents speak English with varying levels of fluency. However, in the former East German areas, the percentage is somewhat lower, and 30% of Germans do not speak any foreign language at all. Moreover, numerous studies have shown that consumers prefer to shop in their native language whenever possible. That means that a German-language website is essential to having a successful e-commerce presence in Germany.
Internet usage in Germany
As a major economic player and technological leader, Germany is a nation of internet users. 90% of German households have broadband internet with an average of 69.4 Mbits/s, which is more than fast enough to shop online conveniently and comfortably. Moreover, the German national government has committed to wide-scale installation of fiber-optic internet throughout Germany by 2025, with the goal of creating a “world class digital infrastructure.”
Nearly all Germans (92.8%) use the internet to search for information, 86.7% use the internet to send and receive emails, and 46% read email newsletters online. That means that the most common online marketing methods, such as search engine optimization (SEO), paid search engine advertising, and email marketing are quite effective and have the potential to reach a broad target audience.
How Germans shop online
In 2021, 72% of German households made at least one online purchase, and around 15% say they shop online at least once per month. 3.5% say they shop online at least once per week. The number of online shoppers is expected to reach 68.4m by 2025, with an expected average revenue per user (ARPU) of US$2,099.97.
German shoppers are cautious buyers: according to a Statista survey, 59% say that they research online before making larger purchases, and 47% pay particular attention to product reviews that they find online. Any online store that hopes to win over German buyers should definitely consider displaying product reviews in their online shop.
Like the populations of most industrialized (and digitized) nations, Germans love to shop on their mobile phones. This is something that you should definitely bear in mind when designing your online shop. A mobile-friendly layout is key, especially if you are targeting a younger audience. Germans between the ages of 18 and 53 years prefer to shop on their phones as opposed to sitting down at a computer. Online shoppers between 54 and 72 years, however, prefer their laptops or desktop computers.
Shipping and International Purchases
Germans are accustomed to quick delivery. DHL, the package delivery branch of the German Post, delivers most packages within 1–2 business days, and Germans expect this level of service from online sellers. 14% of survey participants say that they prefer express shipping, and 12% want same-day delivery (which is often offered in major cities by, for example, Amazon).
Germans are also happy to buy from international websites. In fact, 15% of worldwide international purchases are made by German buyers. Most of these international purchases are made from e-commerce companies based in the UK, the USA and China.
How to create an online experience your German customers will love
Germans are generally a somewhat skeptical target group. If your website is unknown to them, it needs to make an absolutely professional impression before they will be willing to make a purchase. A consumer protection certification that is familiar to German consumers, such as the Trust Mark from Trusted Shops, can help to build confidence in your brand and website. Your website, FAQ page, terms & conditions, etc. should be presented in flawless German, and it would be ideal to offer German-language customer service support as well.
As we’ve mentioned before, Germans like to do their research before making a purchase. Consumer organizations such as Stiftung Warentest are extremely popular in Germany, as their product tests and ratings systems give consumers an added sense of security. Displaying verified product reviews on your website will also serve this purpose.
German customers expect a convenient, modern online shopping experience. This means that you need high-quality images and well-written text in flawless German. As far as UX goes, your website needs to be mobile friendly and, ideally, it should offer a seamless shopping experience when switching from mobile to desktop. You may also want to look into an e-commerce solution that provides omnichannel or multichannel shopping.
Payment and Delivery in Germany
Common payment methods in Germany are: payment by invoice (20- 30%), digital banking such as PayPal, Klarna, or GiroPay, or payment by direct debit. Digital banking payments account for a total of 60% of purchases, while only around 11% of purchases are paid for with credit card. Unlike some parts of Europe, Germans do not commonly pay with cash on delivery. They are also generally risk-averse and do not like making purchases on credit, so financing options are not typically of interest to them.
The most common delivery option in Germany is DHL, which is a service of the German Post. DHL delivers quickly, usually within 1-2 business days. Most Germans have their packages delivered to their homes and offices, but there is also the option to use the “Packstations” — secure lockboxes where customers can pick up their packages 24 hours per day.
International shipments from outside the EU can sometimes be problematic because the German customs office may hold the packages for inspection. This can cause delays and result in unexpected costs for the buyer, neither of which would inspire a repeat purchase. For this reason, many international companies choose to set up an EU warehouse and shipping hub, which avoids this problem.
There are a few legal technicalities to take into consideration when selling to customers in Germany (or the EU in general). The first is the General Data Protection Regulations (GDPR) that went into effect in 2018. This is a complex topic and, if your company is not familiar with it yet, you should definitely look into it in detail before marketing your products to European consumers. The simple takeaway we would like to give you is that German consumers expect their data to be handled carefully and want to be informed of exactly how it will be used.
Lastly, according to EU law, consumers have 14 days to return most online purchases. This rule also applies to companies who are based outside of the EU but are specifically targeting EU consumers. If your company does not currently offer returns (or offers a shorter return window), you will need to keep this in mind.
A summary of the German e-commerce market
Germany represents a large and robust e-commerce market that is a worthwhile target for any company that is considering moving into the European market. With a German-language website, you will also be well-positioned to reach customers in other German-speaking areas of Europe, such as Austria or Switzerland. Although there are certain legal considerations to take into account, the requirements are similar to those in any other European country. It takes a professional and well-designed website to win the trust of German buyers, but it will likely be a worthwhile investment if done correctly.