How to Sell Online in Germany
With constantly growing revenue that is already bigger than the Slovakian GDP, Germany offers huge potential for foreign online shops to expand.
Without a doubt, Germany is the economic powerhouse in Europe and also in the digital commerce industry, Germany offers a big market. With constantly growing revenue that is already bigger than the Slovakian GDP, Germany offers huge potential for foreign online shops to expand.
As analyzed in our previous article, the potential for foreign online shops is not yet utilized. Moreover, German online shoppers are starting to get used to ordering from foreign retailers over the internet. To support foreign online shops to unleash their potential selling directly to Germans, we analyzed the main issues foreign online sellers face in Germany and how to solve them - perceived logistical problems and the trust issue - with ten tips on how to increase trust.
The high level of competition and German customers being demanding are circumstances that require a professional approach to sell successfully online in Germany.
Next to the unused potential in the internationalization of Germany’s e-commerce market, the high level of competition and German customers being demanding are circumstances that require a professional approach to sell successfully online in Germany.
With this article, we now want to introduce you to the German online market and help you to start to fly high with your sales in Germany.
Highly demanding customers
In general, German customers can be characterized as quite demanding – they expect that the shopping experience goes without problems and have high expectations of the product quality.
For Germans, reliability is quite important – especially when it comes to a cross-border order.
For Germans, reliability is quite important – especially when it’s a cross-border order. Germans are in general conservative and skeptical, which is why there are a lot of consumer protection organizations, shows, and magazines. But especially, when it comes to shopping online from a retailer abroad - where there is no personal contact, but uncertainty about the other culture instead - reliability is under scrutiny. As we have analyzed before, the trust issue should not be underestimated by foreign businesses when selling online to Germans - read more about it below.
Next to the requirement for reliability, Germans have high expectations for transparency in the shopping and shipping process. But also with shopping, checkout, and shipping experience we are quite spoiled as we are used to that everything goes conveniently - in particular free return policy and free shipping.
So when selling online in Germany you should make sure that at the shopping and shipping process everything goes smoothly, prompt, and with no hidden costs
So when selling online in Germany you should make sure that at the shopping and shipping process everything goes smoothly, prompt, and with no hidden costs. Moreover, for the best results, the e-commerce store should be localized to Germany – meaning flawless German language, prices in EUR, compliance with the European and German legal requirements (such as ‘Impressum’ - read about it below). Also, for long-term success make sure that the products meet the expectations and needs of your German target group.
What to consider about shipping when selling online in Germany
Even if the old image of things in Germany being always efficient has suffered blows e.g. with the fiasco of the BER airport that took almost a decade longer to finish than planned, the logistical infrastructure counts as one of the best if not the best in Europe. Also, the e-commerce industry is efficient as well as sophisticated and for German consumers, time is an important aspect. So what I am trying to say here is, it is essential to deliver the product within a few days, as that is what German customers are used to. In addition to that, it is also important to keep the logistical costs low to be able to compete effectively in the German digital market. Ah 'ja' and shipping costs are not very liked here, but of course, you can add shipping costs - just make sure that they are clearly communicated and that the fee is reasonable.
So, you should either make sure to have a smooth, fast, and efficient e-commerce fulfillment and shipping process that keeps the extra time and additional shipping costs to cross the border at an acceptable minimum (for which you should adequately inform your customers) or if Germany (and Austria and Switzerland) is (are) a major market, to ship from within Germany – for that we partnered with a fulfilling provider that offers a lean pricing system with low fixed costs which proved to be advantageous for our clients.
Keep your promises
As already mentioned, German online shoppers expect that everything works just fine and if you give specific information – e.g. for shipping time – we do expect that what you write will be the case. Otherwise, we just get annoyed or angry and chances are high that customers won’t come back and worse, that you will collect bad reviews. Having a longer shipment time than you say, is worse than having a long shipment time that is openly communicated. So, when selling online in Germany better stick to what you say – in this case when the product will arrive.
Germanize your content and marketing
Obviously, if you want to sell successfully and spent money on online marketing in Germany, the language must be in German. But in our experience, it must be more than just plainly translated - the German on your online shop and ads must be flawless and in a localized tone. First, you want to avoid any costly misunderstandings that can lead to abandoned carts or the disappointment of your critical German customers. Secondly, for the best results for marketing and sales the language should not only be adjusted to the keywords in Germany but also meet the tone of your target group - which might differ from your home country.
German-speaking customer service
Next to the language, the email address and phone number should be in German - except you only target the international-minded young, urban, and well-educated folks. In general, it is also better to offer a German-speaking customer service - for emails and if possible also per phone.
Of course, also the currency and VAT rate should be adjusted to Germany.
Security is under scrutiny
People in Germany are generally conservative, critical, and skeptical when it comes to something new or foreign. Whether it is to shop in another technological way, to pay electronically, or to purchase from unknown retailers from abroad - Germans want to make sure that everything is safe.
Worries about the trustworthiness of the foreign retailer and about the data privacy in cross-border e-commerce
According to a study published by Idealo, when buying online from abroad, more than every second online shopper is worried about the trustworthiness of the foreign retailer (54 %) and the possibility to receive counterfeit (57 %). A stunning 75 % is even worried about problems with the warranty or guaranty. Also, Germans are worried about whether their data are treated confidentially in cross-border e-commerce (51 %). Read more about the worries Germans have when shopping from foreign online shops.
Make a reliable impression
So since Germans are worried they want to make sure that everything is safe. For that, the impression Germans get about your online shop is absolutely crucial.
To not give reasons for skepticism, it is not only important to have flawless German language and a professional-looking website but also that you comply with the European and German laws - e.g. that you have all the legal texts "Impressum" ("legal information"), privacy, right of withdrawal, and not required but standard (and in your interest) terms and conditions - read more about legal requirements here.
Read more about how to become a trusted online shop.
Of course, every country has its differences in how things are done in personal and commercial life - and one of these things important for online sellers that want to sell online in Germany is how German online shoppers like to pay online.
For the best results, you have no other option than to include PayPal and Invoice as a payment option. No matter which survey you look at - PayPal and invoice always top the ranking - e.g. in the following two surveys.
Behind the forerunner are the German-specific SEPA Direct Debit is the well-known Credit Card. While everyone is familiar with Credit Card, SEPA Direct Debit might need some more explanation for non-Europeans - for that, we suggest reading more e.g. here.
An important trend in recent years is that more payment service providers are used by online shops in Germany. Applying that practice, payment methods like prepayment or invoice or even the whole payment process can be outsourced to a trusted and secured payment provider - like SOFORT, Klarna, or Mollie.
To read more about payment methods in Germany, click here.
High return rates
Two our of three German online shopper return their order if they are not satisfied with the product. With that Germans lead this ranking in Europe according to a study by sendcloud (2022).
Consequently, the return rate is quite high in Germany - every eighth order gets send back on average according to a study of the digital association Bitkom in 2018. Especially bad in this regard are the young compatriots aged 14-29 (who send 18 % back) and women (15 %). That women are above average might be also due to that they shop more fashion online – which usually has a very high return rate which gets as high as 70 % (Manning, 2021). So, when your target group is young women and you sell the newest fashion then you can expect a very high return rate. Otherwise, it might be possible to keep your return rates at a more acceptable ratio. Important to keep the return rate in Germany is to describe and show the product as good as possible and to really stick to your promises to meet the expectation of your German customers.
For non-European vendors, it is important to know that the online shopper has the right to send back the purchased article within 14 days without needing to give a reason for the withdrawal. Also, it is noticeable that it is standard to have a customer-friendly return policy with a period of 30 or more days.
Market places to sell on
Selling online in Germany is often a multi-channel campaign using other sales channels next to the online shop. Selling through retailers and of course market places like Amazon are sales channels that offer great potential. Especially for online retailers that sell well-known commodities rather than special innovative products market places are a very good sales channel.
Amazon in Germany
The uncontested leader in the category of market places to sell online in Germany is Amazon. Amazon does bring a lot of traffic and many consumers like the easy and familiar process, knowing that nothing can go wrong and being able to quickly check the reviews before ordering. On the other side though, Amazon is not famous for being the best business partner one could imagine – e.g. 84 percent of sellers that sell for more than five years see Amazon as a difficult business partner according to a study of the Federal Association of Online Trade in 2021.
84 percent of sellers that sell for more than five years see Amazon as a difficult business partner
Moreover, Amazon has a bad reputation in Germany due to reports about how they treat their employees and that they destroy returned products is also not liked in the country which sees a sustainable ‘green’ trend. If you want to read more about Amazon and to learn whether it makes sense to enter the German market first through Amazon, click here.
Otto - "Germany's high-end Amazon"
The best alternative to Amazon is the second-largest sales platform in Germany is Otto. Otto offers a better image regarding social and environmental standards. However, when it comes to interface, range of goods, delivery time, and comfort, Otto is still slightly lacking behind Amazon - the reason why Otto is only second. One reason for the limited range of goods is the policy to only accept products from producers or sellers, which have a German office and a German customer hotline. Those requirements seem to be a barrier for smaller foreign entrepreneurs. On the other hand, this also opens a chance, since when you can sell to Otto, there is less competition.
Other relevant market places in Germany
Then there is of course also eBay, but at eBay, the prices are usually very low, and mostly price-sensitive people shop there. Similar to eBay and Amazon but build on a fairer premise are Rakuten and Hood – on which, however, is lower traffic. More interesting could be Kaufland.de (former real.de) which is according to themselves the fastest growing market place and Yatego, which supposedly has already over 10.000 online stores.
The other online marketplaces in Germany which you could consider selling on mostly depend on the niche. Zalando and AboutYou for fashion or Avocado store for environment-friendly and sustainable products for instance.
The increasing request for sustainability
The last point we want you to know when you plan to sell (online) in Germany is that people here really became environment friendly: a trend that is growing with no end in sight. It is fascinating to see people discussing how to consume more sustainably and what to consider when deciding what to buy and where to buy it. And that kind of discussion is not just among the young, urban, "Friday for Future" supporting part of our population - it goes through all kinds of groups and arrived in the center of Germany's society. Not for no reason, the German green party counts as one of the biggest green parties worldwide.
That means for online sellers to consider the ecological impact the product, packaging, and shipping process has and how it is perceived by their German target group. In a bid to meet the "green" trend, you should think about how to decrease the preconception ('green washing' and marketing) or how to actually decrease (unnecessary) materials or emissions at packaging and shipping respectively. Shipping and packaging are the two issues that are perceived as harming the environment when shopping online. Read more about the "green" trend in Germany and what it means for businesses selling to Germans here or more interesting insights about environment friendliness in Germany’s e-commerce sphere, here.