E-commerce in Germany has a lot to offer your brand. But it’s not enough just to set up shop – you’ll need to sell on the top online marketplaces too. Here’s why – and how to go about it.
They’ve got deep-rooted privacy concerns and a cautious approach to social media. So you could be forgiven for thinking e-commerce might not be Germans’ cup of tea.
You’d be mistaken.
In 2018, e-commerce in Germany grew 11.4% to 65.1 billion euros – making it the fifth largest e-commerce market in the world. For every euro spent in the German retail industry, more than one eighth belongs to e-commerce. And 66% of all German internet users bought something online in the past month. All of which means e-commerce in Germany is full of lucrative potential for your brand.
But it’s not enough to just set up an e-commerce site and think ‘job done.’ Marketplaces are the largest distribution channel in German e-commerce – and their steady growth is one of the major drivers of e-commerce in Germany as a whole.
It goes without saying you’ll need a well-thought-out marketplace optimization strategy to succeed. But where to begin? Simple: start with the three largest German marketplaces. They make up 43% of the total value produced by the top 100 online retailers.
So who are they, and what can you do about it? Here’s what you need to know.
Surprise, surprise, Amazon’s on the list. You might have figured it would feature somewhere. What you probably didn’t realize is how popular it actually is. Here are the stats:
- Germany is Amazon’s second-largest market after the US.
- In 2017, it sold more than the rest of the top 10 marketplaces combined.
- It’s been voted the best online retailer by German customers for three years in a row.
The great news for foreign brands is that cross-border commerce is common on the marketplace. In 2016, 53% of all sellers on Amazon.de were from abroad – a trend that will continue as consumers flock online in search of cheaper prices.
As in other markets, Amazon.de offers two different ways of selling on the site: Amazon Vendor Central and Amazon Seller Central.
Vendor Central is an invite-only service, where Amazon buys a stockpile of your products and sells them under its own name. As Amazon is then the retailer, they’ll take care of selling to customers and managing aftercare.
People are more willing to buy from Amazon than from third-party sellers. This can be a great opportunity for your brand – provided you don’t mind the loss of control and direct consumer contact. There’s also little scope for negotiation on pricing or business terms.
So how can you get an invite?
It’s not something you have much control over. Typically, you need to be an existing brand or marketplace seller with strong demand. Alternatively, you might catch the Amazon team’s eye at a trade show.
Vendor Central isn’t for everyone. If you do get the offer, take the time to consider what’s best for your brand – you don’t want to regret your decision later.
Seller Central allows anyone to sell third-party products on Amazon. This gives you control over selling to customers, pricing, aftercare and anything else that may come up.
You can also create an Amazon Europe Marketplaces account. This allows you to use a single Seller Account to sell goods in the UK, Germany, France, Italy and Spain. You can manage stock across markets and control everything from a centralized account. Of course, you should still localize product pages. And Amazon requires you to provide customer service in the local language.
Just like in the UK or US, you can also promote your products on Amazon using Product Campaigns or Sponsored Brands.
OTTO is the second largest online retailer in Germany. It’s a fashion and lifestyle retailer, selling its own line alongside around 5,000 other brands – including Chanel and New Balance. 45% of all German households have shopped on the site, making it a huge player in the apparel and fashion market. But although they specialize in fashion, sport, furniture and lifestyle, they’re always adding more to their product portfolio.
To sell on OTTO, you’ll need high quality images and German product descriptions at the very least. They cover 20 other countries too, so if you decide to expand later down the track, you’ll also need to localize product descriptions into their languages.
If you’re a brand, you can sell your products through the OTTO marketplace. But OTTO also allows retailers with a wide product and brand portfolio to set up shop too.
Zalando is Europe’s largest online retailer for fashion. It’s currently home to 2,500 stores operated by 200 brands.
Although Amazon’s made some ground in the fashion market with a ‘pile it high, sell it cheap’ tactic, Zalando offers a more premium service. Simply put, it’s a place for people who are interested in fashion. People go there to find high-quality items, and they’re less price-sensitive than on other platforms.
Instead of selling brands on their platform, Zalando partners with them. Which means you won’t have to compete with the marketplace on price. Zalando is also great for customers – it can make recommendations based on your previous purchases. This high-quality service is based on data and in-depth knowledge about customers. In short, Zalando is always looking for ways to make their customers feel special, and to simplify purchasing.
Because of this premium service, you need your own online shop – selling sportswear, fashion or accessories – to operate on Zalando. They’re relatively simple to set up though, so don’t panic if you don’t already have one. You should also be able to offer free delivery and returns through Hermes.
For any brand looking to sell in Europe, Germany is a natural choice. It’s prosperous and e-commerce is booming in the country. Partnering with larger e-commerce marketplaces can help you take advantage of this and gain traction faster than you would on your own.
If you’d like some help setting your brand up for e-commerce in Germany, get in touch with our digital team today. They’d love to hear from you.
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