Germany 2021

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Germany 2021

Germany 2021 Ecommerce Country Report

Ecommerce Country Report

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€499 | May 2021 RXRDE21RP

Welcome to the Germany spending time with friends and socialising properly. Contents Ecommerce Country Report. Retailers will be keen to collect on the pent-up demand from money that consumers didn’t spend in 2020. Country profile 3 This report is published at a time Market context 4 when Germany is looking with hope As I look over the charts and expert analysis that my team Partner perspective: Amplience 6 to the future, having experienced has brought together in this report, I see Germany as a Partner perspective: Asendia 8 lengthy government restrictions country in the midst of change. There is hope ahead as Partner perspective: Iterable 10 on movement around the country and shops closing due the country comes out of its latest lockdown as a leader in Partner perspective: Tealium 12 to the pandemic. Currently, cases of coronavirus have environmental matters, digital taxation and scrutiny of the Key indices 14 dropped to a point not seen since October last year. practices of global digital behemoths Amazon and Google. The German consumer 15 Data protection and the desire for transparency and Online behaviour 18 Germany’s vaccination programme appears to be going trust are key for Germans and this extends into all Payment methods 20 well, with initial problems with the rollout now resolved. areas of life, from how they shop online to the behaviour Online devices 21 At the time of writing, doctors have administered 40m of its politicians. Case study: Douglas 22 doses of the vaccine, almost 40% of Germany’s population Delivery methods 23 has received one dose and 11.2% are fully vaccinated. Angela Merkel’s lasting legacy may well be the strong Covid-19 24 economic position that she leaves the country as she Holiday season 25 Germany’s health minister, Jens Spahn, says he is stands down from frontline politics in September. Yet the The Largest 100 26 looking forward to the end of June when, hopefully, future of the country, how it repays its Covid-19 debts and Political outlook 28 a larger number of people will have been vaccinated, the direction it takes on the global arena in the next four Case study: Zalando 30 infection rates will have reduced and the country can years are yet to be decided. Retailers would be wise to take Figures and sources 31 have “a really good summer”. note of consumer sentiment. Conclusion 33

Retailers are hoping for the same thing. German Ian Jindal, CEO, RetailX consumers are no different from consumers across Europe who are looking for the release of once again going out,

Germany is a strong economy but it still faces the uncertainty of a €1.3tn pandemic bill and a looming election

Germany is the fourth-largest economy in the world Although GDP will have fallen in 2020 because of the Germany country profile after the US, China and Japan. It ranks fifth in terms Covid-19 pandemic, Germany’s strong economy looks set Area: 357,022km2 Capital: Berlin of Purchasing Power Parity (PPP), which makes it an to bounce back fairly quickly. The latest forecasts predict Currency: euro, € attractive market for business while giving citizens an 3.2% growth in 2021, up from a previous estimate of 3%. Official language: German enviable standard of living. It is also the country with the There is a certain level of pent-up demand among German Foreign languages spoken: English, French largest population in the European Union. consumers, so household spending is expected to drive Nationality: Germans the recovery once restrictions placed on the population Government: Federal Republic Much of its economy is based on exports. It is one of the and businesses are lifted. In the meantime, consumers VAT: 19% | Reduced rate: 7% biggest global exporters with almost 50% of its GDP will carry on purchasing online. attributed to this. Its manufacturing base exports vehicles, machinery and electrical and electronic products. Leading That said, German consumers are likely to have to pick up “The [Covid-19] crisis is becoming companies headquartered in Germany include Daimler, the bill for measures put in place during the pandemic. historically expensive, the costs are Volkswagen, BMW, BASF, Siemens and SAP. The loss of revenue, along with business and welfare aid rising from week to week and the federal packages set up by the federal and state governments, Germany is a major force in the European Union, being amounts to €1.3tn. government has so far not bothered to one of its founders and a vocal proponent of political and work out who will pay for them” economic integration. It was, for example, one of the main Germany goes to the polls in September so the decision Dietmar Bartsch, parliamentary leader leads behind the enlargement of the EU to include former on how the pandemic will be paid for will be a question for of the socialist Left Party Soviet countries. a new government.

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2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020 PopulaPtiopuln startuiocntu srteructure 80.5m 80.5m 80.8m 80.8m 81.2m 81.2m 82.2m 82.2m 82.5m 82.5m 82.8m 82.8m 83.0m 83.0m 83.2m 83.2m Market context through th triomeugh time 10.7m 10.7m 10.6m 10.6m 10.7m 10.7m 10.9m 10.9m 11.0m 11.0m 11.2m 11.2m 11.3m 11.3m 11.4m 11.4m 8.8m 8.8m 8.7m 8.7m 8.7m 8.7m 8.8m 8.8m 8.7m 8.7m 8.7m 8.7m 8.6m 8.6m 8.5m 8.5m As its population ages and birth <15 <15 16-24 16-24 9.8m 9.8m 10.0m 10.0m 10.2m 10.2m 10.6m 10.6m 10.6m 10.6m 10.6m 10.6m 10.6m 10.6m 10.6m 10.6m 50m 50m rates fall, Germany attracts 25-34 25-34 10.5m 10.5m 10.2m 10.2m 9.9m 9.9m 9.9m 9.9m 9.9m 9.9m 10.0m 10.0m 10.1m 10.1m 10.2m 10.2m 35-44 35-44 workers from elsewhere 45-54 45-54 13.5m 13.5m 13.6m 13.6m 13.6m 13.6m 13.5m 13.5m 13.2m 13.2m 12.9m 12.9m 12.5m 12.5m 12.0m 12.0m 55-64 55-64 12.4m 12.4m 65-74 65-74 10.6m 10.6m 10.8m 10.8m 11.0m 11.0m 11.2m 11.2m 11.5m 11.5m 11.8m 11.8m 12.1m 12.1m >75 >75 8.8m 8.8m 8.6m 8.6m 8.4m 8.4m 8.3m 8.3m 8.2m 8.2m 8.3m 8.3m 8.4m 8.4m 8.5m 8.5m Germany has the second biggest population 7.9m 7.9m 8.3m 8.3m 8.7m 8.7m 9.0m 9.0m 9.3m 9.3m 9.4m 9.4m 9.5m 9.5m 9.6m 9.6m 0m 0m in Europe, beaten only by Russia, which Source: RetaSiolXu,r dcera: wReintagi loXn, ddraatwa ifnrogm on E duarotas tfartom Eurostat also has a larger landmass. Yet while Russia has unimaginably vast areas of uninhabited land and a population density of just 8.58 people for each square kilometre, Germany’s PopulaPtiopuln garotiwonth growth 1 .2% 1 .2% residents live relatively side-by-side, with 0 .53% 0 .53% 232.8 Germans for each square kilometre. Germany Germany 0 .42% 0 .42% EU EU 0 .3% 0 .3% 0 .33% 0 .33% 0 .24% 0 .24% 0 .27% 0 .27% 0 .18% 0 .18% EEA EEA Germany has the highest population within the EU, and the EEA and 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020 a large proportion of Source: RetaSiolXu,r dcera: wReintagi loXn, ddraatwa ifnrogm on E duarotas tfartom Eurostat its population have migrant backgrounds. 21.2 million residents, representing around 21% of the population, were either born as 4 1,510 4 1,510 GDP peGr DcaPpi petar (c€a)pita (€) 3 8,070 3 8,070 3 9,440 3 9,440 4 0,480 4 0,480 4 0,120 4 0,120 citizens of another country or one of their 3 4,860 3 4,860 3 6,150 3 6,150 3 7,050 3 7,050 parents were. Being born in Germany does not qualify people automatically to German Germany Germany [1] EU EU citizenship . The majority have moved to EEA EEA Germany from other European countries, with 35% from within the EU. 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020 Source: EurSoostuartce: Eurostat RetailX 2021

4 | RetailX | May 2021 ﬁle:///Users/nickmoyle/Documents/Wﬁle:///Users/nickmoyle/Documents/Work/Internet_Retailing/Germany_2021/Assets/Supercharts/Copyork/Internet_Retailing/Germany_2021/Assets/Supercharts/Copy of RXEU21RP_germany_pop_super_chart_V207.html of RXEU21RP_germany_pop_super_chart_V207.html 1/1 1/1 01/06/2021 01/06/2021 01/06/2021 01/06/202101/06/2021 RXEU21RP_germany_ecomm_super_chart_V269.htmlRXEU21RP_germany_ecomm_super_chart_V269.htmlRXEU21RP_germany_ecomm_super_chart_V269.htmlRXEU21RP_germany_ecomm_super_chart_V269.htmlRXEU21RP_germany_ecomm_super_chart_V269.html

2013 2013 2014 2013 20142013 202105123014 20152014 202106124015 20162015 202107125016 20172016 202108126017 20182017 202109127018 20192018 202200128019 20202019 20129020 2020 2020 Internet useIrnst berentwete uenseIrnst ebrentewte uesneInrst ebrentIewntte ueersnnerest buestewrse benetween 100% 100% 100% 100% 100% 16 and 74 ye 1a6r sa nodld 74 ye 1a6r asn odld 74 ye 1a6r asn odl 1d 674 a nyeda 7r4s oyledars old 10% 10% 10% 10% 10% 13% 13% 13% 13% 13% 12% 12% 12% 12% 12% 16-24 16-24 16-24 16-24 16-24 © 2021 retailx.net, distributed by InternetRetailing.net GERMANY ECOMMERCE REPORT | MARKET25-3 4CONTEXT25-34 25-34 25-3401/06/202125-34 RXEU21RP_germany_ecomm_super_chart_V269.html 14% 14% 14% 14% 14% 35-44 35-44 35-4540% 35-4450% 35-44 50% 50% 50% 93% 93% 94% 93% 94% 93% 93%94% 94% 94% 45-54 45-54 45-54 45-54 86%45-54 86% 88% 86% 88%86% 898%6%88% 89% 88% 918%8%89% 91% 89% 918%9%91% 91%91% 91%91% 91% 91% 14% 14% 14% 14% 14% 55-64 55-64 55-64 55-6401/06/202155-64 RXEU21RP_germany_ecomm_super_chart_V269.html 8% 8% 8% 8% 8% Immigration into the country will continue65-74 to65 rise,-74 65-74 65-74 65-74 Europe (excluding UEKu)rope (excluding UEKur)ope (excluding UEuKr)ope (exEculurodpineg ( eUxKc)luding UK) 2013 2014 2015 2016 2017 2018 2019 2020 Germany:Internet users betwee ninternet user analysis over time 29% 29% 29% 29% 29% with migrants expected to make up one in three of the 100% 16 and 74 years old 10% 0% 0% 0% 0% 0% population by 2040. The number in cities is expected 2013 2014 2015 2016 2017 2018 2019 1230%20 Internet users between RetailX, drawing on Rdeattaai lfXro, dmra Ewuirnogs toantR deatatail Xfr,o dmra Ewuinrogs otantR deatatail Xfr,o dmrRa eEwtuianriolgXs o,t adntr daawtian fgr oomn dEautrao fsrtoamt Eurostat 100% 12% to increase above the country average, to eventually 16 an16d-2 474 years old 10% 25-34 134% 35-44 50% [2] 93% 94% 45-54 86% 88% 89% 91% 91% 124% represent 65% or 70% of the population . 16-24 55-64 8% 625-734 14% 35-44 50% Europe (excluding UK) 93% 94% 45-54 86% 88% 89% 91% 91% 2194% 55-64 8% This population increase is seen as essential by the 65-74 0% 20R1et3ailXE,u drorapwe i(negx colnu ddiantga2 Ufr0Ko)1m3 Eurostat 2014 2013 20142013 202105123014 20152014 202106124015 20162015 202107125016 20172016 202108126017 20182017 202109127018 20192018 202200128019 20202019 20129020 2020 2020 Percentage oPfe rpocepuntlaagteio Ponef rpocepuntalagtei oPonef rpocepunPtealragcteei onontfa pogepu ofl apotiopunlation 29% government, which wants to continue attracting workers,100 % 100% 100% 100% 100% shopping on slhinoepping on shlionppie ng on shlionppie snhgo ppionlninge online 0% 9% 9% 9% 9% 9% RetailX, drawing on data from Eurostat particularly highly-skilled people, as a way to keep the 12% 12% 12% 12% 12% economy stable. Germany is facing a future with falling 12% 12% 12% 12% 12% 16-24 16-24 16-24 16-24 16-24 2013 2014 2015 2016 2017 2018 2019 2020 Percentage of population 25-34 25-34 25-34 25-34 25-34 100% 13% 13% 13% 13% 13% birth rates and an ageing population – almost a quarter shopping online 9% 35-44 35-44 35-4540% 35-4450% 35-44 50% 50% 50% 12% 12% 12% 12% 12% 2013 2014 2015 2016 2017 2018 2019 1220%20 is 55 years or above. Although it has45- 5increased4 45- 5in4 recent45 -54 45-54 P4e5r-c5e4ntage of population 82% 82% 82% 82% 82% 82% 828%2%82% 82%82% 828%2%82% 82% 82% 848%2%82% 84% 82% 82%84% 84% 84% 80% 80% 80%1080%0% 80%80% 80%80% 80% 80% 12% 7% 7% 7% 7% 7% 55-64 55-64 55-64 55-64 sh55o-ppi6146-24ng online 9% 13% years, Germany has had one of the6 5lowest-74 birth65-74 rates in65 the-74 65-74 65-7245-34 12% 35-44 50% 12% Europe (excluding UEKu)rope (excluding UEKur)ope (excluding UEuKr)ope (exEculurodpineg ( eUxKc)luding UK) 12% 45-54 82% 82% 82% 82% 84% 35% 35% 35% 35% 35% 16-24 80% 80% 7% world for the last 70 years. Age groups below 25 years old 55-64 13% 625-734 35-44 50% 0% 0% Europe (excludi0ng% UK) 0% 0% 3152% 45-54 comprise less than 23% of the total population. 80% 80% 82% 82% 82% 82% 84% 7% Eurostat Eurostat Eurostat Eurostat Eurostat 55-64 65-74 0% EurostEautrope (excluding UK) RetailX35% 2021

The country is attractive to people from other countries 0% due to its per capita GDP, which is higher than other Eurostat

countries across the EEA. This has been rising steadily, €15+ €120+ €300+ €600+ Money spent€ o1n5+line €15+ €15+ €15+ €1€2105++ €120+ €120+ €120+ €3€0102+0+ €300+ €300+ €300+ €6€0300+0+ €600+ €600+ €600+ €600+ 40% Money spenMt oonnleiny espenMt oneliyn espenMt oneliyMn seopen byen aytg eso gpenrolinunpte online as has the number of people using the internet and the 40% 40% 40% 40% 40% by age group by age grou bpy age grou bpy age b gyr aoguep group €41%5+ €120+ €300+ €600+ Money spent online 4% percentage of those who are shopping online. What is 4% 44%0% 4% 4% 4% by ag16e-2 4group 4% 25-34 4% 4% 4% 4% 4% 4% 4% 35-44 20% 7% already a large market for ecommerce is forecast to 4% 16-24 16-24 16-24 16-24 16-2445-54 4% 4% 4% 4% 4% 5% 5156-624 4% 25-34 25-34 25-34 25-34 25-34 9% 5% increase by 11% in 2021, making an already highly 625-734 4% 4% 4% 4% 4% 4% 35-44 35-44 35-4240% 35-4420% 35-4345-44 270%% 2702%0% 20% 7% 7% 7% 7% 4% 45-54 5% 45-54 45-54 45-54 45-54 45-54 8% 5% 5% 4% 5% 5% 5% digitalised society even better for consumers and online 55-64 2% 1% 55-64 55-64 55-64 55-64 55-64 0% 9% 5% 65-74 9% 9% 9% 9% 5%9% 5% 5% 5% 5% retailers alike. 65-74 65-74 65-74 65-74 E6u5ro-s7ta4t 4% 8% 4% 4% 4% 4% 4% 4% 2% 1% 0% 8% 8% 8% 8% 4%8% 4% 4% 4% 4% Eurostat 2% 2% 2% 2% 1%2% 1% 1% 1% 1% 0% 0% 0% 0% 0% Eurostat Eurostat Eurostat Eurostat Eurostat

[1] www.dw.com/en/german-population-of-migrant-background-rises-to-21-million/a-54356773 [2] www.dw.com/en/germany-in-20-years-1-in-3-people-will-have-migrant-roots/a-51101172 RetailX 2021

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file:///Users/nickmoyle/Documents/Wfile:///Users/nickmoyle/Documents/Wfile:///Users/nickmoyle/Documents/Work/Internet_Retailing/Germany_2021/Assets/Supercharts/RXEU21RP_germany_ecomm_super_chart_V269.htmlfile:///Users/nickmoyle/Documents/Work/Internet_Retailing/Germany_2021/Assets/Supercharts/RXEU21RP_germany_ecomm_super_chart_V269.htmlfile:///Users/nickmoyle/Documents/Work/Internet_Retailing/Germany_2021/Assets/Supercharts/RXEU21RP_germany_ecomm_super_chart_V269.htmlork/Internet_Retailing/Germany_2021/Assets/Supercharts/RXEU21RP_germany_ecomm_super_chart_V269.htmlork/Internet_Retailing/Germany_2021/Assets/Supercharts/RXEU21RP_germany_ecomm_super_chart_V269.html 1/1 1/1 1/1 1/1 1/1 THE FREEDOM TO DO MORE. AMPLIENCE. POWERING DIGITAL EXPERIENCES FOR THE WORLD’S MOST INNOVATIVE BRANDS.

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Expert insight How have retailers’ online channels responded to What will be the main drivers for ecommerce growth in challenges in the market? 2021 and 2022? The pandemic has certainly accelerated investment in Ecommerce growth in the immediate future will come ecommerce infrastructure, allowing retailers to create and from an accelerated closure of brick and mortar stores Theo Khoja deliver better online experiences. This is most noticeable driven by the pandemic. This will ultimately create a lack by the amount of Progressive Web Apps (PWAs) that are of alternatives that will only push more people towards Director Strategic Alliances, Amplience now out in the market. These enable very fast native app- ecommerce. One vertical where significant growth is like experiences for the mobile web – in layman’s terms, expected is online grocery, especially as Germany plays Amplience’s Strategic Alliances lead looks a faster, more intuitive user experience for mobile web catch-up to more established markets such as the UK. users. Retailers are also investing in technologies such ahead and offers his perspective on the as headless commerce, whereby they can increase their latest ecommerce trends for Germany agility and speed to market, ultimately responding to market changes a lot quicker.

What changes have you seen in the German retail Which of the new retail behaviours do you expect to market in the last year? remain post-pandemic? As with almost every other country in the world, the Firstly, the digital-first mentality adopted across all age pandemic has driven customer engagement online. As groups will remain. As a result, retailers should continue a result of this, Germany has seen over ten years of to focus on mobile ecommerce revenue, given it is already Amplience powers digital-first brands and retailers ecommerce growth in less than 12 months. What will be the dominant ecommerce revenue channel for many and with the freedom to do more. Its low-code CMS, DAM interesting is seeing which of these changes in consumer is outpacing desktop revenue growth. Also, ecommerce and Digital Experience Management platform allows behaviour are here to stay, what the ‘new normal’ for adoption by the 50+ and 60+ age groups accelerated more than 350 of the world’s leading brand teams to retail will look like and how retailers will adapt to it all. during the pandemic and is expected to increase more. manage content, not code. The result is a rapid ROI One thing is for certain – businesses that had historically Given that Germany is in the top five countries for the for its clients, letting them deliver data and insight- invested online have fared better than those with a weaker highest median age, these demographics will drive driven customer experiences that drive deeper, online offering. Going forward, online and omnichannel ecommerce growth. Lastly, we expect to see the trend more valuable customer relationships. For more investment will continue to prove crucial and be key of establishing Direct to Consumer (D2C) channels to information on the Amplience platform, visit: differentiators for retailers. continue. Some high-profile brands have already started www.amplience.com the move and many more are following suit.

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eco-friendly transport methods. However, I think we will Expert insight What new opportunities are opening up for ecommerce retailers selling in or to Germany? see more e-tailers – along with more consumers – thinking Digitalisation continues to drive growth and bring exciting carefully about how to minimise the carbon footprint of new opportunities to both retailers and consumers in ecommerce. The growing popularity of the Green Party in Oliver Schleiss Germany. Shoppers benefit from an agile and more Germany is proof of this. mature ecommerce service, with a wider range of Chief Sales Officer, Asendia Germany distance-selling solutions and better product offerings. For What characteristics define German ecommerce? e-tailers, visibility on the larger marketplaces can quickly The German ecommerce shopper is very price- and Having spent over 20 years working in generate new customers and customer segments. German service-focused and expects retailers to help them shop international logistics and distribution, consumers are very open to cross-border ecommerce, as transparently. So marketplaces should help them to Oliver has experienced first-hand the long as estimated delivery times are adhered to. They don’t compare products and make an informed choice. Germans digital transformation of ecommerce mind waiting, just that the goods arrive when expected. shop predominantly on their smartphones, with many utilising the connected experience as brick and mortar How will this translate to ecommerce delivery? stores integrate in-person services with their digital What has the German retail market faced in 2020? The importance of delivery times to German consumers offerings. Above all, service and product quality is key: one The effects of Covid-19 have been far-reaching and means e-tailers must provide transparency around good experience will net e-tailers a loyal customer for life. transformational, demanding quick-thinking solutions to shipping. Growing demand puts pressure on sellers to ensure distance-selling remains operative as well as safe. provide flexible delivery methods to ensure that customers It’s been a steep learning curve and, particularly for smaller can collect or receive orders in a way that makes them feel retailers, a hugely challenging time. safe. This does pose challenges to e-tailers though – they must have a solution in place that can handle increasing As more and more consumers shifted to shopping online delivery capacity and meet customer requirements, such only, the marketplace became increasingly competitive as daily FMCG supplies. Asendia is one of the world’s leaders in international while also struggling with Covid-19 related challenges ecommerce and mail. Combining the expertise of across the supply chain and attempting to remain What impact will the growing awareness of its founding companies, La Poste and Swiss Post, compliant with new and complex regulations, including sustainability have on the German market? Asendia brings together a wealth of international and Brexit and new EU laws. However, with the introduction For smaller retailers, sustainability offers a chance to really local know-how. of click and collect and drop-off services, the market has stand out from the big players by offering customers green www.asendia.com shown real resilience and risen to meet all challenges. products delivered in sustainable packaging and using

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products are the best in their categories. For many Expert insight What has been your experience of the last year and how have German merchants handled the pandemic? categories, the differences are razor thin. That’s why the Over the course of the pandemic, a digital transformation omnichannel customer experience will be the ultimate occurred where the traditionally offline German economy differentiator. These days, experience is more impactful Mike McGuire embraced digital channels for food and personal care than product, or even price. items. While this occurred out of necessity, the German VP Sales EMEA, Iterable consumer base, 95% of which use the internet, adapted When looking at the German market, age and region quickly. The extensive German infrastructure further play integral roles in how brands can personalise their Before joining Iterable, Mike worked at expedited the digital adoption, making the dissemination omnichannel experience. Some generations and regions Salesforce Marketing Cloud for six years of online orders efficient and timely. will still prefer the in-store experience, while others will where he built pan-EMEA sales teams fully digitally transform. As we continue through 2021 and into 2022, the omnichannel experience will be about who specialising in new acquisitions Where will retailer growth come from post-pandemic? Looking to 2022 and beyond, retailer growth in Germany can create the most seamless, consistent and valuable will come from those brands that are able to adequately customer journey. Removing friction at every opportunity What do you see as the main characteristics that define replicate their offline experience online. In doing so, encourages consumers to remain engaged and, ultimately, Germany’s ecommerce market? retailers will create a consistent, cohesive experience that to come back. The German market is defined by a discerning consumer will bring the personalisation and promise of quality that base, as well as by security, transparency and consistency. comes from an in-store experience onto digital channels. These are trademarks of how the German consumer goes through the buying process. A point of emphasis for brands will be the personalisation by generation. With Germany’s aging population comes Iterable is a modern cross-channel platform that Research also plays a pivotal role in the buying decision, a shift in preferences and buying behaviours. As the age powers unified customer experiences and empowers while secure payment options can be a deciding factor for structure of the country shifts, so too does the way in marketers to create, optimise and measure the the overall customer experience. I believe that satisfaction which brands communicate with their audiences. relevant interactions and experiences that customers with a consistent product takes precedent, since German love. Leading brands such as Strava, Calm, Fastic, consumers expect their money will always be put towards How do you think the omnichannel customer Zoopla and KptnCook choose Iterable to power a valuable product that satisfies their needs. experience will change in 2021 and 2022? world-class customer experiences throughout the German consumers have access to all of the necessary entire lifecycle.www.iterable.com reviews, surveys and feedback to understand which

11 | RetailX | May 2021

Expert insight What, for you, has been the most exciting recent How will this affect online customer experiences? development in ecommerce in Germany? I am convinced that consumers are tired of poor I am impressed by the way many brick and mortar high remarketing – of seeing ads for items that they already street merchants innovated overnight to ramp up their bought or are no longer interested in. The winners of Michael Hubrich ecommerce offerings. BOPIS is no longer an unknown this race will be the ones that impress customers by the acronym but a way to sell even if your store is closed to the quality, relevance and usefulness of the information and Managing Director DACH, Tealium public – buy online, pick-up in-store. Of crucial importance communications they provide. to this growth is the fact that older web users – the “silver What are the biggest challenges and opportunities that surfers” – have picked up the habit of buying online. Their Due to GDPR, marketing can no longer be a numbers German retailers have dealt with over the last year? product mix is more DIY, garden and living and less fashion game. This forces marketers to use the tactics that Without doubt, the pandemic has disrupted and and electronics, but that only broadens opportunities for genuinely work and understanding the wants and needs challenged every aspect of every merchant’s way of doing retailers. Who would have thought that two years ago? of their clientele by having a complete 360o view through business. High streets were deserted as people stayed complete unification of their data sources. at home or went to the nearest store solely for grocery What will be the main market drivers for future shopping. The percentage of those shopping online is growth? continuously increasing and reached 87% in 2020. Once we return to the way of life we were used to, we will see consumer demand play catch-up. What point was Despite such changes, many companies did not recognize there in buying fancy dress during lockdown? Or thinking the need for digital transformation until what had been about travel, music concerts or sport events? seen as a ‘nice to have’ suddenly became essential for survival. There were opportunities for all companies that Germany’s GDP will grow by 3.2% in the second half of Tealium provides the industry-standard platform braved these circumstances and innovated. Douglas, for 2021, which is even more than after the financial crisis. We for businesses aiming to unleash innovation with example, is doing well, with only a slight drop in revenue see growing markets appearing in ecommerce that people a real-time, universal data foundation. More than in 2020 due to its heavy shift to online when most of the hadn’t really considered in the past – like mobility, delivery 1,000 companies trust Tealium to orchestrate their stores were closed. This is also reflected by the German or content offerings. Personalisation also helps companies customer data. These include Domino’s, Gap, IBM, ecommerce market being the third biggest in Europe, to understand the wants of their customers and enables Molekule, Epson America, Cambia Health, Orange, amounting to €104bn of B2C turnover in 2020. Forecasts them to tailor products or custom-build services. The TUI, Rakuten, Sportsbet and Network 10. predict it will further increase to €115bn in 2021. acceptance of these is higher when they are delivered in www.tealium.com an environmentally friendly and conscious manner.

Benchmarking the Indices Definition Global rank digital economy Logistics Performance LPI measures performance along the logistics supply chain within a country Index (LPI) 1 /160 Germany is one of the world’s leading Ease of Doing A high Ease of Doing Business ranking means the regulatory environment is more conducive Business Index to the starting and operation of a local firm 22 /190 digital economies and indices that E-Government The E-government Development Index measures the willingness and capacity of national compare performance reflect this Development Index administrations to use information and communication technologies in order to deliver public services 25 /193

Integrated Index for 2IPD is a comparative indicator of postal development around the world which built on four pillars: In the Overall Internet Inclusive Index, Germany ranks Postal Development Reliability, Reach, Relevance and Resilience 3 /170 25th. Compiled by The Economist Intelligence Unit, this (2IPD) Index, “seeks to measure the extent to which the internet is not only accessible and affordable, but also relevant to all, Internet Inclusive sub-indices allowing usage that enables positive social and economic Availability Quality and breadth of available infrastructure required for access and levels of internet usage outcomes at the individual and group level”. 20 /120

Affordability Cost of access relative to income and the level of competition in the internet marketplace Germany’s weakest performance is in ‘Relevance’. In 22 /120 some countries, this measure is low due to many news and government sites not using local languages. In Germany’s Relevance Existence and extent of local language content and relevant content 60 /120 case, its score is reduced because of the low number of websites within the leading 25 that use a country-level Readiness Capacity to access the internet, including skills, cultural acceptance, and supporting policy 12 /120 domain. The relatively low level of consumers accessing finance, health and entertainment online in Germany Overall Internet Inclusive Index 25 also brings its score down. /120

KEY: n Top quartile n Second quartile n Third quartile n Bottom quartile Its rankings of first and third in separate logistics and postal indices attest to investment in infrastructure, especially by Source: World Bank, United Nations, The Economist Intelligence Unit, Universal Postal Union postal incumbent Group Deutsche Post DHL.

When I plan a major purchase, I always do some Attitudes 65% The German research on the internet first towards online Customer reviews on the internet 50% shopping in are very helpful I usually manage habitual / recurrent orders consumer in focus Germany, 2020 directly via my smartphone or tablet 28%

Which of these I want to see an item before I buy it 27% Transparency and trust are key for statements on I prefer to use my smartphone or tablet to research 26% Germans, but convenience and price are online shopping on products and to make major new purchases do you agree with? Sometimes I deliberately order the factors that drive online shopping more items than I want to keep 15% I miss the shopping experience when I shop online 14% German consumers are the conscious consumers of When I buy an item, I want to hold it 12% Western Europe. They want to know and understand in my hand the same day all of the details of their shopping transaction before When I order an item, I prefer 12% buying online. This extends from understanding delivery Source: Statista Global Consumer survey express shipping options even before they add an item to their basket, to how any information they provide about themselves Drivers Direct delivery to my home 66% is going to be held or used by a retailer. The terms and of online conditions are important to German consumers. Available round the clock 62% purchases in More convenient way of shopping 58% Germany’s modern data privacy laws date back to 1970 Germany, 2020 Cheaper prices 57% and a time when the Stasi secret police operated in East Which of these do you Germany[1]. The State of Hesse, a region in what was then consider good reasons Greater product range 57% to buy an item online? West Germany, introduced legislation governing how Undisturbed shopping process 48% the public sector would use information from citizens. A version of this Datenschutzgesetzgebung – Data Protection More possibilities to compare 47% Legislation – became federal law in 1977 with the aim of More product information 34% protecting citizens’ data “against abuse in their storage, I prefer online shopping in general 19% transmission, modification and deletion”. There are no good reasons to buy items online 4% Source: Statista Global Consumer survey

In 1983, the German Constitutional Court took this need “In the past few years, we have had to deal with Amazon Multichannel service relevance for legislation further, declaring the right of “self- on several occasions and also obtained far-reaching in Germany, 2020 determination over personal data”. This gave German improvements for sellers on Amazon Marketplace,” says Which of these services in the field of shopping citizens a fundamental right to privacy. A successive law Andreas Mundt, president, Bundeskartellamt. “If we find would you like to use? in 1990, based on this ruling, forms the basis of the EU that the company does have such a market position, we Checking online whether the data privacy legislation introduced in 1995. could take early action against and prohibit possible product is available in the store 45% Return / replacement in the anti-competitive practices by Amazon.” 40% It is no surprise then that Germany is one of the main store of items ordered online Home delivery of products proponents behind anti-trust measures. It was a Spanish USING DATA purchased in the store 35% citizen who brought Google to the Court of Justice of the Germany was among the first countries to implement the Ordering online then 33% European Union in 2014, which led to the highest court General Data Protection Regulation (GDPR) that came picking up in the store in the EU ruling that people have the so-called ‘right to into force in 2018. This legislation protects consumers’ Online store locator 25% be forgotten’. However, it is amendments to German privacy across the EU today. German citizens and Picking up purchased items in 21% competition legislation, introduced earlier this year, that the authorities are quick to contact any company not the store outside opening hours Buying in the store and 19% now allow regulators to intervene in anti-competitive applying the regulations correctly. returning by mail behaviour, particularly against the practices of large Source: Statista Global Consumer survey digital companies at an early stage.[2] For example, property company Deutsche Wohnen was fined €14.5m in 2019 after it was found to have stored The Federal Cartel Office (Bundeskartellamt) initiated tenants data unnecessarily[3]. The same year, fines of insight for employees. AI is self-learning, so the controls anti-competition proceedings against Amazon in May €195,407 were given to delivery company Delivery Hero that are put in place during the setup and initial training and is examining whether the online marketplace holds Germany, which sent unsolicited emails and stored of an AI impact on future interactions with people “an almost unchallengeable position of economic personal data of former customers, while a telecoms or other machines. It also raises questions around power”. It is already investigating the extent to which provider was fined €9.55m for lack of data security. responsible use and ethics. Amazon influences sellers’ pricing through price control mechanisms and algorithms on its Marketplace – and Data security and the use of technology come up again German grocery chain Rewe has introduced an AI also how agreements between it and brands, such for German retailers in their use of artificial intelligence manifesto that outlines the ethical use of AI and as Apple, exclude other sellers from listing branded (AI). This is being used increasingly across the retail dictates responsibilities for employees developing IT products. industry, and in others, to optimise logistics, drive solutions with it. Among the guidelines is the point that interactions with consumers and provide actionable software engineers developing or using AI have to take

responsibility. “An AI can only make decisions within the Product reviews are popular in Germany, with shoppers Importance of low-priced products boundaries you defined,” it says. trusting the opinions of other customers. Half of online in Germany, by category, 2020 shoppers say that they look at product reviews from other For which of these products is a low price of The manifesto reminds developers about inclusivity customers on the internet and find them very helpful. A particular importance to you? and unconscious prejudice so that data used to train AI large majority of shoppers (65%) always conduct some Clothing 40% should reflect actual users’ perspectives. Customers sort of research online when planning a major purchase. also need to be told when they are interacting with an AI Food & non-alcoholic drinks 38% [4] application rather than a live person . When it comes to reasons for shopping online rather than Detergents & cleaning products 34% visiting a brick and mortar store, consumer attitudes lean IMPACT ON SHOPPER BEHAVIOUR towards the convenience aspects of digital channels. Shoes 34% The desire to understand and be in control of their data Having an order delivered directly to their home is Smartphone 31% and the implications on privacy may make it seem as the main reason given for shopping online by 66% of Household appliances 26% though German consumers are risk adverse or very consumers polled. cautious shoppers. As shown in more detail further on PC / laptop 26%

in this report, Germans want a sense of security when Online stores being open 24/7 ranks second among Cosmetics & body care 24% shopping online – they value information about products consumers as a driver for online purchases, with ‘being and transparency. a more convenient way to shop’ coming third. This is TV & HiFi 24% closely followed by 57% liking lower prices than in brick Furniture & household goods 23% The safe payment method of open invoices has become and mortar stores, along with a wider range of product Alcoholic drinks 20% popular in Germany since such invoices allow shoppers availability. German shoppers are price sensitive, which is to order online, have the items delivered and then inspect most obvious in the clothing and grocery sectors. Online’s DIY, garden & pet products 20%

them before deciding whether to keep and pay for them, convenience factor drives behaviour across channels, with Stationery & hobby supplies 20% or return all or part of their order. Easy returns, therefore, the ability to check online which items are available from 19% are important. While behaviours are now starting to a physical store the main driver of multichannel services. Bags & accessories change in both the types of payment offered by retailers Cars, motorcycles, bicycles 15% and the ones preferred by consumers, ‘try before you buy’ [1] https://advisera.com/eugdpracademy/knowledgebase/eu-gdpr-vs-german- Sports & outdoor products 14% type behaviour remains. bundesdatenschutzgesetz-similarities-and-differences/ [2] https://www.bbc.co.uk/news/technology-57160721 Toys & baby products 10% [3] www.linklaters.com/en/insights/data-protected/data-protected---germany [4] www.rewe-digital.com/en/ai-manifesto.html Source: Statista Global Consumer survey

GER EU GER EU GER EU GER EU GER EU GER EU GER EU Amount spent 100% A maturing market online in the last three months, Germany is a mature online market but by age group, 2020 75% offers opportunities for retailers with a long-term view Germany (GER) vs Europe, excluding UK (EU) 50% n Less than €50 Germany is one of the more mature digital markets in n €50-€99 Europe, with a large percentage of the population n €100-€299 n €300-€499 25% using the internet and shopping online. It’s the 25-34 n €500-€699 age bracket that is shopping online most often, with the n €700-€999 majority of this group shopping online more than six times n More than €1000 0% in the last three months of 2020 and 29% of them shopping Source: Eurostat 16-24 25-34 35-44 45-54 55-64 65-74 All individuals online more than ten times during that period. While many people already shop online in Germany, Frequency of online purchases in the last Those aged between 35 and 44 also shop online frequently, there is plenty of scope for market expansion. Many three months, by age group, 2020 with 49% doing so six times or more during the latter consumers are yet to become regular online shoppers, months of 2020. Frequency of shopping online decreases while the majority spend less than €300 online over three n 1-2 times n 3-5 times n 6-10 times n More than 10 times

with age but a fifth of older online shoppers aged 65-74 months. Retailers have an opportunity to incentivise 16-24 27% 42% 17% 14% shop online at least twice a month. shoppers towards larger basket sizes as well as increasing the number of times they purchase online. 25-34 16% 32% 23% 29% These age groups also spend the most online, with 11% 35-44 18% 33% 22% 27% of shoppers aged 25-44 spending more than €1,000 The last three months of 2020 included a period when online over the same three months. This is higher than brick and mortar stores were closed in Germany due to the 45-54 23% 37% 20% 20% the EU average, highlighting both the maturity of the Covid-19 pandemic. This may skew figures slightly, with 55-64 33% 37% 18% 12% German online market and the country’s position as one shoppers having to shift online and a percentage of the of Europe’s strongest economies. Even younger (16-24) population shopping online for the first time. 65-74 38% 40% 14% 7%

shoppers spend more online than the EU average. Source: Eurostat

LOCATION AND DEMOGRAPHICS Share of online shoppers Most purchased category, What consumers are buying online differs by age group. in Germany, by state, 2020 by age group, 2020 This needs to be taken into account when taking a long- Bavaria 20.6% term view of the German market rather than seeing it as a Clothing quick win. Falling fertility rates, along with increasing life North Rhine-Westphalia 18.5% expectancy, are causing an ageing population, which will result in different behaviour and spending patterns. Baden-Württemberg 13.4% Shoes

Lower Saxony 9.5% While younger consumers are buying from fashion Books, movies, music, games categories, purchasing among older age groups shifts Hesse 5.3% towards more hobby pursuits, categories such as DIY, Consumer Rhineland-Palatinate 5.3% garden and pets. electronics

Saxony 5.0% Another demographic opportunity for retailers is capturing Household appliances market share in those states with a high percentage of Berlin 4.8% online shoppers. More than half of Germany’s online Schleswig-Holstein 3.8% Cosmetics and shoppers live in the three most populous states of North body care

Rhine-Westphalia, Bavaria and Baden-Württemberg. Saxony-Anhalt 2.9% DIY, garden and pet products Bavaria has a larger percentage of online shoppers than Brandenburg 2.7% its population suggests, is home to automotive companies Thuringia 2.5% Drugstore and n 18-24 and ICT giants and has a per capita economic output far health products n 25-34 above the European average. Berlin is another state Hamburg 2.1% n 35-44 n in which a large percentage of the population shops Furniture and 45-54 Mecklenburg-Western n 55-64 [2] 1.6% household goods online. This could be because the city is a hotspot for Pomerania n All individuals technology startups and ecommerce companies. Saarland 1.3% Bags and accessories [1] https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor/base-profile/ Bremen 0.8% bavaria 0% 20% 40% 60% [2] www.businesslocationcenter.de/en/startup-capital-berlin/ Source: Statista, VuMA Source: Statista Global Consumer survey

Most popular payment methods for Payment methods online purchases, 2020 48% As the payment market evolves, German their goods. This works well for German consumers consumers are moving away from their because they have a high propensity to return goods, or order a replacement. Although invoicing has now been earlier internet habits taken over by digital wallets as the preferred way to pay, its use remains popular with 21% of online shoppers. How German consumers pay for their online purchases has gone through a major transformation in recent years, with BNPL has been growing in popularity across Europe 21% 19% many new payment services entering the market since and Germany is no exception. The service lends itself to 2014. Some, such as giropay and paydirekt, have been German consumers’ preference for transparency since, launched by the banks, while Klarna’s successful Buy Now as with open invoice, BNPL services offer transparent Pay Later (BNPL) method is independent. conditions and no interest. They also enable consumers 6% to order items online secure in the knowledge that they 2% 2%

As ecommerce has matured, consumers’ trust in new can be returned before they have to be paid for. PayPal or Invoice Debit or Direct debit Mobile App Cash on payment providers has increased and digital wallets, similar credit card payment delivery through including PayPal and the German banks’ Paydirekt Payment by instalments is popular, with PayPal bank

service, are now the most popular way to pay. They offer launching the PayPal Ratenzahlung, (Instalments by Source: Statista, PostNord consumers a certain level of privacy since banking details PayPal) service to its 23m customers in Germany in 2016[1]. aren’t shared with the retailer and they are secure – two 19% factors that are important to German shoppers. The ease What is clear is that the German payments market Market share of 18% of using them to make payments on a smartphone will continues to evolve and, as long as different consumers buy now, pay later have speeded up their adoption as the use of smartphones have preferred ways to pay for goods online, retailers need (BNPL) in domestic for online shopping has grown. to be able to offer a range of services. ecommerce payments From 2016 to 2020

Open invoice has been the predominant way to pay in 3% Germany, allowing consumers to order products then pay

for them at a later date once they’ve received and reviewed [1]https://newsroom.paypal-corp.com/2020-06-29-paypal-launches-installments-in-france Source: Worldpay, Statista 2016 2019 2020

Online purchases in Germany, Share of people 23% How German by device, 2020 Which of the following devices have you used for online shopping who purchased in the past 12 months? goods on social consumers shop Smartphone 55% media, by age Laptop 51% group, 2020 Mobile commerce is driving the Desktop PC 36% 12% use of shopping apps and social Tablet 27% media purchasing Smart TV 6% Smart speakers, eg, Amazon Echo 4% Streaming device, 3% When German consumers shop online, they are more eg, Apple TV, Chromecast) 4% likely to reach for their smartphone than turn to a laptop None of the above 4% No answer 3% or desktop computer. This rise in mobile commerce is Source: Statista, Shopify 18-34 35-54 55+ affecting the use of mobile apps and social media, which Source: Statista Global Consumer Survey are now ubiquitous throughout retail.

Leading iPhone Vinted – Secondhand verkaufen Vintage and second-hand fashion marketplace app Vinted shopping apps (known as Kleiderkreisel in Germany) is Amazon leading the in Germany, by iPhone shopping app download charts in Germany and eBay Kleinanzeigen downloads, 2021 is one of the brands that has done well during the Covid-19 Mein dm Deutschland pandemic. Established in Lithuania, Germany was the Zalando: Mode online first country into which the platform expanded. Growth has mostly been through word-of-mouth but in 2020, it Lidl Plus became a big hit on social media[1]. Klarna | Shop now. Pay later. SHEIN – Shopping und Fashion Almost a quarter of shoppers aged under 35 purchased eBay: Kaufen und Verkaufen goods on social media last year and its importance will keep rising as this group’s spending power increases. OTTO – Shopping und Möbel

[1] https://conquestconsulting.eu/companies-that-are-succeeding-during-the-covid-19-pandemic/ Source: Airnow, Statista 0 100,000 200,000 300,000 400,000

codes for the products and are valid only for the duration CASE STUDY of the broadcast. Others feature social media influencers, such as YouTuber Dana Rolle, while others still feature an appearance by the celebrity behind a beauty brand. Alicia Douglas: premium Keys joined the live stream to launch her new skincare beauty triumphs on range Keys Soulcare. While social media and live presentations are becoming social media familiar territory for beauty brands and retailers the move to social commerce is still in its infancy in Europe.

Premium beauty platform Douglas turned to live © DOUGLAS streaming in response to shoppers’ move to digital The mix of commerce and entertainment is clearly an Live streams will become increasingly important in the years ahead channels in the summer of 2020. The innovative format of innovation that shoppers enjoy – and it boosts sales. The Douglas Live combines live tutorials and social commerce sales figures of the products presented multiply during the However, lockdowns and national measures to restrict the – with the audience able to interact as well as to purchase broadcast with the format achieving a conversion rate of spread of Covid in the middle of the Christmas shopping products featured during the presentation directly from the up to 40%, according to Douglas. On top of this, consumers period had a huge impact on the weeks of the year that live stream feed from Douglas’ website. spend more time on the website. usually generate the strongest sales for Douglas, according to Tina Müller, CEO, Douglas Group. Their impact was Tutorials are held several times a week with each one Douglas Live was particularly successful in the run up to offset to a certain extent by the company’s online offerings covering different types of products and brands that are Christmas when many consumers were buying gifts. with Douglas increasing momentum through ecommerce sold on the platform. Some of the tutorials include discount thanks to a digital-first strategy. More than half of its sales in Germany are now attributed to digital channels. “Our platform strategy in ecommerce is working, as evidenced by our strong sales growth of around 60% to €1bn in the 2020 calendar year. We are resolutely continuing During the Christmas quarter, the growth of new online customers was 81% higher than in the same period of 2019 on this path with the further international roll-out of our initiatives and marketplace with the number of online orders rising by 68% to a total of already being used in Germany, Austria and France. All these efforts are geared to our 8m. Online sales across digital and bricks and mortar stores clear goal of realising €2bn in ecommerce as quickly as possible.” in Europe account for €1bn of its €3.2bn revenue. Vanessa Stützle, chief digital officer, Douglas Group

Preferred methods of delivery Returns of online purchases Grocery deliveries in Germany, 2020 in Germany, by category, 2020 Which of these kinds of articles have you sent back Home delivery in daytime 41% Grocers expand online offerings following after an online order in the past 12 months? Delivered to my mailbox/multi- 36% Clothing 32% rapid sales growth in 2020 occupancy mailbox by the mail carrier

Home delivery in evening 8% Shoes 18% 2020 was a pivotal year for the online grocery market in Collect the product myself from a parcel machine 5% Bags & accessories 6% Germany, with consumers turning to the internet at the Collect the product myself Consumer electronics, start of the pandemic in record numbers. 2% 5% Online food from a distribution point eg, TV, smartphones) retail sales grew 126.8% in April 2020 compared to the Delivery to workplace 2% previous year, pushing the market to a value of €308m, Household appliances 5% Pick up at the online 1% Books, movies, music & games according to German ecommerce association bevh. Online store’s physical shop 4% grocery is in its infancy in the country, yet some retailers (excluding downloads) Source: PostNord are now investing heavily in digital channels. Sports & outdoor products 4%

3% Hypermarket chain Kaufland bought the Real.de Cosmetics & body care Ecommerce consumer marketplace in 2020 relaunching it under the Kaufland DIY, garden & pet products 3% brand in 2021. Real.de now offers 25m products listed expectations of delivery time, 2020 Food & drinks 3% across 5,000 grocery and non-food categories and has 1-2 days 3-5 days 6+ days 32m monthly customers[1]. 14% 75% 10% Furniture & household goods 3%

There is speculation that discounter Aldi is preparing Stationery & hobby supplies 2% to launch ecommerce offerings, with the rollout of a Source: PostNord backend solution across 20 countries at a cost of €1.5bn[2]. Toys & baby products 2%

I did not send anything back 53% Meanwhile, Dutch pureplay Picnic is opening new [1] https://internetretailing.net/selling/selling/lidl-owner-acquires-marketplace-to-bolster-online- distribution hubs in Germany following a year in which presence-21599 Other 2% [3] [2] https://ecommercenews.eu/aldi-prepares-for-ecommerce/ its sales in the country increased six-fold . [3] https://ecommercenews.eu/picnic-doubles-revenue-eyes-expansion-to-france/ Source: Statista Global Consumer Survey

Shifting to online Restaurant delivery / takeaway Covid-19 purchases because Hygiene products, eg, hand sanitiser, toilet paper Clothing of the Covid-19 Household cleaning products The pandemic accelerated ecommerce, pandemic, by Food and drink delivery, eg, from supermarket adding customers along with an increased Health products, eg, medicine category, 2020 Books frequency that’s likely to remain As of 31 May, 2020, have Hobby supplies you deliberately purchased Games any of these products or Consumer electronics, household appliances, furniture 2020 was an unprecedented year for the retail industry, services online instead Video which had to continue supplying goods to consumers of offline because of the Music Covid-19 pandemic? while closing brick and mortar stores and keeping Magazines & newspapers Financial products and services employees safe. Changes in consumer demand caused I have not shifted from offline to online supply chain issues, while a huge rise in ecommerce put purchases for any products or services pressure on fulfilment activities. Of course, sectors were Source: ecommerceDB 0% 10% 20% 30% 40% 50% impacted differently and companies that already operated online before the pandemic managed to flex well. ingrained in German shopping habits. Many older German ecommerce growth, The grocery and pharmaceutical sectors saw consumers (those aged 60 and older) shopped by category particularly strong growth online, with ecommerce online for the first time and now make up a third of Food & Personal Care is expected to profit the most from association bevh reporting increases above 30% for this online consumers. Before the pandemic, this age Covid-19 in Germany sector, with some seeing ecommerce rise by 53%. group accounted for less than a quarter of online Fashion shoppers. Electronics & Media Retailers handled the increase in orders well, with more than 95.3% of consumers saying they were either satisfied Shopping frequency has also changed, with 40% of Toys, Hobby & DIY or very satisfied with the service they received during the consumers buying online more than once a week. Furniture & Appliances pandemic – an improvement of 0.8 percentage points. 75% say they would like to continue buying the same amount, if not more online, a rise from 50% a Food & Personal Care The dramatic shifts in consumer behaviour last year are year ago. 0% 5% 10% 15% expected to remain, with ecommerce having become more Source: ecommerceDB

Christmas gift shopping locations Plans to shop Holiday season during the pandemic in Germany, 2020 on Black Friday Undecided Plan to 14% 85% Online with in Germany, Non-essential brick and mortar stores multichannel 2020 Online retailers brands and retailers closed ahead of restrictions on Christmas 4% 49% Do you plan to shop Day gatherings on Black Friday 2020?

In-store with In-store with large Black Friday in Germany is a major affair, with the majority local retailers brands and retailers Source: Quantilope 18% Source: Black Friday GmbH , Statista of shoppers usually planning to pick up a bargain online 25% during the sale period. The popularity of Black Friday in Germany is unsurprising since the originally American Devices used for online Christmas Coronavirus and Christmas present shopping phenomena was largely exported to other shopping, 2020 choices in Germany, 2020 countries by Amazon, which holds a major share of the n PC n Tablet n Smartphone How is the Covid-19 crisis influencing your choice of Christmas German ecommerce market. presents this year? Germany 36.1% 25.8% 38.1% n Disagree n Neither n Agree As Christmas 2020 approached, Covid-19 cases in Germany All mobile 63.9% 60% 60% 13% European rose at an alarming rate, keeping shoppers away from brick 39.2% 25.0% 35.8% 9% and mortar stores. The increase caused the government to average 78% All mobile 60.8% introduce strict measures in mid-December, with Angela Source: VoucherCodes.co.uk, Statista Merkel and state leaders introducing a nationwide lockdown that included schools and non-essential stores from 16 8% 7% 33% December. Parents not classed as key workers also stayed families and friends gathering on New Year’s Eve and 32% home looking after children for the last few days of the only small gatherings were allowed over the core festive school term[1]. The internet, therefore, became the main holiday. Some states went further, introducing night-time I will be giving away I will be giving away fewer I plan to spend more source of Christmas presents. curfews and banning people from leaving their homes fewer coupons/tickets vouchers for trips because money on Christmas gifts to cultural events the outlook is uncertain because I have spent less except for essential reasons. because the outlook on travel and cultural is so uncertain events this year Bars and restaurants were already closed when the stricter [1] www.theguardian.com/world/2020/dec/13/germany-to-close-shops-and-schools-in-tightened- covid-lockdown measures were introduced but these new rules restricted Source: Statista, FOM, IFES

Web traffic from the catchment Web Traffic destinations (HQ) The Largest 100 to sectors from the region The percentage of unique visits over 12 months to the The Largest 100 retailers in Germany are not necessarily What does RetailX data say about Largest 100 retailers, split by sector headquartered in Germany. (See the chart on the following page.) This chart shows the percentage of unique visits to the Largest 100 the Largest 100 retailers that sell online retailers split according to where the company is based Multi-sector stores 52.6% in Germany? Consumer electronics shops 15.7% USA 53% Fashion shops 8.8% Understanding where – and in which categories – German Homeware shops 4.9% shoppers browse when they are online offers useful Supermarkets 4.7% insights into demand. Such data puts a spotlight on Germany 34.1% some of the commercial opportunities available to those Stationery shops 2.5% DIY or construction trade shops 2.1% retailers and brands that are considering investing in this China (mainland) 2.5% market. RetailX researchers worked with SimilarWeb to Software stores 1.5% Netherlands 2.1% explore customer visits to the Largest 100 websites in the Niche or specialist grocers 0.9% Switzerland 1.8% German market. Sweden 1.4% Sports shops 0.9% Austria 0.8% Hobby shops 0.8% The web traffic analysis is used here to show where key Italy 0.7% retailers selling to the German market are based. It shows Book shops 0.7% France 0.5% the type of goods local online shoppers are interested in. Garden stores 0.7% United Kingdom 0.5% 0.5% It also shines a light on the way that German browsers Pharmacies 0.7% Korea, Republic of Poland 0.5% explore other international markets, as well as on which Other sectors 0.6% international shoppers take an interest in German Japan 0.4% Cosmetics shops 0.5% ecommerce stores. Singapore 0.3% Children’s goods shops 0.4% Denmark 0.2% Spain 0.2% Looking across the charts, the data highlights German Musical instrument shops 0.4% Taiwan, RoC 0.2% consumers’ love of marketplaces. More than half of the Liquor stores 0.3% A huge proportion of web traffic goes to marketplaces (and, in particular, to Amazon and eBay) which are based in the unique visits to the largest 100 retailers over the last 12 Florist or gift shops 0.2% USA. German-based companies are the dominant destination of web traffic when marketplaces are excluded months is directed at multi-sector stores Source: SimilarWeb, RetailX Source: SimilarWeb, RetailX

rather than consumers visiting retailers specialising Web traffic sources of retailers Countries where the in a specific category. With just 15.7% of unique visits, headquartered in the catchment Largest 100 are headquartered retailers of consumer electronics show the disparity in The Largest 100 are selected based on web traffic from German how people in Germany shop. This figure may be higher Germany 42.2% consumers and are not necessarily based in Germany itself. even than previous years since people have been working This chart shows, however, that the majority of the companies are Other 11.9% based in Germany from home, and thus spending money on computer USA 7.9% n Germany n USA n China (mainland) n Netherlands n France equipment and looking to digital channels and gaming for France 6.0% n UK n Korea, Republic of n Poland n Sweden n Others entertainment to fill leisure time. Poland 4.4% Netherlands 4.0% The fashion sector, in third place for unique visits, accounts United Kingdom 3.4% for 8.8% of visits. Russian Federation 3.1% Austria 2.5% It’s interesting to see that a large proportion of German Belgium 2.4% web traffic is directed towards ecommerce stores operated Italy 2.4% by retailers based in the US. Further analyses shows that Switzerland 2.3% these are predominantly marketplaces – and in particular Spain 2.1% Amazon and eBay. Both of these companies operate Sweden 1.7% localised .de websites specifically for the German market. Canada 1.3% Czechia 1.3% German consumers are loyal to retailers headquartered Denmark 1.1% in Germany as well. More than a third of unique visits Source: SimilarWeb, RetailX to German retail websites are from consumers within the country. Examining the list of retailers within the Largest 100, we find that the majority of them are both fashion marketplace Zalando and beauty retailer headquartered in Germany. Douglas have extended operations internationally and operate ecommerce sites across a number of countries These retailers also receive a large part of their web traffic in Europe. Douglas has bricks and mortar stores as well, from outside of Germany. This highlights the international although many of these will have seen reduced footfall

reach of some of Germany’s major retailers. For example, or been closed at various times throughout 2020. Source: RetailX

to the second and third waves of the disease and a slow German election rollout of vaccinations. Germany joined with other EU states in the mass purchase of vaccinations in a move Germany’s election in September that has subsequently put member states behind other is pushing sustainability targets to countries in vaccinating citizens. Germany’s online portal for booking vaccinations is causing issues as well. the top of the political agenda and will have consequences for the retail sector Restrictions in people’s movement and the temporary closure of brick and mortar retail establishments classed as non-essential caused dissent amongst retailers and

Germany is facing a political tipping point as it heads consumers alike. As well as closing stores in March 2020 WESTERMANN © MATHIAS towards elections on 26 September 2021. Chancellor when the pandemic first hit Europe – at a cost of €26bn It is unlikely that a single party will take power in the Bundestag Angela Merkel is standing down, having stated in 2018 in lost revenue to the retail sector – many physical stores that she will not seek any political post after the end of her closed on 16 December ahead of the busy Christmas The government has been criticised by some for opening current term[1]. shopping period. Retailers brought a number of legal cases Germany’s border to migrants in 2015 and giving against regional governments, which held the power to temporary asylum to more than a million refugees. This Merkel has been the leader of the centre-right Christian introduce local measures to slow infection rates, in the move had repercussion in following years and was a core Democratic Union (CDU) party for 21 years and held the hope of getting their stores reclassified as ‘essential’ so reason behind the rise of the anti-immigration party, top position in German politics for 16 years. This longevity that they could remain open. Alternative for Germany (AfD), which has attracted some makes her Europe’s longest-standing consecutive leader. votes away from conservative right-wing parties. As part of her tenure, she has seen the country go through The federal government currently retains the legal right major changes, including the 2008 global financial to reintroduce measures to curb people’s movement if Political corruption within the CDU resulting in three recession and, more recently, the Covid-19 pandemic. infection rates rise again. This ‘emergency brake’ could members of Germany’s Bundestag resigning this year is However, the battle that lies ahead for the CDU to retain its see it closing schools or introducing night-time curfews[2]. not helping it in the polls. 62% of voters say they are less majority in the Bundestag (German parliament) might be It could also instigate a return to the temporary closure of satisfied with the party, following record approval in 2020. an equally tough challenge. stores, stopping people from physically shopping in certain The same poll puts the Greens ahead by 4pp. stores and only able to click and collect or shop online. Many Germans are disappointed by how the government This would be introduced if infection rates in Germany rise The amalgamation of East Germany’s Alliance 90 and West has handled the health crisis, particularly in its reaction to between 100 and 150 per 100,000 people. Germany’s Greens has been attracting significant numbers

of left-leaning voters, with co-leaderAnnalena Baerbock be protected, but also the freedom of future generations,” “The freedom of those living today being particularly popular with voters. 28% of German it ruled. The court called on the government to declare the has to be protected, but also the voters say that they would vote her in as chancellor if the course it would take to tackle climate change post-2030. political system allowed. However, voting for a chancellor freedom of future generations” is the first job of the new parliament, with the candidate Merkel said at the time that while she understands Court ruling on climate change typically drawn from the party holding the majority of seats. frustration about the speed of combating climate change, the CDU also has to ensure that parliamentary majorities companies throughout supply chains. Getting to net zero Speculation as to the outcome of the election continues, allow action to be taken[4]. is not something that a country, businesses or people with the likely position (at the time of writing) being can do alone. Working together with legislation backing up a coalition between the CDU and The Greens. The So, what will these changes mean to business in Germany? the commitments that consumers want is a way forward alternative is the ‘traffic-light’ option of centre-left Social Whether the Greens take the majority in the Bundestag or which will see companies changing in order to follow where Democrats (SPD), the centre-left Greens and the right- just increase the number of seats they hold, Germany is on they are legally led by government and pressured to do so liberal Free Democrats (FDP), as indicated by two major a challenging path to combat climate change over the by consumers voting with their wallets. regional elections. This follows the CDU’s worst results ever next 24 years. in two traditional strongholds[3]. While business does want to change, there are already Investments in clean hydrogen, and possibly carbon companies within the retail industry that are pushing far CDU INTRODUCES SUSTAINABILITY BILL capture, are on the cards, according to think tank Agora ahead of government legislation. Brands and retailers All of the political parties, including the CDU, are pushing Energiewende. It is estimated that it will cost €250bn entering the German market will need to keep the green credentials in a bid to win voters. In May, Merkel on top of the investment required for its existing 2030 environment front of mind when dealing with authorities, announced that Germany would become carbon environmental targets – around 3% of GDP[5]. consumers and the marketplaces on which they sell. The neutral by 2045, five years ahead of its previous target. balance of ‘money over planet’ is quickly shifting. The sustainability bill will see the country reducing carbon Other measures include: having 14m electric vehicles on emissions by 88% by 2040 in order to hit its deadline. the road by 2030 and ending the sale of new petrol and diesel cars by 2032; phasing out the use of coal by 2030, [1] www.bbc.co.uk/news/world-europe-46020745 However, the bill was introduced following legal action by eight years ahead of the original target; and increasing [2] www.bbc.co.uk/news/world-europe-56829377 environmental groups and a decision by Germany’s top renewables to account for 70% of all energy generated. [3] www.newstatesman.com/world/europe/2021/03/spectre-left-led-traffic-light-coalition-rising- germany constitutional court that older generations should share [4] www.independent.co.uk/news/germanys-merkel-build-political-majority-vs-climate-change- angela-merkel-berlin-germany-one-cabinet-b1848057.html the burden of reducing emissions and not leave it to These strong environmental commitments put pressures [5] www.bloomberg.com/news/articles/2021-05-11/germany-s-2045-net-zero-goal-means- young people. “The freedom of those living today has to on industries to reduce their impacts, as well as engaging accepting-unpopular-technologies

and submit data to it. This is applicable to more than 3,500 CASE STUDY brand partners and private labels. Zalando: Leading Zalando uses data ranging from fair wages and human rights, to C02 emissions, in order to track trends in its supply chain, gain a better understanding of how goods by example sold on its site are made and develop solutions to help both its suppliers and its own business to improve. German fashion platform Zalando has been on a mission to have a positive impact on the planet and people Another target has been set for 2023 requiring Zalando to

since 2019, by aiming to give back more to society and the generate 25% of gross merchandise volume (GMV) from © ZALANDO environment than it takes. Its vision includes targets for its sustainable products and for the business to be working Zalando measures its own sustainability to encourage others own business as well as the brands selling via its platform. only with partners that meet its ethical standards.

Significant progress has been made in the year and a half The retailer is quick to point out that it doesn’t expect by 80% and carbon emissions coming from the production since the strategy launched. The Berlin-based retailer and suppliers to make any changes that it isn’t prepared to of private label products by 40%. Zalando is already using marketplace now requires that all brands selling via its site instigate itself – Zalando aims to lead by example. Its 100% renewable electricity in its own operations, which has use the Sustainable Apparel Coalition’s updated version sustainability agenda is organised across the three pillars resulted in a 64% decrease in emissions since 2017. of the Higg Brand & Retail Module to measure both the of planet, products and people. It has so far set science- environmental and the social impacts of their business based targets to reduce its operational carbon emissions Over the past year, the number of sustainably manufactured or sourced garments for sale on its platform tripled to 80,000 products, 16% of GMV was generated by “We made big steps in 2020 and we encouraged our partners to do the same. We are the sale of sustainably produced products and 250 brands reported on their own sustainability activities. However, excited and encouraged by the progress we have been able to make. This validates our the platform still has work to do in educating consumers. ability to act and scale solutions fast. Therefore, we are accelerating our efforts A recent survey it conducted found that while consumers by raising our target of GMV generated by more sustainable products” care about sustainability, the same level of sentiment isn’t Kate Heiny, director sustainability, Zalando carried over to sustainable fashion.

Population structure through time 4 Share of people who purchased goods on social media, by age group 21 Population growth 4 Leading iPhone shopping apps, by downloads 21 GDP per capita 4 Preferred methods of delivery 23 Germany internet user analysis over time 5 Ecommerce consumer expectations of delivery time 23 Attitudes towards online shopping 15 Returns of online purchases, by category 23 Drivers of online purchases 15 Shifting to online purchases because of the Covid-19 pandemic, by category 24 Multichannel service relevance 16 German ecommerce growth, by category 24 Importance of low-priced products, by category 17 Christmas gift shopping locations during the pandemic 25 Amount spent online in the last three months, by age group 18 Devices used for online Christmas shopping 25 Frequency of online purchases in the last three months, by age group 18 Plans to shop on Black Friday 25 Share of online shoppers, by state 19 Coronavirus and Christmas present choices 25 Most purchased category, by age group 19 Web traffic from the catchment to sectors 26 Most popular payment methods for online purchases 20 Web traffic destinations (HQ) from the region 26 Market share of Buy Now, Pay Later (BNPL) in domestic ecommerce payments 20 Web traffic sources of retailers headquartered in the catchment 27 Online purchases by device 21 Countries where the Largest 100 are headquartered 27

31 | RetailX | May 2021 GERMANY ECOMMERCE REPORT | SOURCES © 2021 retailx.net, distributed by InternetRetailing.net Germany report data sources To supplement our own research in our analysis for this Integrated index for postal development: www.upu.int/UPU/media/ Share of people who purchased goods on social media by age group: upu/publications/2020-Postal-Development-Report.pdf www.statista.com/statistics/1192455/share-of-people-who-purchased- report, we drew on these sources. While each one is Attitudes towards online shopping: goods-on-social-media-by-age-group/ referenced next to the chart or graphic they are used in, www.statista.com/global-consumer-survey Leading iPhone shopping apps: www.statista.com/statistics/700084/ for transparency, here are all the links: Drivers of online purchases: leading-iphone-shopping-apps-in-germany-by-downloads/ www.statista.com/global-consumer-survey Preferred methods of delivery: Multichannel service relevance: www.postnord.com/media/publications www.statista.com/global-consumer-survey Returns of online purchases by category: www.statista.com/ Importance of low-priced products by category: forecasts/998730/returns-of-online-purchases-by-category-in-germany Population: www.statista.com/global-consumer-survey Ecommerce consumer expectations of delivery time: www.worldometers.info/world-population/germany-population/ Internet purchases – money spent by age group: www.postnord.com/media/publications https://ec.europa.eu/eurostat/data/database https://ec.europa.eu/eurostat/data/database Shifting to online purchases because of the Covid-19 pandemic, GDP: www.quandl.com/data/ODA/DEU_NGDP-Germany-GDP-at-Current- Frequency of online purchases by age group: by category: https://ecommercedb.com/ Prices-LCU-Billions https://ec.europa.eu/eurostat/data/database German ecommerce growth by category: https://ecommercedb.com/ https://ec.europa.eu/info/business-economy-euro/economic- Share of online shoppers: www.statista.com/statistics/786561/online- Christmas gifts shopping locations during COVID-19: performance-and-forecasts/economic-performance-country/germany/ shopping-share-of-shoppers-by-state-germany/ https://app.quantilope.com/share/K4LTSBrtqLmxjdkR8?type=dashboard economic-forecast-germany_en Most purchased category by age group: Devices used for online Christmas shopping: www.bevh.org/ B2C turnover: www.statista.com/global-consumer-survey www.statista.com/statistics/1194644/devices-used-in-europe-for-online- www.haendlerbund.de/en Most popular payment methods for online purchases: christmas-shopping/ https://ecommercedb.com/en/markets/de/all www.statista.com/statistics/434341/e-commerce-popular-payment- Plans to shop on Black Friday: www.statista.com/statistics/1183150/ Logistics performance index: https://lpi.worldbank.org/ methods-germany/ black-friday-shopping-plans-germany/ Ease of doing business: Market share of Buy Now, Pay Later (BNPL) within domestic Coronavirus and Christmas present choices: https://data.worldbank.org/indicator/IC.BUS.EASE.XQ?locations=DE ecommerce payment: www.statista.com/statistics/1191637/coronavirus-covid-19-christmas- www.statista.com/statistics/1233850/online-bnpl-penetration-country/ present-choices-germany/ E-government development index: https://publicadministration.un.org/egovkb/en-us/data-center Online purchases by device: www.statista.com/forecasts/998672/ online-purchases-by-device-in-germany Internet inclusive index: https://theinclusiveinternet.eiu.com/explore/countries/performance

This report may not be stored in a retrieval 2020 will be looked back on as the year that ecommerce in Germany RESEARCH: Researcher Ludovica Quaglieri system, distributed or sold in whole or in part accelerated. The country may be the largest economy in Europe but in terms For questions about our research and to send feedback, without the publisher’s express permission. of ecommerce, it still falls behind the UK and France. please email Ludovica via: [email protected] Fair quotation is encouraged, with a link to the Head of Research Martin Shaw report’s URL on RetailX.net. All charts and figures RetailX 2021 Consumers changed their shopping behaviour during the pandemic. While CEO Ian Jindal marked with are provided under the Attribution-NoDerivatives 4.0 International this was dictated partly by the temporary closure of brick and mortar stores, EDITORIAL: (CC BY-ND 4.0) license (https:creativecommons. Emma Herrod many of the new customers attracted to buying online have continued to do Research Editor org/licenses/ by-nd/4.0/). You are welcome to use Managing Editor Jonathan Wright so. For those who were already shopping online before the pandemic, the these in full with a link to this report, retaining Production Editor Cam Winstanley RetailX 2021 frequency of shopping has increased. Indeed, when surveyed at the end of the copyright notice May 2020, said that they had DESIGN: the majority of consumers made a conscious Designer Nick Moyle This report is based upon our reasonable effort to buy something online rather than visiting a physical store. efforts to compile and analyse the best sources MARKETING: available to us at any given time. Opinions reflect Marketing and Circulation Addison Southam judgment at the time and are subject to change. Many small retailers launched online for the first time in response to footfall [email protected] to their brick and mortar stores reducing, or stores having to close temporarily. SALES: RetailX The switch to online then enabled them to keep on serving loyal, local Commercial Director Andy James [email protected] 123 Cannon Street, shoppers as well as extending their reach to new, more distant consumers. Group Creative Solutions Director Marvin Roberts London, EC4N 5AU [email protected] Tel: +44 (0) 20 7062 2525 These new patterns of consumer behaviour and the advantages for retailers We update the country reports every year and more regularly of operating an online store are expected to remain in place. While older at www.retailx.net. Subscribe to get updates and access to Global Retail Research RV shoppers with a high level of disposable income make up a third of online additional charts: www.retailx.net/my-account Van Heuven Goedhartiaan 13D shoppers, it is the younger consumers with a growing appetite for buying on 1181LE Amstelveen The Netherlands credit that will shift perceptions, since historically Germans have avoided The Ecommerce Country and region Reports are published by Global Retail Research BV, a subsidiary of RetailX, and debt. Buy now, pay later will become as linked to German consumers distributed to a variety of media partners. To become a as their desire for high quality and transparency, or their tendency to distribution partner, please contact [email protected] complain if they are not happy with their purchase. © RetailX Limited, 2021.

33 | RetailX | May 2021