Do you want to enter the German market? Then read this blog, where we give you advice on how to succeed in selling online in Germany.
Germany is an attractive local market for many European webshops since the country is Europe’s largest e-commerce market. According to a study carried out by PostNord, 61.5 million German consumers shopped online in 2019.
But while it may be tempting to jump straight into the trade with Germany, you need to be well prepared in order to succeed. A large market also means many competitors, so you have to make sure that you are ready for the challenges - and with this blog, we’ll help you to start off on the right foot.
Research the German market
When you expand to Germany, you need to research the market in depth. Many elements influence whether a company can be successful in a new country. Here are some key questions you should ask yourself:
- Is my product relevant?
- Is there a need and demand for my product?
- What is the competitive situation like?
- Can I earn money on my order in the new country?
- Can I handle the logistics?
It takes a lot of work if you want to be successful, so we would advise you to set aside both time and money to establish yourself in the German e-commerce market. You need to produce content, create awareness of your brand and stay up to date on both customers and competitors.
Sign up for the German packaging register
Since 01.01.2019, it has been a legal requirement in Germany that all companies that sell goods to German consumers (B2C) must register in the packaging register called LUCID. At the same time, both your planned and actual quantity of packaging used must be reported with the aim of reducing the number of unregistered packaging as well as advancing the recycling of packaging.
If you fail to register, you’re not allowed to sell your goods to German consumers - and if you do this anyway, you risk a fine.
You register your company (for free) at lucid.verpackungrestiger.org.
An important step in achieving success with your webshop in a new country is that it appears local, as it creates trust. This means that you must have local knowledge of both language, law, culture and logistics.
Germany is known for being very strict regarding legal matters and legislation. Moreover, the vast majority of German consumers read the terms and conditions on webshops. So one of the key elements for success is that your webshop is equipped with the right framework and provides customers with the correct mandatory information.
In terms of language, it’s essential that everything on your website is translated into German, because it gives a local flavour, which creates trust and gives a greater desire to buy. That said, it does not mean that you can translate everything directly, so you need to find out if some of your product names and the content on your webshop need to be rewritten and adjusted.
The popular marketplaces
German e-commerce is dominated by a large number of online marketplaces including Amazon, which occupies almost half of the market. This means, for example, that many of the German consumers use a platform such as Amazon as a search engine, and so they are not exposed to other webshops. For this reason, many companies in the German market choose to have a webshop running next to their Amazon account, and this may also be an option for you. The benefits of having an Amazon account running next to your webshop is that you get the best of both worlds. Through Amazon, you get great exposure, and at the same time, it is possible to draw traffic to your webshop. However, if you’re considering joining the crowd of Amazon retailers, it requires a thorough analysis in order not to disappear among the crowd of webshops. Additionally, you also need to assess and evaluate whether it’s worthwhile embarking on an Amazon adventure. Amazon takes a big chunk of your profits. The average percentage you have to pay each time you sell a product through the platform is 14% of the order total - so you may risk making minimal or no money at all.
Prepare your webshop for the German market
A hassle-free shopping experience is central if you want to be successful in the German market. The strong competition also means that there are a myriad of options that the consumer can choose from - and if the shopping experience on your webshop is not hassle-free, the consumer will switch to one of the many other options.
At the same time, German consumers have a reputation for placing great emphasis on credibility and trust. So you need to make sure that your webshop is finely tuned and that your product feed is world-class, which means always being up to date and accessible, with local prices, texts, pictures and stock status. It’s also a good idea to show trustmarks, such as Trusted Shops, which is one of the major trustmark certifications in Germany.
You also need to make sure that you’re offering the right payment methods, especially because German consumers value trust very highly in relation to the payment process. So it may be a good idea to offer the most common payment methods such as PayPal, which is the most popular payment method in Germany.
Preferred payment methods in Germany: Source: E-commerce in Europe 2019, PostNord
Read more about how to strengthen your webshop’s credibility by optimizing your checkout.
Does your webshop have to be VAT registered?
An important consideration in your extension to Germany is whether you should register for VAT with the German tax authorities, Finanzamt.
As a company located in the EU, when you sell goods to consumers in another EU country through distance selling, you must in principle register in the country and charge VAT at the applicable rate in that country - unless your turnover is below the country’s VAT registration threshold. In Germany, this limit is € 100,000. If your turnover is below the country’s VAT registration threshold, you can still register for VAT - but our recommendation is that you wait before doing this, as it can be a time-consuming and administratively cumbersome process.
Can you handle the freight to Germany?
It is especially important that you have control of the logistics when you expand to another country, such as Germany. Can you currently ship goods to Germany? Do you have the capacity to handle the return process? These are two questions that are crucial to your success.
To help you on your way in terms of delivery and shipping, we’ve set up a graph of which carriers the top 100 German retailers use:
Ship with Shipmondo today
With a free Shipmondo account you can send packages to Germany today! There’s no subscription when using Shipmondo, which means that you only pay for your consumption. So you can test our platform without any commitment.
The process of handling returns
Great customer service is an important factor in your success, and it is important that it is carried through every step in the consumer process.
In Germany, it’s extremely important that the return process should be easy, and this can influence whether a customer will choose you in the future. German consumers are known for returning items on a large scale. Moreover, 67% of German consumers check the return policy before making a purchase. This means that your return policy and return process must be as simple and transparent as possible, as otherwise you risk losing customers.
With Shipmondo’s Return Portal, you can make it easy for your customers to pay for return shipping, download return slips and send their purchased items back to you without having to contact your customer service. You decide the price for your returns or choose to offer free return - and that is something German consumers expect.
See our overview of the countries, carriers and products supported here.
Do you need guidance?
The customer experience during shipping sets the tone for how well your product is received. If you need sparring in relation to carriers, freight options and so on, you are welcome to write an email to us at firstname.lastname@example.org, and we will help and guide you.
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