This blog by PipeCandy is focused on estimating the B2C eCommerce market size in Germany. We analyzed the factors driving the growth of eCommerce in Germany, estimated the TAM and then visualized the TAM by important retail parameters such as Web Sales, Product Categories, and Traffic. Germany is the second major eCommerce market in Europe, next to the UK and followed by France. Together, they contribute more than two-thirds of Europe’s eCommerce turnover.
Major retail & eCommerce companies (by internet sales) are Amazon.de, Otto, Zalando, Notebooksbilliger, Mediamarkt, Lidl, Bonprix, Cyberport and Conrad. These companies together account for nearly 50% of Germany’s B2C ecommerce turnover with Amazon taking the lead. Internet purchases as a percentage of all retail sales in Germany have seen steady growth over the last decade climbing from 7.2% in 2008 to 13.8% in 2018. The growth rate of e-commerce, however, has slowed down over the years, from about 40% in 2013 to 10% in 2018. Apart from the general slowdown, there’s the possibility of Brexit affecting the current retail and e-commerce landscape in the UK and Germany.
Market Size and TAM
The German retail market was worth an estimated 414 Billion Euros in 2016. Two years on, this figure has risen to 471 Billion Euros in 2018, of which B2C e-commerce accounted for about 13.8% or 65 Billion Euros. Within the B2C segment, online Marketplaces formed the largest distribution channel, accounting for 30.62 Billion Euros.
Based on PipeCandy’s secondary research and analysis of sample proprietary data, we estimate that there are about 350,000 retailers and 63,000 eCommerce companies in Germany. Of the 63,000, about 40,000 are B2C eCommerce companies selling physical goods. In the forthcoming sections of this blog, we profile these 40,000 companies by the Web Sales, Product Categories and Traffic.
TAM split by Web Sales
There are only a handful of eCommerce companies that make more than 5M in web sales. 87% of all ecommerce companies in Germany are either emerging companies or retail companies that are yet to become sophisticated in their eCommerce initiatives.
TAM split by Product Categories:
Consumer Electronics (27%) emerges as the leading product category among Germans, followed by Apparel & Fashion (25%) Sporting Goods (16%), Health & Fitness (8%), Food & Beverage (7%) and General Merchandise (5%).
TAM split by Traffic sessions
The TAM distribution by traffic sessions mirrors the long-tail nature of the German e-Commerce market. Nearly 70% of eCommerce websites in Germany clock 100,000 or fewer sessions
A few examples of companies with monthly sessions greater than 1 million are Zalando, Notebooksbilliger, Mediamarkt, and Lidl.
Germany’s demography is almost evenly split between Men and Women. The biggest segment of the population is the 15-54 age group, that accounts for about 50.54% of the population. The average order value or AOV, of transactions in Germany, is an estimated 138 Euros.
90% of shoppers seem to opt to pay via Wallets like PayPal, which emerges as the most popular mode of payment, followed by Credit/Debit cards and Invoices. The desire for security and convenience appears to be driving uptake of these well-established payment methods.
Conclusion: Brexit’s impact on the German eCommerce market
The UK is currently Germany’s third biggest trading partner, according to the German Economic Institute (IW) and 5% of Germany’s GDP is linked to trade with the UK. As far as B2C eCommerce is concerned, the UK accounts for 29% of all cross-border parcels purchased by German shoppers only next to China (44%).
Although Germany’s overall cross-border purchase rate is only about 6%, Brexit could pose rough headwinds for Germany’s cross-border commerce. In the event of a Hard Brexit, we expect there to be an overall slowdown in cross-border trade, resulting in extended delivery times and return times on both sides of the border.
Merchants that have been majorly focused on domestic trade will see little to no impact but those relying on revenue from the UK will find it hard to sustain. On the bright side, however, within Europe, we may see German, French and Dutch merchants beginning to compete for the void left by the UK, and shoppers in Europe will purchase more from these countries.
While these are a few possible scenarios that could play out, the exact impact will depend on whether the UK reaches some kind of a trade agreement with Europe before the May 22nd deadline, that retains its access to the single market and does not disrupt cross-border commerce operations significantly. The chances of such a deal playing out, however, based on recent events seem extremely bleak.
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