In the first of a series of blog posts, we’ll be looking at the current state of e-commerce across some of the biggest consumer markets for local and cross-border payments. Beginning with Germany, this series will go on to include close neighbours such as the Netherlands and the UK before moving on the USA, the UAE, China, Japan, and Australia.
Europe’s Consumer Stronghold
Whilst the UK leads Europe in e-commerce, the contribution of Germany’s consumer spending power towards cross-border shopping defines Germany as the leader in Europe’s e-commerce payments space.
As 88% of Germans fulfil their purchases online in a blended summation of the omnichannel experience, Germany’s ranking as the number 1 performer in logistical fulfilment means that online shopping for customers simply just makes sense.
The convenience and ease of shopping online both domestically and from international sites in Germany have led to conversion rates that are higher than the UK and US. Notably, Germany is also the 5th largest e-commerce market in the world – even when taking the impact of COVID-19 into account – the size of Germany’s 83.7 million-strong economy, means that e-commerce revenues are still set to see a year-on-year increase of 13%; up from 8.5% previously.
When accumulating the value of German e-commerce in numbers, the market can be valued at $82bn USD by the end of 2020.
Whilst we’ll consider Germany’s role as a global leader for cross-border shopping, let’s focus on Germany’s consumer preference for native payment methods and shopping experiences; preferring to shop with sites with a (dot).de domain in their native German language and checking out with local payment options such as invoices over more global options such as card.
69% of German shoppers like to make purchases on international sites.
55% of Germans prefer to shop on sites in their native language so incorporating geo-detection features is key.
50% of online purchases in Germany are made via mobile.
Germany has one of the highest return rates in Europe - up to 70% in some sectors.
Remaining unpopular, card use online remains at 12%.
Where to Shop:
Incredibly, marketplaces account for 40% of German e-commerce. Perhaps, as marketplaces act as a big facilitator of the import/export nature of cross-border commerce; we should be less surprised by this statistic. With Amazon.de and ebay.de ranking amongst the top two sites used by shoppers in Germany - with the former also fulfilling orders across Austria, Belgium, Switzerland and the Netherlands – the German consumer can shop across borders whilst checking out in their preferred local method – with 70% of Amazon’s consumers still choosing to pay via invoice. However, with a demand for multiple checkout options, 67% of Amazon.de customers also checkout using PayPal or Amazon Pay.
However, in recent years, global entity PayPal has recently superseded invoice popularity within Germany. With their accelerating presence as global consumers, Germans have shifted their digital payments preference away from local payment methods as Paypal teeters into the majority with a 56% preference in online payments and the once-popular invoice use dropping to 26%.
As noted, with one of the highest rates of returns in Europe – enabled by the preference for invoice payment methods – the effects of this shift are still to be seen.
Whilst big players like PayPal still hold a considerable majority in the German market, as other financing options like Klarna have the potential to enter the market; will this return rate alter?
Popular payment methods in Germany
To learn more about enabling cross-border shopping options on your storefront get in touch with Total Processing today!
Look out for the next instalment in our e-commerce series soon.