Germany is the second most populous country in Europe with the second largest ecommerce market to match, and bordering nine neighbouring countries, it offers great opportunities for continental growth. Even if you’re not directly looking to Germany as your next market, it should be considered as a key European economy and exporter.
After reading this guide you will understand the opportunities presented by Germany and how to take make the most of them, as well as have a general understanding of Germany’s place in the global balance of powers and why this affects businesses.
2 Expanding business to Germany
Germany’s central position in the EU makes it an ideal location for logistics hubs and distribution centres in Europe. Serving over 82 million German citizens, 150 million consumers in nine neighboring countries and nearly 500 million EU residents, Germany is the direct link to Western and Eastern European markets.1
Germany’s infrastructure is highly developed: the density of the country’s highway network is twice the EU average and significant investments mean that conditions are continuously being improved. Germany plans to spend €264 billion on roads, bridges, railways and waterways by 2030, making it a good investment for use as a European hub and to tap into the local market.2
Ecommerce in Germany continues to grow and is estimated at $99.33 billion for 2018, promising great opportunities for online sales.3 As the second most populous nation on the continent and with the second largest ecommerce market in Europe, Germany offers an advantageous ratio of buyers to sellers and also has good fulfillment centres so you can get product to customer easily and quickly.
3 Quick facts and advantages of doing business in Germany
Germany is top of the World Bank’s Logistics Performance Index for 2016, which ranks 160 countries in terms of logistic efficiency
Germany is Europe’s logistics giant, with annual revenues exceeding €235 billion (more than France and the UK, Europe’s second and third largest logistics revenue earners, combined)
Germany is home to major global logistics leaders, including Deutsche Post World Net, DHL, DB Schenker and Dachser1
German shoppers use open invoice and direct debit payment types, a characteristic unique to the country3
By 2050, Germany’s over-60 population will account for almost 40% of its total population, which could create a unique ecommerce landscape4
4 Customer trends
It’s crucial to think about customer behaviour when expanding in new markets. How does your target customer usually buy products? What’s their preferred method of delivery? The following factors will help you consider how customer trends will affect the way you go about doing business in Germany.
Mobile shopping accounts for only 15% of ecommerce sales in Germany1
1 in 4 German shoppers value fast delivery or local pickup options. Same-day delivery is not critical, but over 50% of German shoppers think standard delivery (3-5 day shipping) should be free2
If shopping cross-border, Germans primarily look to the UK, U.S. and France for goods. German consumers are more likely to purchase cross-border if the international return policy is the same as their own3
Germany has the highest return rate in Europe, accounting for nearly half of all European returns4
5 Fulfilment models
Cross-Border into Germany
Using a fulfilment centre in Northern Germany offers benefits like access to a seaport (Hamburg) and airports, which reduce the overall cost of importing your products into the country. When fulfilling high order volumes, nearby low-cost countries like Poland also offer attractive solutions.
Sharing borders with nine other countries makes Germany a great centralised location for fulfilment within Europe. Given its centrality, more goods pass through Germany than any other country in Europe, helped along by the country’s road and rail densities, which are nearly twice the European average.
A number of logistics powerhouses are headquartered in Germany. Many German ecommerce companies seek fulfillment locations near their German headquarters. Central Germany is also a strong option and offers good transit times.
If you need to serve the DACH-Region (D-Germany, A=Austria and CH=Switzerland) from a point within Germany, a location in Southern Germany makes sense.
Small parcel carriers
The most common small parcel carriers and their respective market shares:1
- DHL 49%
- DPD 16%
- Hermes 14%
- UPS 13%
- GLS 8%
Less-than-truckload (LTL) and truckload (TL) carriers
The following LTL and TL carriers are the primary options for freight delivery:
- DB Schenker
- DHL Freight
- Kuehne + Nagel
- LKW Walter
7 How to start doing business in Germany
When weighing up your move into the German market, think about the pros and cons of incorporating a company and the type of German company structure that might suit you. Also determine the tax office that applies to you, how you can register with the Tax and Customs Administration and whether you’re liable to pay VAT in Germany. Depending on where your goods are coming from, confirm whether they can be imported, and find a fulfilment centre and carriers that provide coverage in Germany.
Market Finder contains a breakdown of the World Bank’s Doing Business Index, where you can get a heads-up about the ease of doing business in Germany. It ranks on a scale of 1 - 190 how easy it is for a business to set up and run a local firm in each of the world economies. Ten topics are assessed to gain the score. These include the ease of getting electricity, the ease of getting credit, and the potential for cross-border trade.
When trading in a new market, it’s good to know the administrative, regulatory, and logistical challenges that may lie ahead. Navigating legal requirements and working out logistics is made a lot easier with Market Finder - find further support and tools including in-depth guides and insights.
Ingram Micro Commerce & Lifecycle Services provides logistics solutions to help businesses connect supply and demand.
The materials provided on the site are for informational purposes only. For financial, tax, or legal advice, consult a specialist.