Germany has one of the largest economies in the world, a profitable e-commerce market, and it borders Poland. Sounds like an excellent destination for foreign expansion!
Nevertheless, before you set out to conquer one of the world’s largest economies, it’s worth getting to know the country better.
Here’s what characterises the German market.
1. Registering Your Company Before Applying for a VAT Number
Foreign companies that want to apply for a VAT number must first register in Germany.
A German VAT number is needed by companies that:
- supply goods or services subject to VAT,
- make intra-Community acquisitions of goods,
- use services subject to VAT,
- provide services for which the recipient pays this tax.
Regardless of the application form (online or snail mail), the decision to assign a VAT number will be delivered via snail mail.
2. Longer Period of Seller Liability
European Union law requires that consumers receive at least a 2-year legal guarantee to protect them from buying defective products.
In Germany, the period in which it is the seller’s responsibility, in the event of a dispute, to prove that the goods were free of defects at the time of purchase has been extended from 6 to 12 months. The new regulations entered into force on January 1, 2022.
3. German Consumers Value Eco-Friendly Solutions
Sustainability is not the most important factor influencing consumer purchasing decisions, but offering an eco-friendly product can be a competitive advantage.
Almost half of consumers believe that companies should focus on extending the life cycle of their products (Germany Everyday Sustainability Market Report 2024).
Sustainability is an extremely important purchasing criterion for 24% of consumers in Germany and slightly important for 34% (Global Sustainability Study 2021).
Raf ChomskyThis indicates that while ecology alone may not be the decisive factor in purchasing decisions, when combined with other product advantages, it can lead to increased attractiveness in the eyes of consumers. This highlights how important it is for companies operating in the German market to invest in more sustainable solutions that not only contribute to environmental protection but also meet customer expectations in terms of product quality and longevity.
CEO of NoN Agency and Sustainable Growth Advocate
If your company is making efforts to protect the environment or operate sustainably, it’s worth talking about. It can be the deciding factor for a group of customers who value such efforts. The best place to communicate this information is on your website.
4. Privacy and Data Security Are a Priority
German consumers are serious about protecting their data and privacy.
Every website must include clear rules for data processing and collection. Vendors operating in Germany have to process in accordance with the GDPR and the Federal Data Protection Act (Bundesdatenschutzgesetz, BDSG), which complements European Union regulations.
The country’s approach to privacy is defined by the well-known term “datensparsamkeit.” It translates as data avoidance and data minimisation, or more specifically, the collection and processing of only necessary data.
5. Strict Quality Requirements
When you’re entering the German market, it makes sense to include information confirming quality on the website and in product descriptions because German customers are demanding in this regard.
The CE marking, well-known in the European Union, confirms that a product meets health, safety and environmental criteria. Other well-known guarantees of product quality in Germany are:
- GS marking: It is one of the most recognised safety markings in Germany. It applies to products that can be used immediately, such as electrical appliances or furniture.
- DIN standards: They are the standards of the German Institute for Standardization.
- TÜV certifications: These certifications attest to quality and safety. For instance, the TOXPROOF mark confirms that a product has been tested for harmful substances or allergens.
6. The German Customer Takes Into Account Opinions and Reviews
Reviews and testimonials are something that can’t be missing from a website — most German customers will check them out online first before making a purchase.
The Statista survey found that more than half of German respondents (56%) said that when they plan a major purchase, they first look for information online.
Source: www.statista.com/forecasts/998723/attitudes-towards-online-shopping-in-germany
Similar information can also be found in the “Digital 2024: Germany” report. Nearly 57% of users use the internet to search for products and brands.
This data clearly shows that SEO in Germany is an integral part of business activities in this market.
A site that can be seen on Google is one thing. German customers will also have an easier time choosing a brand by reading the reviews from other customers placed prominently on the site.
Product reviews can also have a significant impact since they provide an excellent opportunity to acquire a backlink and build domain authority.
7. Mandatory Communication in German
In the 2021 Unbabel Global Multilingual CX Report, we can find that 61% of German consumers consider it very important to provide them with an experience in their native language. This applies to both website content and customer service.
In Germany, customers want to communicate with companies via:
- e-mail (57%),
- chat on the store’s website (41%),
- telephone (40%).
An expression of gratitude for choosing German as the language of communication can be loyalty, 70% of respondents noted.
However, the quality of service must go hand in hand with the German language. As many as 20% more customers said that poor service would negatively affect their trust in the brand.
8. Factors That Encourage Online Shopping
If you want to encourage customers to buy your products, offer them additional solutions. The most common motivating factors for online shopping in Germany are:
- free delivery (65.8%),
- coupons and discounts (49.2%),
- easy return policy (44.2%),
- next-day delivery (36.2%).
The “Digital 2024: Germany” report, from which this data was taken, also included the aforementioned customer reviews (32.5%).
9. Customers Expect a Choice of Payment Options
Most stores in Germany provide the option to pay via digital wallets. Therefore, it should be mandatory for the website to offer the option to pay via PayPal.
Other frequently offered payment methods are credit cards (VISA and Mastercard) and wire transfers.
- The share of digital wallets in the volume of B2C e-commerce transactions is 32.6%.
- Bank transfer accounts for 30.3% of German e-commerce transactions.
- Debit and credit cards cover 12% of payments.
Source: datareportal.com
10. Digital Law in Germany
Planning to sell digital products or goods with digital elements?
As of January 1, 2022, the German Civil Code (BGB) has new provisions relating to digital products. They apply only to consumer contracts.
For example, a trader is obliged to provide updates (including security updates) to the consumer within a reasonable period of time and inform the consumer about them.
Failure to meet these requirements can lead to legal liability, so it is worth preparing a plan for handling such products in advance.
Summary
A well-prepared positioning strategy for Germany, as well as knowledge of the market and consumer behaviour, is a solid foundation for competing with well-known brands.
Thus, before you enter the German market, keep in mind issues such as:
- Business regulations and consumer rights.
- Strict standards for product quality and data security.
- Communication language and other factors that encourage purchases.
- Preferences for payment methods and ecology.
Do you need a strategy for the German market? Are you considering other expansion directions? We look forward to hearing from you!
Source of data and information [Access date: 06/09/2024].
- https://www.bzst.de/EN/Businesses/VAT/VAT_ID/FAQ/faq_node.html#js-toc-entry1#js-toc-entry1
- https://www.evz.de/en/shopping-internet/guarantees-and-warranties.html
- https://verwaltung.bund.de/leistungsverzeichnis/en/rechte-und-pflichten/102837961
- https://www.morganlewis.com/pubs/2022/01/german-federal-parliament-passes-sweeping-new-rules-on-selling-digital-products-to-consumers
- https://www.heuking.de/en/news-events/newsletter-articles/detail/the-new-eu-digital-law-and-its-implementation-in-germany.html
- https://www.gesetze-im-internet.de/bgb/
- https://www.hiig.de/en/the-principle-of-datensparsamkeit/
- https://www.dataguidance.com/notes/germany-data-protection-overview
- https://www.gesetze-im-internet.de/englisch_bdsg/
- https://www.tuv.com/poland/pl/badanie-i-certyfikacja-mebli.html
- https://www.baua.de/DE/Die-BAuA/Aufgaben/Gesetzliche-und-hoheitliche-Aufgaben/Produktsicherheitsgesetz/GS-Zeichen
- https://europa.eu/youreurope/business/product-requirements/labels-markings/ce-marking/index_pl.htm
- https://unbabel.com/german-consumers-understanding-their-buying-habits-and-customer-service-preferences/
- https://store.mintel.com/report/germany-everyday-sustainability-market-report
- https://ecommercedb.com/markets/de/all
