Germany has one of the largest economies in the world, a profitable e-commerce market, and borders Poland. Sound like an excellent foreign expansion destination?
Before you set out to conquer one of the world's largest economies learn 10 pieces of information about the German market that will help you get to know the country.
1. company registration 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:
- provide goods or services subject to VAT,
- make intra-Community acquisitions of goods,
- benefit from services subject to VAT,
- provide services for which the recipient pays this tax.
Regardless of the form of application (online or snail mail), the VAT number decision will be delivered via snail mail.
2. longer period of vendor liability
European Union law requires that consumers receive at least a 2-year legal guarantee that protects them from buying defective products.
In Germany, the period in which the seller has to prove, in the event of a dispute, that the goods were free of defects at the time of purchase has been extended from 6 to 12 months. The new regulations take effect on January 1, 2022.
3. digital law in Germany
Are you 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, the trader is obliged to provide updates (including security updates) to the consumer in 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.
4Privacy and data security is a priority.
German consumers are serious about protecting their data and privacy.
Data processing and collection rules must not be missing from the website. Vendors operating in Germany must process in accordance with the RODO and the Federal Data Protection Act (Bundesdatenschutzgesetz, BDSG), which supplements European Union regulations.
The approach to privacy is defined by the well-known term "datensparsamkeit" in this country . It translates as data avoidance and data sparing, or even more specifically, the collection and processing of only necessary data.
5. high quality requirements
It's worth putting 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 the product meets health, safety and environmental criteria. Other well-known product quality guarantees in Germany are:
- The GS marking, which is one of the most recognized safety markings in Germany. It applies to products that can be used immediately, such as electrical appliances or furniture.
- DIN standards, or standards of the German Institute for Standardization.
- TÜV certifications that attest to quality and safety, such as the TOXPROOF mark confirms that the product has been tested for harmful substances or allergens.
6. German customer takes into account opinions and reviews
Reviews and testimonials are something that can't be missing from a website - most 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.
Similar information can also be found in the report "Digital 2024: Germany." Nearly 57% of users use the Internet to search for products and brands.
The data clearly shows that SEO in Germany is an important part of business activities in this market. A site that can be seen on Google is one thing. German customers will also be helped in choosing a brand by reviews from other customers placed prominently on the site. Likewise, product reviews, which are an excellent opportunity to acquire a backlink and thus build domain authority in the search engine.
7. mandatory communication in German
From the 2021 Unbabel Global Multilingual CX Report, we learn that 61% of German consumers consider it very important to provide them with a native language experience. This applies to both website content and customer service. In Germany, customers want to communicate with companies through:
- e-mail (57%),
- Chat on the store's website (41%),
- telephone (40%).
An expression of appreciation for the language of communication can be loyalty, 70% of respondents believe. However, the quality of service must go hand in hand with the German language. As many as 20% more said that poor service would affect their trust in the brand.
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8. factors that encourage online shopping
If you want to encourage customers to buy and do it effectively, offer them additional solutions. The most common motivators 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 ability to pay via electronic wallets. Therefore, it should be mandatory for the website to have the option to pay via PayPal.
Other frequently offered payment methods are cards (VISA and Mastercard) and wire transfer.
- Digital wallets account for 32.6% of B2C e-commerce transaction volume.
- Bank transfer accounts for 30.3% of transactions in German e-commerce.
- Debit and credit cards cover 12% of payments.
10. German consumers value green solutions
Sustainability is not the most important purchase factor, but environmental sustainability with other product features can be a competitive advantage. Nearly 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 a slightly important one for 34% (Global Sustainability Study 2021).
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If your company is making efforts to protect the environment or produce sustainably, it's worth talking about. This can be an important decision factor for a group of customers who value such efforts. The best place to communicate this information is on your website.
Summary
A well-prepared positioning strategy for Germany, as well as knowledge of the market and consumer behavior, is a solid foundation for competing with well-known brands. Therefore, before you enter the German market, keep in mind issues such as:
- Regulations on the conduct of business and consumer rights.
- High standards of product quality and data security.
- Communication language and other factors that encourage purchases.
- Preferences for payment methods and ecology.
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
