Online Retailing in Germany 2011

Online Retailing In Germany 2011

Release date: January 17th, 2011 (32 pages)
PDF/Powerpoint format. Price: GBP600.00


As online operations internationalise from 2010 on, especially in the EU, we ask whether Germany offers an attractive opportunity for pureplays as well multichannel players. Germany is after all the market with most broadband connections in the EU, so will it pay to expand online operations into the market?

Recent new developments from German online retailing included ebay buying brands4friends, the German discounted luxury club site, basically a well functioning vente privee copy, and the specialist footwear pureplay Zalando starting its facebook retail operations. We believe that the market is very much in upheaval and exciting chances and opportunities will emerge.

Moreover the German DIY giants OBI and Hornbach are finally launching their transactional websites, OBI’s well documented problems with franchisees notwithstanding, mirroring the problems Metro Group has encountered with launching online operations for its Media Markt/Saturn Consumer electronics chains. In a nut shell the internet is set to cannibalise offline sales (for both OBI franchisees and Media/Saturn) and as store managers/franchisees are incentivised by obtaining a share of profits of their particular store, a clear conflict of interest is developing. While in theory sales could be allocated on a post code basis, allocating sales to those stores from whose catchments online orders were made, the reality is a lot more messy, with aftersales service and returns only one bone of contention.

Both Sweden’s finest retail exports, H&M and Ikea, launched transactional websites in Germany (their main market) years before launching in the UK (one of the EU’s most developed online retail markets). The recent arrival of Inditex and Gap will shake up the clothing sector though, especially against the backdrop of the Arcandor implosion and the disappearance of Quelle, Germany former mail order champion. That said leading specialist C&A’s transactional site has been performing strongly for a while now and as such is ready to fend off the encroachment of the fast fashion players.

Studying the pureplays, Thomann, the musical instruments specialist from Bavaria has turned into a truly global player and internationalised operations to such a degree that it could serve as a model for other businesses going forward, facing obstacles and problems such as differing VAT rates which are relatively straight forward to resolve and import restrictions for wood (musical instruments) into Australia or Canada, which are much harder to crack.

That said, Germany is also a market where the mail order giants (Otto, Neckermann) reacted to the emerging threat of online early on by launching their own sites and hence healthy online competition has evolved. A side effect of the legacy of mail order operations and customers knowing their rights is that Germany can be dubbed the land of returns. In footwear for example a 40% returns quote is no exception. Moreover German consumers – despite the recent very positive macroeconomic news – remain extremely price focused, one reason why online grocery is relatively underdeveloped, but this could be about to change.

Table of contents

Market fundamentals: Germany p4 Total retail and online retail spend 2005 – 2010 (€m): online storming ahead p5 The background p6 2009 Sales in €m: Segments p7 Segment profile: Clothing & footwear; Books, music, DVDs and games p8 Segment profile: Consumer electronics, computers and peripherals & others p9 Retailer online turnover in €m: Germany 2008-2010 p1 0 The Top 10 Germany: from Amazon to Notebooksbilliger p1 1 Other interesting players: brands4friends, frontline & Zalando p1 4 Assessing the opportunity: Germany p1 6 Assessing the opportunity: The model p1 8 Assessing the opportunity: The result p1 9 Outlook & Recommendations: Germany p2 0 Focus on online grocery p2 3 Introduction, sizes and latest developments p2 4 MyMuesli – the customization opportunity p2 5 Gourmondo – the premium long tail p2 7 Otto – looking for the right partner and learning from past mistakes p2 9 Amazon – who is the target customer? p3 1 Sources p3 2