e-commerce berlin expo 2017 - the german e-commerce market: how the consumer challenges the entire...

FEBRUARY 2, 2017

Nadine Litchfield Senior Manager Investor Consulting Consumer Market & E-Commerce [email protected] Phone: +49 (0) 30 2000 99-305 www.gtai.com/e-commerce

GERMAN E-COMMERCE MARKET: HOW THE CONSUMER CHALLENGES THE ENTIRE

INDUSTRY

© Germany Trade & Invest www.gtai.com 3

E-Commerce Market in Germany Continental Leader in Europe

Source: Bundesverband E-Commerce und Versandhandel Deutschland e.V., February 2016

B2C Turnover of Interactive Commerce & E-Commerce in Germany (in billion €)

39,3

54,5

27,6

52,5

2012 2016

Total interactive commerce E-commerce





39,3

54,5

27,6

52,5

2012 2016


53m digital buyers in Germany:

98% internet users; 32% online on a

regular basis





39,3

54,5

27,6

52,5

2012 2016


Clothing, Media (Books, CDs, DVDs), CE 1



regular basis





39,3

54,5

27,6

52,5

2012 2016


Clothing, Media (Books, CDs, DVDs), CE 1



regular basis

Furniture, Pharmaceuticals, Food &

Drugstore Items


E-Commerce Market in Germany Preferred Purchasing Channel for Different Product Groups

Source: bevh, Boniversum, Oktober 2016

62% 60% 57%

54% 58%

45% 42%

32% 30%

21% 15%

7%

38% 41% 43% 46% 42%

55% 58%

68% 71%

79% 85%

93%

Online and Mail Order Distribution Traditional Retail


E-Commerce Market in Germany Top Ten Online Shops in 2016

Source: iBusiness, October 2016

Company (position last year)

Country of origin Assortment

1 Amazon EU S.a.r.l. (1) USA Full product range

2 Otto (GmbH & Co KG) (2) Germany Full product range

3 Zalando AG (3) Germany Apparel, textiles, shoes

4 NOTEBOOKSBILLIGER.DE AG (4) Germany Computer, CE, mobiles, equipment

5 Cyberport GmbH (5) Germany Computer, CE, mobiles, equipment

6

bonprix Handelsgesellschaft mbH (7) Germany Apparel, textiles, shoes

7

Tchibo GmbH (6) Germany Full product range

8 Conrad Electronic SE (8) Germany Full product range

9 ALTERNATE GmbH (9) Germany Computer, CE, mobiles, equipment

10 Apple (10) USA Computer, CE, mobiles, equipment


Changing Consumer Behaviour (1/2) Global Leaders describe changing consumer behaviour as the biggest challenge for their company.

Source: PwC, 19th Annual Global CEO Survey: Retail and Consumer Industry Key Findings, 2016

Convenience

Flexibility

Personalisation Digitalisation

Speed of Change

Social Media

Loyalty Programs

Customer Journey Mobile

Technology

Service

Shopping

Dynamic

Demands

Savvy Customer


Changing Consumer Behaviour (1/2) (Shopping) Behaviour and Characteristics of the German Consumer

Service

Customisation vs. Mass Production

Flexibility

Savvy Customer

Household Structure

IT-Safety

Risk and Credit Averse

High Purchasing Power Low Loyalty Brand Level

Technology


Factors influencing German consumers Convenience is increasingly more important than price!

German

Consumer

Payment Speed of

Delivery

Return

Options

Social Media Functionality

Security /

Trust


Social Media Online reviews influence purchase decisions.

Source: PWC Study „Total Retail 2016“

Activity Influence on customers aged 18-34

Reading of ratings, reviews and feedback 43 %

Advertisements 27 %

Up-to-date on fashion and product trends 23 %

Receiving promotional offers 31 %

Ties with brands and merchants 22 %

Writing of ratings, reviews and feedback 20 %

Purchasing products directly via social media 9 %

Other 1 %


Quality Label / Seal of Approval (1/2) Existence of Quality Labels (both offline & online) plays an important role

in 62% of consumer purchasing decisions in Germany. How important are quality labels for your purchasing decision?*

24%

38%

31%

5% 2%

Very Important Important No difference Unimportant Absolutely irrelevant

Note: 1000 internet user (<14 yrs of age) were asked in Germany

Sources: GfK


62% of merchants are certified

Quality Label / Seal of Approval (2/2)

Note: 7.9% use other quality labels than the ones mentioned

Source: ECC Köln / HDE „e-KIX“ - survey among 400 online retailers , September 2016

46%

3.3% 8.7%

7.3%

4%

3%


Payment (1/4) Credit cards play a minor role in Germany.

Preferred Offline-Payment Methods

* invoice, instalment payment

Source: EHI 2015

3%

7%

37%

52%

Other*

Credit card

Debit card

Cash


Payment (1/4) Credit cards play a minor role in Germany. Germans prefer to receive the bill with the delivered goods ordered.

Preferred Offline-Payment Methods Preferred Online-Payment Methods

* invoice, instalment payment ; **e.g. PayPal, ClickandBuy, Sofortüberweisung (instant money transfer) giropay ; *** e.g. COD (cash on delivery), instalment payment

Source: EHI 2015; bevh / Creditreform Boniversum, 2016 - survey with >1000 people interviewed

3%

7%

37%

52%

Others*

Credit card

Debit card

Cash

6%

5%

8%

9%

29%

43%

Other ***

Advance payment /Bank transfer

Direct debit

Credit card

Purchase onaccount

Online paymentservices**


Payment (2/4) Nearly 30% of German Online shoppers prefer to pay after receiving the goods, i.e. purchase on account.

Preferred Online-Payment Methods (in Germany 2013-2016)

* e.g. PayPal, sofortüberweisung.de, ClickandBuy, giropay ** e.g. COD (cash on delivery), instalment payment

Source: bevh / Creditreform Boniversum, 2016; survey with >1000 people interviewed

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2013 2014 2015 2016Online Payment Services* Purchase on account Credit card Direct debit Advance payment Others**


Payment (3/4) 30% of Online shoppers in Germany cancel the order if their preferred payment method is not offered.

Reasons for cancellation of order while shopping online

11,6%

0,9%

2,8%

3,4%

3,5%

3,6%

4,0%

5,7%

6,5%

6,6%

9,8%

9,8% 29,1%

I have never cancelled an order process

Too high return costs

Data security too low

Payment process security too low

Delivery time too long

Order process too long

Lower price found elsewhere

Product choice not available

Technical Problems

No reason

Delivery costs too high

Order process too complicated

Preferred payment method not available

Source: Fittkau & Maaß Consulting via Statista 2015


Payment (4/4) Cancellations during purchase process is less likely if more payment method options are offered.

Rate of cancellation during purchase process dependent on number of payment methods offered

2%

6%

9%

15%

25%

33%

38%

67%

80%

88%

PP + PayP + CC + PoA + BW

PP + PayP + CC + DD

PP + PoA + DD

PP + Purchase on account (PoA)

PP + Credit Card (CC)

PP + PayPal (PayP)

PP + Direct debit (DD)

PP + (instant)bank wire (BW)

PP + Cash on delivery (COD)

Pre-Payment (PP)



Payment (4/4) Cancellations during purchase process is less likely if more payment method options are offered.

Rate of cancellation during purchase process dependent on number of payment methods offered

2%

6%

9%

15%

25%

33%

38%

67%

80%

88%

PP + PayP + CC + PoA + BW

PP + PayP + CC + DD

PP + PoA + DD

PP + Purchase on account (PoA)

PP + Credit Card (CC)

PP + PayPal (PayP)

PP + Direct debit (DD)

PP + (instant)bank wire (BW)

PP + Cash on delivery (COD)

Pre-Payment (PP)


Online retailers offer 5 - 6 payment

methods:

2013: 5.5

2014: 5.1

> 6 tends to cause confusion


Delivery > 50% of consumers consider delivery crucial to the online shopping

experience!

Source: DHL Study 2015: „Customer Journey – Von der Bestellung bis zum Paketempfang“; MetaPack „Delivery Consumer Choice: State of E-Commerce Delivery“ 2015;

„Nutzungsverhalten im E-Commerce in Österreich und Deutschland“ DHL 2015

Detailed information about status of

delivery

Flexible delivery options:

- Place

- Time: 85% want to choose the day 78% want to choose time window 40% want delivery in the evening

Customers Wishes



experience!




delivery


- Place


Customers Wishes

88 % of customers want free delivery!



experience!




delivery


- Place


Customers Wishes

50% choose a more expensive online retailer that offers better delivery options.


Return (1/2) Every 10th purchase is returned in Germany (Fashion items every 2nd)!

Source: Study „Versand – und Retourenmanagement im E-Commerce 2016“ by EHI; PWC Study „Total Retail 2016“

% of Retailers Stated return rate

65% < 10%

10% < 20%

10% < 30%

10% < 50%

3% up to 60%

10€ (50,- €)





65% < 10%

10% < 20%

10% < 30%

10% < 50%

3% up to 60%

10€ (50,- €)

60% of customers have returned items

70% of items can be re-sold as „new“ goods





65% < 10%

10% < 20%

10% < 30%

10% < 50%

3% up to 60%

10€ (50,- €)

Ideal return criteria for customers:

- Free return label included in package

- Option to return to shop or other place of

convenience

60% of customers have returned items

70% of items can be re-sold as „new“ goods


Return (2/2) 51% of customers bought products with the intention to return them later. 5% do this on a regular basis.

20%

46% 41%

17%

9% 14% 24%

25% 16%

24%

10% 14%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

notintended

possible intended

Debit card

PayPal

Credit card

Purchase onaccount

Source: ECC Köln 2015, Question: Which payment method did you use for your last order and did you intend to return the purchase before ordering“ 141 <n<1754

„Der Retrourenprocess aus Sicht der Konsumenten – Welche Rollen spielt das Zahlungsvermögen“ ; „Payment im E-Commerce – Der Internetzahlungsverkehr aus Sicht der

Händler und Verbraucher“; Bitkom, January 2017

Payment method used in connection with return rate intention



20%

46% 41%

17%

9% 14% 24%

25% 16%

24%

10% 14%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

notintended

possible intended

Debit card

PayPal

Credit card

Purchase onaccount





63% of customers rate “purchase on account“ as very

good when it comes to returning goods.



20%

46% 41%

17%

9% 14% 24%

25% 16%

24%

10% 14%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

notintended

possible intended

Debit card

PayPal

Credit card

Purchase onaccount





63% of customers rate “purchase on account“ as very

good when it comes to returning goods.

6 out of 10 customers will purchase again if previous returns are handled to their satisfaction.


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© Germany Trade & Invest

All market data provided is based on the most current market information available at the time of publication. Germany Trade & Invest accepts no liability for the actuality,

accuracy, or completeness of the information provided.

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