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Germany Passport 2015Cross-Border Trading Report
A report researched & compiled by eCommerce Worldwide
Supported by
Your guide to international e-trading
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The Germany Cross-Border Trading Passport is our latest publication in a series of international trading guides produced and maintained by eCommerce Worldwide, our sister associations and supporters for a variety of key territories around the globe.
These passports are designed to operate as comprehensive guides for cross-border e-Trading, exclusively focusing on the B2C markets in their subject territories.
The complete set of published Passports are available for download on the eCommerce Worldwide website at ecommerceworldwide.com/countries and on the websites of our sister associations.
For more information please visit
www.ecommerceworldwide.com or you can email
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CONTENTS Foreword 2
Executive summary 3
Introduction 5
Territory overview 5
Online and mobile statistics overview 9
Political & socio-economic environment 13
Marketing 13
Optimising customer experience 16
Consumer confidence 17
Fear of fraud 17
Track & trace/returns/exchange 18
Above and beyond 19
Customer care expectations 19
Marketplaces 20
Loyalty and vouchers 21
Dispute resolution 21
Ongoing issues of interest 22
Legal framework and regulation 23
Regional differences in legislation 32
Hierarchy of court system(s) 33
Finance & payments 33
Payments overview 33
Implementation 34
Common payment types 36
Logistics and delivery 40a German market view
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Germany is Western Europe’s largest country with 81 million citizens. It has the second biggest ecommerce market in Europe, is expected to grow by 12% in 2015 and be worth €47bn (Bevh) with an internet penetration of 83%.
As a market, Germany clearly has huge potential for any online business. How can a brand producer or retailer effectively establish and operate an online business in Germany, leveraging existing opportunities whilst facing the fierce international and domestic competition that any attractive market fosters? What are the specifics and peculiarities compared to other European core markets? What makes the customer tick?
FOREWORDBy arvato
You can find more at: www.scm.arvato.com
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CURRENT TRENDS & CHALLENGESThe German ecommerce market shares many similarities with other mature markets in Europe. The current strategic discussions with our clients predominantly concern the same topics that are also at the centre of other advanced-commerce ecosystems, such as the UK. For example; omnichannel excellence, mobile first, social commerce, big data and changing customer expectations. However, there are some key differences that any merchant should consider before launching in to the German market:
• German customers are used to ordering with open invoice as the payment method. Returning items they don’t like or that don’t fit must be easy and for free. As a matter of fact, return rates can exceed 40% depending on the industry segment. However, on the upside, conversion rates when offering open invoice often outperform the European average, thus compensating or exceeding the return effect.
• The German customer tends to be much more sensitive than their European counterparts when it comes to data protection. This is also reflected in a rather strict legal framework. Likewise, gaining the German customer’s trust is not a given. Online shop operators need to diligently check their website with regards to spelling and overall professional appearance. Trust symbols might help if brands are totally unknown or reputation still needs to be built up.
• German businesses, such as Zalando, have set a high service standard – e.g. 100 day free returns – which domestic online customers now expect from any online vendor.
• For flexible parcel deliveries, Germans are more likely than other European markets to choose a parcel locker solution, such as Deutsche Post DHL’s ‘Packstation’, as their preferred delivery location.
• Special promotion days: ‘Mother’s Day’ in Germany is on the second Sunday of May, as opposed to the English equivalent in March. ‘Black Friday’ has recently gained prominence, with the first dedicated sale activities taking place in 2014.
• English proficiency is not as widespread as one might expect – Germany only ranks 10th in a European comparison, with countries such as Poland or Estonia ranking higher. Thus, localised German language along all customer communication touchpoints is crucial.
Whilst these points are important considerations for a successful digital launch into the German market, the size and expected growth of the opportunity make it a worthwhile consideration for any merchant with plans to expand their cross-border trade in Europe.
WHO IS ARVATO?For more than 15 years arvato has been supporting clients in their ecommerce endeavours, often starting in one market and later expanding globally into others. As one of the leading European ecommerce and retail logistics service providers for fashion, beauty and FMCG industries, arvato SCM Solutions is offering the entire ecommerce value chain: implementation of online-shops including online marketing, logistics and shipping including returns management, as well as financial services, customer service and ecommerce consulting. As ecommerce has become more about international engagement, we support our clients’ successful geographic expansion with our own warehouses around the globe, for example in the USA, UK, Germany, France, Italy, Russia and China. Based on the long-standing and constant collaboration with some of the most renowned international brands, we have gained extensive experience and insights about the different ecommerce markets – with Germany being one of the most important ones in Europe. In this study, we would like to share these findings with you.
Niels Weithe Managing Director Consumer Products – arvato SCM Solutions
Return rates can exceed 40%
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EXECUTIVE SUMMARY
In an increasingly digital world, global trading has never been easier. This cross-border activity is merely an extension to the physical world offering for many merchants. For others, digital opens up new frontiers for commerce.
For any digitally-enabled business, European or otherwise, Germany offers many opportunities and a few challenges. This report explores a number of the key areas and provides merchants with insight that will help to make expansion into this territory that little bit more informed.
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ONLINE & MOBILESTATISTICAL OVERVIEW
OPTIMISING THE CUSTOMER EXPERIENCE
As a digital economy, Germany is second only to the UK in Europe in terms of online retail spend, currently projected at circa €50bn in 2015; a 14% increase on 2014.
Some commentators are reporting an increase in the order of 23% whilst average spend per online consumer ranges from €600 to €1,000. The ever-increasing sophistication of the German shopper includes 75% having made a purchase online, 10% having made a purchase cross-border and 39% having used their mobile phone to purchase goods. Overall, ecommerce represents 15% of all non-food retail.
As with all territories, the customer experience is a blend of many different elements of the merchant’s proposition, from brand/product awareness through to website usability and customer support.
Where brand awareness is the factor, trust schemes can play a major role whilst clear and concise information about the product, returns and customer support is vital. Communications also include localisation of the offer and customer support channels. Germany ranks behind some smaller countries in the number of consumers that speak English.
For such a large country, there are a relatively small number of major population centres, with only three cities having more than a million inhabitants. Germany is a federal country of 16 states with over 60 years of stable parliamentary rule, often formed with coalition governments. Across all industries and channels Germany’s largest trading partners are France, USA and the UK. For all types of retail, Austria, Switzerland and the Benelux are natural shopping destinations for German consumers.
With the largest population in Western Europe, Germany’s 81 million citizens represent a strong economy with a GDP of €2,666bn; the biggest in the European Union (EU).
of German shoppers have made an online
purchase
75%
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MARKETING & BRANDINGThe German ecommerce opportunity shares many traits with other markets. Digital ad spend is increasing and currently stands at €5.46bn. Mobile is of increasing importance with smartphone penetration at over 60% and clothes and electricals being the most popular sectors for the mobile consumer. Social media growth has stabilised and even showed a modest fall in 2014. However, with over 40 million user accounts, the social consumer is an important segment in the market. Social media ad revenue is expected to exceed €2.2bn in 2015; a significant proportion of total digital ad spend. Vouchers and loyalty programs have their place in driving customer loyalty whilst marketplaces have considerable penetration into this developing market and offer access to millions of prospective customers.
Credit and debit cards are not the dominant online payment mechanism in Germany. Overall credit usage is limited and only one in five cards in Germany are credit cards, the rest are debit cards and not all of these can be used online. Open invoice is a popular method which allows a customer to see and try the products before purchasing, and only pay for what they keep. Bank-to-bank transfers are also gaining in popularity and direct debit has its place in the payments mix. PayPal is an important player in the market and with the increase in mobile commerce, e-wallets are gaining popularity.
Mobile is of increasing
importance with smartphone penetration at over 60% and clothes
and electricals being the most popular
sectors for the mobile consumer.
FINANCE & PAYMENTS
Germany’s distance-selling laws are based on EU legislation and generally follow a stricter interpretation than territories such as the UK. Commonalities include the 14 day cooling-off period but data protection legislation, whilst based on EU rules, is taken very seriously by both regulators and consumers.
Free returns were also required under German law but this has been replaced by the EU legislation. However, consumers still expect this level of service.
Finally, it is important to ensure that a merchant’s T&Cs and website information conform to legal requirements. Consumers and competitors are likely to pursue legal action if the information falls short of these standards.
Overall fraud levels in the German market are lower than European averages, coming in at around 0.5%. Direct debit is the highest at 1.5% whilst open invoice follows a number of credit checks, allowing fraud levels to be kept down but increasing conversion rates.
The risk management tools used in Germany would be familiar to managers in other territories although only those used to running customer credit accounts would be aware of the additional risk and credit checks required by open invoice. Another interesting point with direct debit is the longer period that chargebacks can be implemented by the customer; up to 8 months
With 10% of German online customers already having purchased cross-border and the total ecommerce market being worth nearly €50bn in 2015, the marketplace is already open to distance-selling. On the back of a strong catalogue shopping heritage, there is a well-developed B2C delivery network in Germany.
Customer expectations are high with 14% expecting a 1-2 day delivery service but they are also open to collecting their packets from parcel shops or locker locations. Deutsche Post having 2,500 locations nationally provides good infrastructure for convenience and a wide range of delivery options to the customer.
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LEGAL
FRAUD & RISK MANAGEMENT
LOGISTICS & DELIVERY
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INTRODUCTIONGermany, being the largest country in the EU, both in terms of population and economically, is an attractive target for any online merchant. Consumers are already used to distance-selling through catalogues so migrating to digital is natural to many.
The younger generation coming through is adapting to mobile commerce in increasing numbers and this is helping to drive ecommerce growth. Consumers expect high levels of customer service and local competition sets standards that foreign businesses will be expected to meet, if not exceed.
The German economy is stable and the country is very open to inward investment. The digital market is growing strongly and on the back of this, a seasoned and developing pool of talent exists to help with the process of launching into the market. Whether a merchant needs logistics expertise, marketing insight and full service agencies, a number of global businesses have a presence in Germany and a lot of local business have a global presence.
Any investor can have confidence that the right proposition will find a willing audience but it will pay to listen and act on the local nuances that make the German market different from others in Europe.
Global online sales in 2013 reached a staggering $295bn, projected to hit $540bn in 2015.
Capital city: Berlin
Population (aged 15–79): 72 million
Language: German
Currency: Euro (€)
Internet penetration: 83%
Proportion of the population who have shopped online: 81%
Average online spend per year: € 646
TERRITORY OVERVIEW Supported by arvato
Germany is Western Europe’s largest country, with a population of 81 million. As a country it has a strong history in manufacturing, particularly of high quality products at the leading edge of technology.
This is reflected in global brands in medicine and healthcare, chemicals, transport and logistics, automotive and aerospace engineering, pharmaceuticals, technology and innovation, energy, environment and financial services.
Germany has the largest economy within the EU, running at circa €2,666bn, but as the following graphics show, there is still an east / west split in terms of prosperity and opportunity. The states in the east of the country, the former German Democratic Republic (GDR), still haven’t gained the full potential of post-unification which took place in the 1990s.
German Economy is the largest in the EU
GDP in 2012, Euro (Billions)
Source: Eurostat
Netherlands €599Sweden €409Poland €381Belgium €376Austria €307Denmark €245Greece €194Finland €193Portugal €165Ireland €164Czech Rep. €152Rest of EU €584
Germany€2,666
France€2,032
UK€1,927
Italy€1,566
Spain€1,029
Netherlands €599Sweden €409Poland €381Belgium €376Austria €307Denmark €245Greece €194Finland €193Portugal €165Ireland €164Czech Rep. €152Rest of EU €584
Germany€2,666
France€2,032
UK€1,927
Italy€1,566
Spain€1,029
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CURRENCY AREA POPULATIONGOVERNMENT
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The Federal Republic of Germany is a parliamentary democracy which has been stable for over 60 years and, since reunification, consists of 16 states. Local or state level government has a major part to play in the overall governance of the country whilst at the federal level most ministries are based in Berlin, although there are still a few based in the former capital, Bonn (pre-unification).
A constitution is in place and is referred to as the Basic Law. This defines Germany as a constitutional, federal and welfare state.
Country statistical profiles: Key tables from OECD - ISSN 2075-2288 - © OECD 2015
Last updated: 12 May 2015; disclaimer: http://oe.cd/disclaimer
Country statistical profile: Germany 2015
UNIT 2010 2011 2012 2013 2014
Production and income
GDP per capita USD current PPPs 39 563 42 089 42 730 43 108 44 203
Gross national income (GNI) per capita
USD current PPPs 40 395 43 172 43 854 44 219 ..
Household disposable income Annual growth % 0.6 1.9 0.5 0.5 ..
Economic growth
Real GDP growth Annual growth % 4.1 3.6 0.4 0.1 1.6
Net saving rate in household disposable income
% 9.9 9.6 9.4 9.1 ..
Gross fixed capital formation % of GDP 5.1 7.3 -0.7 -0.6 3.4
.. Not available
| Break in series
e Estimated value
UNIT 2010 2011 2012 2013 2014
Economic structure: share of real value added
Agriculture, forestry, fishing % 0.7 0.8 0.9 0.9 0.8
Industry % 25.7 26.0 26.1 26.1 25.9
Trade, transport, accomm., restaurants, communication
% 20.4 20.7 20.5 20.2 20.2
Finance, insurance, real estate, business
% 26.7 26.3 25.9 25.9 26.0
Other services (ISIC Rev.4 O - U) % 22.1 21.8 22.0 22.3 22.4
Taxes
Taxes on the average worker % of labour cost 49.1 49.7 49.6 49.2 49.3
Trade
Imports of goods and services % of GDP 37.1 40.0 40.0 39.8 39.1
Exports of goods and services % of GDP 42.3 44.8 45.9 45.6 45.7
Goods trade balance: exports minus imports of goods
Bln USD 204.3 .. 242.9 .. ..
Foreign direct investment (FDI)
Outward FDI stocks Mln USD 1 365 645 1 356 021 1 461 761 .. ..
Inward FDI stocks Mln USD 963 391 955 617 1 004 003 1 059 854 ..
Inflows of foreign direct investment Mln USD 65 623 59 372 13 208 26 716 ..
Outflows of foreign direct investment
Mln USD 126 318 81 045 79 638 57 539 ..
Prices and interest rates
Inflation rate: all items Annual growth % 1.1 2.1 2.0 1.5 0.9
Inflation rate: all items non food non energy
Annual growth % 0.7 0.9 1.3 1.2 1.4
Inflation rate: food Annual growth % 1.2 2.8 3.4 3.9 1.0
Inflation rate: energy Annual growth % 4.0 10.1 5.7 1.4 -2.1
Producer Price Indices (PPI): manufacturing
Annual growth % 2.5 4.2 1.5 -0.0 -0.4
Long-term interest rates % 2.74 2.61 1.50 1.57 1.16
Labour compensation and hours worked
Labour compensation per unit labour input, total economy
Annual growth % 0.3 2.7 3.3 .. ..
Average time worked per person in employment
Hours per year 1 405 1 405 1 393 1 388 ..
Research and development (R&D)
Gross domestic expenditure on R&D
Mln USD 76 507 81 650 84 290 86 109 ..
Population
Total population '000 persons 81 777 81 798 81 932 | 81 060 80 920
Population growth rates % -0.2 0.0 0.2 | .. ..
Youth population aged less than 15 % of population 13.4 13.3 13.2 | 12.9 12.8
Elderly population aged 65 and over
% of population 20.6 20.6 20.7 | 21.1 21.4
Source: OECD Factbook statistics. For explanatory notes, see OECD Factbook 2014 (DOI: 10.1787/factbook-2014-en)
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Germany is a country of 5,700 towns and cities but only 3 have populations of more than one million. Only 81 conurbations have more than 100,000 inhabitants and of the total population, 37 million people (45% of the total population) live in 300 cities. The following table shows the top 10 German towns/cities:
Table 1: Showing top 10 German towns/cities by population
RANK CITY STATE POPULATION
1 Berlin Berlin 3,275,000
2 Hamburg Hamburg 1,686,100
3 München Bavaria 1,185,400
4 Köln Northrhine-Westfalia 965,300
5 Frankfurt Hessen 648,000
6 Essen Northrhine-Westfalia 588,800
7 Dortmund Northrhine-Westfalia 587,600
8 Stuttgart Baden-Württemberg 581,100
9 Düsseldorf Northrhine-Westfalia 568,900
10 Bremen Bremen 527,900
Source: 1: www.staedtetag.de
ONLINE AND MOBILE STATISTICS OVERVIEWThe size of the German ecommerce market is second only to the UK in the European context and as the following data shows, is continuing to grow rapidly. Individual spend is growing, frequency of transactions are on the increase and of course, mobile commerce is becoming more popular.
ONLINE SALES GROWTH
STORE-BASED SALES GROWTH
COMBINED RETAIL SALES GROWTH
ONLINE SALES PER SHOPPER 2014 (£)
ONLINE SALES PER SHOPPER 2015 (£)
CHANGE (%)
UK 16.2% -0.2% 3.5% 1071 1174 9.6
Germany 23.1% -1.8% 2.0% 890 1023 14.9
Europe 18.4% -1.4% 2.0% 738 820 11.1
Source: Retailmenot survey 2015
Whilst the data in the following graph is from 2011, it illustrates the growing trend in both domestic and cross-border ecommerce. There is also an even distribution of demand across different population densities. The convenience of digital commerce, breadth of choice and improving range of delivery options to the urban shopper still outweighs a trip to the shops for many purchases. Likewise, for the rural shopper, digital commerce increases choice and availability which makes up for the inconvenience of traveling to major shopping centres.
E-SHOPPERS BUYING GOODS AND SERVICES ONLINE
DOMESTIC CROSS BORDER**
Share of households with access to internet/broadband
83%
Share of individuals who bought goods or services online within past 12 months*
75% 10%
Change in online purchasing behaviour*, 2010-2011 (percentage points)
+8 0
Share of individuals living in densely-populated areas who bought goods or services online within past 12 months*
74% 13%
Share of individuals living in intermediate urbanized areas who bought goods or services online within past 12 months*
75% 8%
Share of individuals living in sparsely populated areas who bought goods or services online within past 12 months*
75% 8%
Note: Source E-commerce and delivery – State of play of EU parcel markets with particular emphasis on e-commerce, European Commission DG Internal Market and Services, 15 July 2013; Data from 2011
* Share of individuals who used Internet within the last year,
** Cross-border intra EU trade Source: CIVIC Consulting (2011), EMOTA, Eurostat
35% Shop online weekly
31% Made 1st online purchase less than 4 years ago
31% buy products on social media
39% shop on mobile phones
33% shop on tablets
Source: http://www.pwc.com/gx/en/retail-consumer/retail-consumer-publications/ global-multi-channel-consumer-survey/survey-highlights.jhtml
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39%
33%
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Most online purchasers are new to the sector but they are rapidly adapting to the new technology and methods. As in other markets, electricals has been the sector driving online adoption which is following convention; early adopters are those that use technology, and the products they want to buy are electronics. However, as consumers become more used to the digital channels, and more trusting, other sectors start to become more important. Fashion, which often relies on high quality images and other rich media, soon becomes the most attractive online vertical.
The German ecommerce market survey in 2010 (market survey of the 1,000 largest online-shops of physical and digital goods) highlighted the following as the top 10 ecommerce brands.
amazon.de
otto.de
telekom.de
conrad.de
neckermann.de
thomann.de
weltbild.de
bonprix.de
baur.de
notebooksbilliger.de
Source: The IMRG – Docdata e-Retail International Logistics Guide
E-Retail Share of total retail E-Retail Share of total retail -Excluding Groceries
e-Retail 8%
Retail 92% Retail 85%
e-Retail 15%
As device usage changes then so does the makeup of the online purchaser. 45.1 million 3G mobile subscriptions are now active and 4G is standing at 0.9 million but growing fast. As 4G penetration increases, so does a customer’s use of the device for shopping, engaging with brands, researching and of course, engagement in social media.
Demographics show that females are more likely to make purchases via mobile devices in most categories. The gender gap is biggest in the clothing and book sectors with electricals the only sector where this is reversed. 18 to 44 year-olds are also the biggest user group in these sectors but older groups are still showing a strong propensity to use mobile channels.
Smartphone penetration in Germany has reached 62% and this has had an impact on social media engagement; being ‘always-on’ and ‘always-to-hand’.
Popular sectors and online/offline sales split
Source: Source: The IMRG – Docdata e-Retail International Logistics Guide
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SOCIAL MEDIA USAGE
Source: PostNord eCommerce in Europe report, 2015
78% of all web users in Germany from ages 14+ had a profile on at least one social network in 2013. Over 90% of 14 to 29 year olds have a social media account. There is a strong trend of users engaging with adverts on social media and becoming buyers as a result. The following list highlights the most popular social media networks in Germany, based on the latest data available.
The graphic below highlights a number of key insights. For example, German consumers are most likely to purchase fashion from foreign websites with the UK and US the favourite markets to buy from and at the same time, highlights the appetite for cross-border trading. 46% of online consumers have already purchased from a foreign website.
Facebook (more than 20 million German users in July 2012)
Google+
Wer-kennt-wen
MeinVZ/StudyVZ
MySpace
Lokalisten
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Netherlands 11%
UK 20%
Austria 31%
Within the EU however, the top international markets for ecommerce that German consumers purchase from are as follows:
Top-3 intra-EU countries of origin for inbound cross-border ecommerce (% of cross-border e-shoppers)
POLITICAL & SOCIO-ECONOMIC ENVIRONMENT
German politics is dominated by six main parties, many of whom have been part of a ruling coalition over the past 60 years. The parties are; Christian Democratic Union (CDU) which are conservative in their outlook and part of the current ruling coalition (2015); Social Democratic Party (SDP) which is centre-left in its politics; Free Democratic Party (FDP), pro-business and free-market and has been part of a ruling coalition more time than any other party; Green Party, Left Party and the Christian Social Union.
As recent events have shown, Germany is becoming much more confident on the global stage and is a key player in the EU. Prominent trading partners include the USA, France and the UK and promoting cross-border trade is a key component of government policy. In 2014, Germany exported €96bn to the US, €101bn to France and €84bn to the UK (German Federal Statistics Office –August 2015). The top three import partners are the Netherlands, China and France.
Austria obviously has the benefit of common language whilst the Netherlands will benefit from its proximity to the population-dense northern states.
Note: Data from 2012. *Answers based on answers from multiple delivery operators Source: Eurostat, Copenhagen Economics (2012), Delivery operator questionnaire (January 2013)
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MARKETING
Digital advertising spend in Germany during 2014 topped €5.4bn, second only to the UK at €8.9bn according to IAB Europe (21/05/2015). With mobile shopping becoming more and more important, 2013 saw responsive web design spread, and 2014 saw an improvement in mobile shopping experiences.
With the first step being to create sites that render on mobile devices, consumers will be exposed to an increasing number of online stores scrambling to build sites that positively blossom on smartphones and tablets.
That said, it must be maintained that a larger number of mobile stores will also start advertising their products and services on mobiles. The popularity of mobile advertising is increasing day-by-day, and branded ecommerce stores are among the first big spenders on mobile advertising.
Popular marketing channelsAn advertiser’s core objective is to prioritise investment in relevant communication channels that deliver maximum returns for their business. As shown by the many studies proving digital marketing ROI, it makes perfect sense to leverage digital channels for promoting your brand and its products and services. A fine balancing act between advertising budget and the costs of using a particular channel is essential.
The three digital channels showing the best return on investment (ROI) are:
Pay Per Click (PPC): With a majority share of PPC market (roughly 67%), the use of Google AdWords is a requirement. Plenty of businesses have driven traffic to their site, marketed their products/services and ultimately increased sales by leveraging Google AdWords. If you add to that a collection of features like Ad Customizers, Call-Out Extensions, Google AdWords Editor and HTML 5 Ads you get a channel that helps deliver a marketing message the way your audience wants to hear it. These methods can also identify if and when an ad leads to an offline sale and that’s a huge advantage.
Email: It would be easy to ignore emails as an advertising channel because it is perceived as outdated. However, email marketing still has the lowest costs per lead and is a digital channel that should be utilised. According to a survey by the Radicati Group, there will be more than 1.1 billion business email accounts by 2017, and 77% of worldwide email accounts will be consumer email accounts.
Social Media: Social media advertising revenue in 2015 is estimated to be close to $8.5bn, and it is set to witness explosive growth in the next few years. Social media is a top internet activity and people across age groups are spending a large amount of time on social media. Social media advertising provides a strong communication channel with commercial benefit.
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An effective digital strategy will help business managers make the right decisions. A digital marketing strategy should involve a review to check that all of the available capabilities are in place and help the organisation to manage all of the digital touchpoints.
To summarise, a successful digital marketing strategy should be built on reviewing the following core capabilities: strategic approach, performance improvement process, management buy-in, resourcing and structure, data and infrastructure, integrated customer communications and customer experience.
The democratisation of data and analytics is perhaps most apparent in marketing. Data and business intelligence (BI) tools are increasingly used by marketers to better understand and cultivate their customers. The same tools enable the business to evaluate the performance of marketing investments. Today analytics can address nearly all aspects of marketing: from lead generation to sentiment analysis and social media traffic.
Technology changing the landscapeThe proliferation of social media, online communities and mobile communication have generated large amounts of consumer data of interest to marketers. Simultaneously, technologies to collect and analyze the data have improved greatly. The result is insight into the preferences of individual consumers and the ability to implement one-to-one marketing with unprecedented effectiveness. In fact, it can be argued that mobile technology will be central to all the future trends, e.g. Internet of Things, virtual or augmented reality, and wearables. Mobile is already the main focus of innovation and increased ad spending for countless major brands. This is no surprise, bearing in mind how rapidly smartphone penetration is rising globally.
Social media platformsFacebook, Twitter, LinkedIn, Google+, YouTube, Pinterest and Instagram are the top seven platforms used by marketers, with Facebook leading the pack by a significant margin. Social media advertising is also about personalisation. The better you know your customer, and for that you need to have data and analytics capabilities, the better you can offer personalised marketing and increase conversion.
In Germany it is maintained that social networks are probably about to face a new era. Hamburg PR consultancy, Faktenkontor & Toluna, said in their November 2014 report that the percentage of internet users visiting social sites has dropped, as consumers weigh up the pros and cons of taking part. In 2013, an estimated 75% of the online population aged 14 and older used networks such as Facebook, Twitter and XING; but in 2014 that figure fell to 68%.
However, social media will still exercise enormous influence. According to the Statistisches Bundesamt, around 40 million people in Germany use social sites. Even if this population shrinks further, it will represent a vast potential audience for advertisers. With social networks being an integral part of daily life, a further decline in user numbers is unlikely.
Search marketingGoogle is the dominant market player in Germany with some usage of Bing and Yahoo! As with the user experience, it is important to localise site search, ad words and some elements of the URL, such as the top level domain (TLD). For example, using ‘.de’. Not only does this benefit SEO, it also creates the environment expected by the German consumer. Likewise, translating common search terms from your domestic site into German won’t always work. A direct translation might not reflect how German consumers refer to a product.
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OPTIMISING CUSTOMER EXPERIENCE
As with any business proposition, there are commonalities across all markets and Germany is no exception. There will be local nuances that will be highlighted in this document but much of the market requirements will be familiar to any ecommerce professional.
However, the not-so-subtle difference when trading cross-border is that a brand isn’t just competing with other brands selling similar products, it is also looking to assuage any fear that a consumer might have in trading with them, as a foreign business. This section assesses the importance of some of the key factors that addresses this challenge.
German consumers will value a number of different requirements in a different way to other markets. Particularly, the following are presented in order of importance, in general, by German consumers:
1. Clarity over consumer rights
2. Concern over ease of redress rights
3. Genuine high quality goods reassurance
4. Fear of fraud
5. Track and trace services
6. Returns and exchange
7. Ability to compare international retail offerings
8. Website speed and convenience
9. National and international delivery arrangements
10. Payments made in local currencies
The following table highlights some of the key barriers that prevent German consumers from trading cross-border. Addressing any one of these concerns can have a major impact on the success of a merchant trading into Germany.
0% 10% 20% 30% 40% 50% 60%
Delivery charges too high 56%
Difficult to return faulty/unsuitable goods 50%
Takes too long to arrive 49%
Don’t know enough to feel comfortable 41%
Have concerns about credit card fraud 33%
Concerns about the quality of the goods 35%
Sorting out customs is a hassle 53%
Currency conversion rate unfavourable 10%
Language problems 18%
Difficult to navigate foreign websites 17%
GERMAN CONSUMER REASONS FOR NOT MAKING ONLINE PURCHASES FROM FOREIGN RETAILERS
Source: 2: Hermes Usage and Attitudes Survey 2014
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Consumer confidenceOften this comes from brand but if your brand is new to the German market, then it is worth highlighting that websites are expected to display certain information as standard. Some of this is covered in the legal section but German consumers are much more aware of their rights, understand the requirements and expect to be able to find the information easily on a retailer’s website.
Irrespective of device, key information such as customer support, T&Cs and FAQs should be easy to access. Automated emails and delivery notes should also highlight points of contact and educate customer expectations.
For international brands, a German domestic trust scheme and accompanying mark holds a lot of sway with the German consumer. Trust marks are held in high regard and provide an additional check that improves a customer’s degree of confidence that your brand is safe to trade with.
Fear of fraudTrust marks particularly help to alleviate the fear of fraud that is often increased when trading with foreign firms. Additionally, the use of trusted local payment methods such as ’Kauf auf Rechnung’ (open invoice), discussed in more detail later, completes this circle of confidence.
Figure 1: Circle of confidence
A FICO (www.fico.com) report published in May 2015 highlighted key data points around card payment-related fraud. Total fraud losses on cards was 0.1% of total sales whilst 70% of this occurred in the card not present (CNP) arena, 80% was associated with cross-border transactions. The travel-related sector is particularly hard hit, accounting for a quarter of all losses.
Overall as a percentage of total payments value, CNP losses are relatively low although there is an upward trend. Credit and debit card payments represent a smaller proportion of online payments in Germany than other territories. The fear of fraud is one reason for German consumers to avoid using cards in favour of other methods.
Trust Mark
DataProtection
Trusted localpaymentmethods
Confidenceto
purchase
ClearInformation
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Track & trace / returns / exchangeFulfilling a customer’s order is the most physical representation of the merchant’s proposition. As part of the user experience, providing a potential customer with details of the delivery services on offer, including information about track and trace services used can improve conversion rates.
The service offering is then further enhanced post-purchase by communicating the parcel number, link to track & trace the dispatch, email confirmation, push messaging (SMS/email) and as a self-service option in a customer’s account. These elements all help with customer retention; a good service will encourage repeat purchases.
Returns and exchanges are always at the forefront of a German customer’s mind. Clear information on processes and policies are expected. This information should be included in the help / FAQ section of the website, emphasised in automated emails and on delivery documents.
Free returns are also expected by many customers, as a legacy of the catalogue industry. Return handling fees / restocking fees are not poular.
There is a statuatory right to return goods during a period of 14 days. Customers are traditionally used to mail order and the right to send it back, which combined with the popular payment method ‘open invoice’, returns are typically around 40% in most sectors. Fashion might even exceed this.
The usual metrics and expectations around website performance across multiple devices are applicable to any territory. However, it is important to highlight that the German legal requirements around the use of cookies and gaining consent from website users before they are downloaded is much stricter than in other EU territories.
Above and beyondWhilst the majority of the guidance here will talk about what is required to meet local market consumer expectations, there are a few elements of the customer experience that can be used to ‘delight’. Exceeding the delivery promise is usually welcome, although this should be done with caution on certain products. For example, a product requiring a 2-man delivery arriving a day early would be as bad as arriving a day late; typically these products require the customer to be at the delivery address at time of delivery. General expectations for delivery once goods have been despatched are 2 to 3 days.
When something isn’t to the customer’s liking and goods are returned, prompt refunds are always welcome. German customers value a free returns service (with no hidden fees) perhaps more than other nations. It can make good business sense to ensure a product is returned to inventory promptly so that it can be sold again.
A wide range of payment options are always of benefit but at the same time should fit the target customer. For example, open invoice is expected in the fashion vertical.
Customer care expectationsCustomer expectations around service availability and provision differ slightly from other territories. For example, telephone contact, chat service and email support/response is expected between 08:00 and 20:00 Monday to Friday. During that time, prompt responses are required; via email within 24 hours. 1st and 2nd level support is demanded immediately. On principal, all communication is expected to be in German; if the retail site and marketing has been translated (localised) then so should customer service.
The Hermes survey mentioned above also cites 79% of consumers saying that email is easy to do and importantly, 60% say it gives them a record of the correspondence. 57% say that telephone is a good way of communicating the problem. Whatever channel is used however, it is clear that a combination of communication methods need to be available to the consumer. This is another example for the need of localised support.
Source: 3: Hermes Usage and Attitudes Survey 2014
German customers preferred method of contacting aretailer on customer service issues
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MarketplacesExpansion into new territories is probably one of the biggest strategic decisions that a merchant will have to make. Seeing ‘door step sales’, where a foreign customer makes a purchase from a merchant’s domestic site, is probably the first indicator that there is demand for that merchant’s offering in other countries. Modifying search terms to allow for local requirements is usually the next step to better understand if there is demand.
However, this is still a big leap from investing in a localised website and the associated support activities required to operate it. There will also be a degree of uncertainty as to what to expect in terms of performance; how do the KPIs match up to the domestic market? For example, what do conversion rates look like in the sector of interest; how do I generate local brand awareness and how do I compete against local businesses?
Marketplaces can provide a business with an excellent gateway into new territories; testing the market, understanding performance and customer requirements as well as reducing the risk involved in international expansion. Marketplaces already have an established user base, well-known branding and provide new market entrants with scale. The most common marketplaces in Germany are Amazon, Zalando (for fashion), Otto, Quelle, ebay and Rakuten.
Figure 2: Marketplace - size by Unique Visitors
Source: Neteven- as at Sept 2013
Loyalty and vouchersAs with any other consumer market, German costomers are demanding – the costs of acquisition and retention are gaining importance. In other mature ecommerce markets, customers actively look for deals (vouchers, loyalty programs) so there is always the question as to whether a customer becomes loyal to the brand or the discount program. Members of these programs still represent a substantial customer base and there are several examples of successful schemes in the German market. DeutschlandCard and Payback appear to be two of the most popular whilst there are also a number of international players with a presence in the market. In terms of potential, Payback reports approximately 25 million registered users and DeutschlandCard 15 million.
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Dispute resolutionGerman consumers are particularly aware of their rights and expectations of how a business will behave. Supporting this is an awareness of the services available to them should something go wrong with a transaction, particularly if the remedial action proposed by the business isn’t satisfactory. Any business operating in Germany should have an appreciation of how these services operate, how they should be engaged and the benefits that can be had from this engagement.
A number of dispute resolution services operate in Germany. For example, ECC-net is a European Commission supported pan-EU service that helps consumers achieve redress. They can be found at http://www.eu-verbraucher.de/en/home/. The German operation of ECC-Net is funded by the German government. In addition, each of the 16 federal states that make up Germany have ‘Verbraucherzentralen’ (consumer advice centres) https://www.verbraucherzentrale.de/home. These advice centres operate under a federal association, details of which can be found at http://en.vzbv.de/1580.htm. It should be noted that your competitors in Germany are just as likely to bring your shortcomings to the attention of authorities and your potential customers.
Ongoing issues of interest In common with other markets, there are a number of issues that regulators are wrestling with, either due to domestic demand or in response to changing requirements coming out of the EU. For example, there are changes underway as to how interchange rates are set (the cost of processing a credit/debit card transaction), concern over additional charges for using certain types of payment methods, e.g debit card versus credit card, and in the German context, moves to ensure that “Sofortüberweisung” isn’t the only ‘free’ option available to customers.
To combat some of these concerns around payments and redress, a number of schemes are run that offer buyer protection. In the UK, a degree of protection is offered to consumers who use a credit card for certain transactions. In Germany, PayPal and Amazon now offer buyer protections. Trusted Shops offer a scheme that protects the buyer, promotes the merchant and includes customer reviews. Open invoice and direct debit payment types include a six-week window during which the buyer can claim a refund.
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Germany has a civil law system based on a comprehensive compendium of statutes. The jurisdiction separates between private and public law. While particular state law is often applicable in public law, private law is based on a uniform legal framework.
LEGAL FRAMEWORK & REGULATIONSection Sponsor: HÄRTING Rechtsanwälte
You can find more at: www.haerting.com
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TOPIC AREA
RELEVANT REGULATIONS PURPOSE
Privacy and Data Protection
Federal Data Protection Act - Bundesdatenschutzgesetz (BDSG)
Regulation of the processing of personal data by public authorities, businesses and other organisations.
EFFECTS
TOPIC AREA
RELEVANT REGULATIONS PURPOSE
Privacy and Data Protection
European General Data Protection Regulation
The European Data Protection Directive (Directive 95/46/EC) is likely to be superseded by a pan-European Data Protection Regulation in upcoming years.
EFFECTS
The Federal Data Protection Act (BDSG) applies to all organisations that are responsible for processing personal data.
Personal data is any information relating to an identified or identifiable natural person (data subject). An identifiable person is one who can be directly or indirectly identified, in particular by reference to a name, an identification number or to one or more factors specific to his physical, physiological, mental, economic, cultural or social identity.
The following principles must be adhered to.
Legal Prohibition, unless permission is granted/Consent: The collection, processing and use of personal data are permitted only if authorised by a law or if the data subject has consented to it.
Direct survey of data: Personal data shall be collected directly from those affected. Without the involvement by parties affected, collection is only permitted by exception, provided that no legitimate specific interests of the data subject prevent collection.
Data economy: Personal data should not be kept for longer than is necessary and should be adequate, relevant and not excessive in relation to the purpose for which it is processed. Personal data should be anonymised if possible.
Purpose limitation/Necessity: Personal data must be obtained only for specified and lawful purposes and should not be processed in any manner incompatible with that purposes. Furthermore, data processing must be necessary regarding its purpose.
Transparency: Each data subject must be informed of the storage, the type of data, the purpose of the collection, processing or use and the identity of the responsible authority.
There is stronger legal protection for “sensitive personal data”. Sensitive personal data is personal data consisting of information about an individual’s racial or ethnic origin, political opinions, religious or similar beliefs, trade union membership, physical or mental health or condition, sexual life or commission of or proceedings for any offence committed or alleged to have been committed by the individual and the outcome of such proceedings.
The European General Data Protection Regulation when enacted will impose more onerous obligations on organisations that process personal data.
Tougher punishments are likely to accompany a stricter regulatory framework; the current draft Regulation proposes fines of up to five percent of a company’s annual global turnover or €100 million (whichever is the greater).
IN DETAIL:
I. Privacy and data protection
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TOPIC AREA
RELEVANT REGULATIONS PURPOSE
Privacy and Data Protection
German Telemedia Act (Telemediengesetz - TMG)
Protection of the individual telemedia user from any possible danger that may occur through data processing, regulation of data processing.
EFFECTS
TOPIC AREA
RELEVANT REGULATIONS PURPOSE
Privacy and Data Protection
Telecommunications Act (Telekommunikationsgesetz - TKG)
Protection of participants and users of telecommunication systems from data processing through corporations or persons providing telecommunication.
EFFECTS
The TMG regulates the relationship between the telemedia user and the telemedia provider, especially focusing on protecting the telemedia user. The telemedia provider is only permitted to process user data under certain circumstances, e.g. with his permission or on the grounds of a judicial regulation.
The telemedia provider is obligated to inform the telemedia user of any data processing.
He is permitted to process user data only in specific cases, for instance if the usage is essential for the conclusion or alteration of the a contract between the two parties or for the contract design, in case of criminal proceedings or for the purpose of danger prevention or to enable the usage of telemedia in the first place.
Furthermore, the provider is permitted to create user profiles while using pseudonyms for promotion or market research purposes. Information gathered by different techniques, such as Cookies or Web-Bugs, are especially useful for the creation of user profiles. User profiles can only be permitted if they serve a specific purpose.
All the regulations concerning data processing through a telemedia provider are subject to strict boundaries. If the provider has any knowledge of misuse or illegal data processing, he is obligated to inform the authorities.
After Directive 2002/58/EC, cookies or similar devices must not be used unless the subscriber or user is provided with clear and comprehensive information about the purposes of the storage of or access to that information and has given his or her consent. It is litigious if German law complies with the requirements.
The TKG concerns participants and users of telecommunication systems as well as any corporations or persons providing telecommunication or participating in its provision.
The provider is to inform the user of the type, extent, location and purpose of any data processing.
The TKG contains several regulations permitting the provider to process data, although the boundaries are very strict. The data processing must serve a specific purpose, while the participant must be informed beforehand and agree to data processing.
The regulations are similar to the TMG in certain areas, although it is generally stricter. For instance, the TKG differentiates between a user and a participant. The term “participant” implies a contractual relationship between him and the provider, while this is not a requirement for a user.
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TOPIC AREA
RELEVANT REGULATIONS PURPOSE
Consumer Protection
German Civil Code (Bürgerliches Gesetzbuch – BGB)
The BGB is the body of codified private law.
It is divided into five parts: The general part, law of obligations, property law, family law and succession law.
The law of obligations contains sections 241 through 853 BGB and describes the various forms of contracts and other obligations between persons.
EFFECTS
The following sections contain obligations concerning consumer protection:
Sections 305 through 310 (General Terms and Conditions)
These sections deal with the limitation of the use of standard business terms in consumer contracts (and partly also apply to b2b contracts).
Business must not use clauses in general terms and conditions that are from the consumer’s perspective to be considered surprising.
There is a long list of clauses to be considered null and void if used in consumer contracts. This list inter alia consists of a prohibition of
– certain rights of reservation of the right to revoke
or to modify the services offered after conclusion
of the contract
– certain Fictitious declarations or receipts
– certain rights in connection the unavailability
of performance
– certain agreements regarding a lump-sum claims
for damages or contractual penalties
– various exclusion of the liability of the business
– very long or self-renewing contractual obligation of the consumer
– certain clauses with respect to the burden of proof
– certain clauses with respect to the form of notices and declarations
In addition there is a test of reasonableness with standard clauses and a requirement of good faith. An unreasonable clause is also considered to be null and void. An unreasonable disadvantage is, in case of doubt, to be assumed to exist if a provision is not compatible with essential principles of the statutory provision from which it deviates, or limits essential rights or duties inherent in the nature of the contract to such an extent that attainment of the purpose of the contract is jeopardised. An unreasonable disadvantage may also arise from the provision not being clear and comprehensible.
Sections 312 through 312k BGB (Consumer Rights in distance-selling and ecommerce )
These sections contain principles applying to consumer contracts, including off-premises contracts and distance contracts. A consumer contract is any contract concluded between a trader and a consumer.
Distance contracts are contracts for which the entrepreneur and the consumer exclusively avail themselves of the means of distance communication negotiating and concluding the contract.
Traders must inform consumers within the scope of section 246a-c EGBGB. In the case of distance contracts, the entrepreneur is obliged to provide the consumer with a confirmation of the contract on a durable medium in which the content of the contract is set out and to do so within a reasonable period of time after having concluded the contract, at the latest, however, at the time of the delivery of the goods or before the performance of the service.
Traders cannot charge consumers a surcharge fee which exceeds the cost borne by the trader for the use of his means. This will apply to credit/debit card transactions and the use of premium rate phone lines.
II. Consumer protection
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EFFECTS
Traders must provide information whether any delivery restrictions apply and which means of payment are accepted. If placing an order entails activating a button or a similar function, it shall be labelled in an easily legible manner only with the words “order with obligation to pay” or a corresponding unambiguous phrase.
Consumers have the right of withdrawal. In some cases, such as the supply of goods made to the consumer’s specifications, the supply of goods which expire rapidly or the supply of sealed goods which are not suitable for return due to health protection or hygiene reasons and were unsealed after delivery, the right of withdrawal is not provided.
Sections 355 through 361 BGB (Right of withdrawal)
These sections contain the right of withdrawal. In the case of distance contracts, traders must provide the consumer with the information on the right of withdrawal and the model withdrawal form.
Consumers have a period of 14 days to withdraw from a distance contract without giving any reason. If the trader has not provided the consumer with the information on the right of withdrawal as required, the withdrawal period shall expire 12 months from the end of the initial withdrawal period.
Traders shall reimburse all payments received from the consumer, including, if applicable, the costs of delivery without undue delay and in any case not later than 14 days from the day on which he is informed of the consumer’s decision to withdraw from the contract.
TOPIC AREA
RELEVANT REGULATIONS PURPOSE
Consumer Protection
Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuch – EGBGB)
The EGBGB complements the BGB.
EFFECTS
TOPIC AREA
RELEVANT REGULATIONS PURPOSE
Consumer Protection
German Telemedia Act (Telemediengesetz - TMG/ German State Broadcasting Treaty (Rundfunkstaatsvertrag - RStV)
The EGBGB complements the BGB.
EFFECTS
The sections 246a-c EGBGB specify the rights and obligations accruing from the BGB. As subject to these sections, traders are required to provide the following information:
Traders shall provide information about the main characteristics of the goods or services, their identity and geographical address and contact details, the total price of the goods or services inclusive of taxes, the arrangements for payment, delivery and payment and the time the trader undertakes to deliver the goods or to perform the service.
Less information requirements apply if the contract is concluded through the means of distance communication, which allows limited space or time to display the information.
In pursuance of section 5 TMG, service providers must provide an easily recognizable imprint that is immediately accessible and constantly available.
After Section 55 RStV, telemedia providers must determine a responsible person for journalistic and editorial content.
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TOPIC AREA
RELEVANT REGULATIONS PURPOSE
Consumer Protection
Brussels Regulation (44/2001)/ Rome I (Regulation 593/2008)
EU legislation protecting consumers who contract with companies directing activities into the consumer’s member state.
EFFECTS
TOPIC AREA RELEVANT REGULATIONS PURPOSE
Digital Signatures & Authentication
Sections 126, 126a German Civil Code (Bürgerliches Gesetzbuch - BGB)Digital Signature Act (Signaturgesetz - SigG)
The regulations provide the legal framework for electronic signatures.
EFFECTS
TOPIC AREA RELEVANT REGULATIONS PURPOSE
Unfair Competition/ Consumer Protection
German Act Against Unfair Competition (Unlauterer Wettbewerb-Gesetz - UWG)
Protection of consumers and other market participants from unfair competition.
EFFECTS
A company will be considered to be directing its activities if - by any means - it directs commercial or professional activities into a member state; this will include sales into a European member state via websites.
Website operators are likely to be directing activities if they offer products to consumers in a member state via a website drafted in the local language and accept payment in the local currency.
If a consumer purchases a product from a website directing activities into the consumer’s member state and wishes to make a claim against that company, the Regulations allow the consumer a degree of flexibility as to where the claim may be brought.
According to section 126 cl. 3 BGB, electronic signatures may replace the textual form. A qualified electronic signature is required, which consists of an advanced electronic signature based on a qualified certificate and created by a secure signature-creation device.
The SigG establishes a legal framework for electronic signatures and certain certification-services in order to ensure the proper functioning of the internal market. It contains primary regulations for the operator of signature-creation devices.
Subject of the UWG is commercial activity. The term can be understood as a person’s behaviour in favour of its own or an external company. The behaviour must be connected to the conclusion of a business transaction with the purpose of promoting or executing a contract to supply services or other goods. The law is essentially supposed to protect market participants.
Commercial activity can be interpreted as unfair whenever it has the ability to disturb or interfere with the interests of market participants or consumers to a substantial extent.
The UWG contains a series of examples for specific unfair commercial activity.
III. Advertising
IV. Digital signatures & authentication
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TOPIC AREA RELEVANT REGULATIONS PURPOSE
Digital Signatures & Authentication
Regulation 910/2014 on Electronic Identification and Trust Services for Electronic Transactions in the Internal Market has repealed the E-Signature Directive 1999/93/EC. Regulation (EU) 910/2014 will apply from 1 July 2016.
The Regulation seeks to improve trust in electronic transactions and encourage the use of electronic signatures to help create a fully integrated digital single market.
EFFECTS
The Regulation sets out rules for the use of trust services (electronic identification and signature) and establishes a legal framework for electronic signatures (for natural persons), electronic seals (for legal persons), electronic time stamps, electronic documents, electronic registered delivery services and certificate services for website authentication.
Under the Regulation, member states can choose to recognise and accept electronic identification schemes that have been notified to the European Commission. The notification of electronic identification schemes is not mandatory, however, states that do notify will be providing a clear indication that they are prepared and ready to trade in the digital market place.
TOPIC AREA
RELEVANT REGULATIONS PURPOSE
Intellectual Property
German Copyright Act (Urhebergesetz – UrhG)
This Act is the main legislative source for both copyright and related rights.
The Act sets out when such works will be protected and allows the owner to prevent other from infringing those rights.
EFFECTS
Copyright seeks to protect the author in his intellectual and personal relationships to the work and in respect of the use of the work. Only the author’s own intellectual creations constitute works within the meaning of the Act. Protected works can be those of literature, science and art.
The author has the exclusive right of reproduction, distribution and exhibition. Furthermore he has the exclusive right to communicate his work to the public in non-material form. For example, copyright is not infringed by the use of a quote from the work where it is used for criticism, review or otherwise, provided that the work meets certain criteria as set out in the Regulations.
In addition to the protection of a work of authorship, the Act seeks to protect copyright related rights such as protection for performers, photographs or broadcasting organisations.
Merchants must respect the intellectual property rights of creators and providers of copyrighted materials, information and other intellectual works in order to avoid infringing such rights and facing legal proceedings.
V. Intellectual property
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TOPIC AREA
RELEVANT REGULATIONS PURPOSE
Intellectual Property
German Trademark Act (Markengesetz – MarkenG)
The Act protects trademarks and other distinctive signs.
EFFECTS
TOPIC AREA
RELEVANT REGULATIONS PURPOSE
Intellectual Property
German Patent Act (Patentgesetz – PatentG) This Act protects monopoly rights in patents, giving the owner of the patent the right to use and exploit an invention industrially.
EFFECTS
TOPIC AREA
RELEVANT REGULATIONS PURPOSE
Intellectual Property
German Design Act (Designgesetz – DesignG)
The Act provides the legal framework for protection of design.
EFFECTS
Protected under MarkenG are trade marks, business identifiers and geographical indications. A trade mark is described as a sign, represented graphically which is capable of distinguishing the goods or services of one undertaking from those of other undertakings.
The protection of a trademark is formally a result of the application and registration of the trademark. It may also result from the use of a sign in the course of trade or from the fact that a sign is well-known.
The Act provides the registration of trade marks as well as enforcement of those trademarks.
The Act applies when a monopoly right subsists in a patent and when it may be infringed. It also provides defences for such infringement.
Patents shall be granted for any inventions in all fields of technology, provided that they are new, as long as they involve an inventive step and are susceptible of industrial application.
An industrial design is the ornamental or aesthetic aspect of an article. The design may consist of three-dimensional features, such as the shape or surface of an article, or of two-dimensional features, such as patterns, lines or colour.
By registering an industrial design and obtaining protection under the applicable law, the owner of the design right acquires the exclusive right to its use and to enforce remedies against any infringer who produces an identical or similar design.
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Both German consumer protection law and German data protection laws are generally considered to be quite strict and complex. With the consumer rights directive the differences to other member states of the EU have decreased.
One of the major differences with respect to the enforcement of the law relevant for ecommerce companies is the extensive system of cease and desist letters. In practice every competitor may demand lawful behaviour from any other competitor by sending a cease and desist letter demanding the cessation of the unlawful behaviour and the promise of a contractual penalty for any infringement.
In addition the company in breach of the law has to bear the costs for the letter, e.g. attorney fees. This procedure applies to pretty much all consumer protection laws and is widely used amongst competitors in all areas of business. The main risk is not so much the costs involved but the need to react quickly to avoid a preliminary injunction. The system of cease and desist can lead to the need of an adaptation of the business model within a few days. It is therefore more crucial to seek legal advice regarding compliance issues in Germany than in other countries.
In addition to this there is a comparatively strong consumer protection organization system that also has the right to demand a declaration to cease and desist from ecommerce companies that do not act lawfully.
Compared to this public authorities play a less important role. Although obviously there is a right to sue for authorities also, depending on the topic involved. Data protection officials do try to enforce data protection law by issuing notices to businesses. This system is also the reason why there are so many court decisions in Germany regarding consumer law issues.
Regional differences in legislation As mentioned before, the Federal Republic of Germany is made up of 16 federal states (Bundesländer). Since Germany has a federal constitution, the constituent states retain a measure of sovereignty that is also reflected in the legal system. Federalism is one of the entrenched constitutional principles of the Federal Republic of Germany. According to the German constitution some topics, such as foreign affairs and defence, are the exclusive responsibility of the federation, while others fall under the shared authority of the states and the federation.
Notwithstanding the federal structure all the main laws for ecommerce businesses are the same throughout all federal states. Thus as a general rule an ecommerce company from abroad does not have to worry about local laws. This is different though with respect to certain areas, such as gambling or advertising for certain products. Due to the federal system there also are 16 data protection authorities (plus the federal data protection officer). There are nuances in the main focus of each of the authorities. For instance the Bavaria authority has recently been very active in the field of (email) marketing and privacy aspects involved.
Hierarchy of court system(s)The judicial system in Germany basically comprises three different types of courts: ordinary courts, dealing with criminal and most civil cases, specialised courts, such as the administrative, labour, social and fiscal courts, and finally constitutional courts which are competent for judicial review and constitutional interpretation.
Ordinary courts are competent for criminal matters, civil matters, matrimonial and family proceedings. Furthermore for non-contentious proceedings such as the maintaining of the company register. Ordinary courts are organised in four tiers, each of increasing importance: the local courts (“Amtsgerichte”), the regional courts (“Landgerichte”), the higher regional courts (“Oberlandesgerichte”) and the Federal Court of Justice (“Bundesgerichtshof”). In criminal cases, each of the first three courts may have jurisdiction, depending on the nature and seriousness of the crime. In civil proceedings, either the local or the regional court can be court of first resort. Appeals may mostly be lodged with up to two higher courts.
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Payments overviewUnless you are a UK or American business, it will not be surprising that payments cards are not the most popular form of payment in Germany.
In fact, credit card penetration is around 20%, with only 36 million credit cards issued in 2014.
The card picture is starting to change however. There are more cards in circulation every year (27.5m in 2012, 36m in 2014) and is an ongoing trend which should continue as fees are on the decline due to regulatory pressure. There is also an element of generational change that is affecting the use and adoption of cards.
The four payment methods below are the most common in Germany as of 2015: open invoice, PayPal, credit card and direct debit. On mobile devices, open invoice and PayPal are the preferred options. For some readers, it is important to highlight direct debit usage. In many countries, this payments mechanism is used primarily for regular, fixed amounts. For example, monthly bills such as utilities. In Germany, a direct debit can easily be set up for a one-off transaction. The benefits to the merchant include a lower cost of processing and direct transfer of funds to the merchant account. Likewise for the customer, direct debit is easy to control and includes a mechanism for disputing transactions.
How consumers will adapt/adopt to new payments methods is hard to predict. Likewise, new developments often need critical mass before both businesses and consumers feel happy about adopting them. Brands such as Apple Pay go some way to mitigate this but, perhaps widespread adoption will be a generational change.
Many e-wallets (‘wallets’) are based on debit/credit card and direct debit payments in the background and whilst credit card usage is limited, debit cards are much more widely available. Wallets consist broadly of a technical solution that contains the core account details required to process a payment. They replace cards as a form factor and store multiple payment types, allowing the user to select the most appropriate one for a transaction. Most commonly they are available as an app for popular mobile devices.
As the market matures customers are getting more used to electronic payment methods like PayPal and SOFORT.
Open invoice is on the decline based on the payment methods share, but due to the growing ecommerce market is steady in numbers. In some sectors, such as fashion, open invoice is still preferred by consumers due to the high return rates.
Table 2: Overview of popular online payment methods in GermanySource: 4 www.statista.com
• Sofortüberweisung is a kind of cash in advance
• Giropay is similar, but processed directly through a merchants website
FINANCE & PAYMENTS
44%
10%
15%
15%
16%credit card
PayPal
DirectDebit
Other
Invoice
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Implementation Complexity of implementation depends on how the payment flow is implemented in general. For methods like PayPal Express Checkout or Amazon Payments the shipping and billing address doesn’t need to be collected by the webshop, but will be provided by the wallet itself. This means different process flows for different payment methods. For other methods such as debit/credit card payments and open invoice you still need to collect this data yourself. This doesn’t mean that the methods should be avoided at all as this might be more convenient for the customer. Advance payments and cash on delivery are hard to implement and handle/reconcile.
Currently a typical mixture of payment types merchants make available to the customer in Germany are:
• PayPal
• Open invoice
• Direct debit
• Debit / credit card
• SOFORT
Common payment methods like credit cards and direct debit have been consolidated over the past years with the emergence of wallets like PayPal or MasterCard MasterPass. The convenience of the payment and checkout process has been the focal point of most providers, as this is something that you can change rather quickly in contrast to the perception of security. Ensuring that payment methods are also supported via mobile devices has been on the agenda for many payment providers.
Credit cards are still not very common for German customers; even when debit cards are included, this is the case especially compared to other countries (credit/debit cards make up 20% of payment method share in Germany, 80% in the UK). The bias toward credit cards is despite the fact that they are outweighed by credit cards by a ratio of 5:1 (Source: Paypers 2014). This is because in Germany the majority of debit cards are not currently supported. However, due to the wallet solutions, the continuously strong economy in Germany and the future cap on card fees there is no reason to believe that this payment method won’t continue to grow.
Open invoice is still very popular for industries with high return rates, where customers order more goods than they would like to keep, e.g. a pair of shoes in two different sizes. Customers then only pay for the pair they keep and return the other one. Based on customer experience and convenience this is not very likely to change. PayPal introduced their own open invoice solution just this year (PayPal Plus).
Access to the local payment methods is usually via a specialised local supplier or payment service provider (PSP). Your current PSP may have international connections that aggregate these services and make acceptance much easier. Some services also require a local bank account for acquiring and acceptance.
Consumer attitudes towards online payments
Germans are very risk-averse and have reservations about new alternative payment methods different from the ones they are used to, like open invoice or direct debit.
However, tech-savvy and younger customers are much more likely to try out/use new electronic payment methods. For those especially, convenience is the key driver for user acceptance.Consumer recourse on payments
Aside from the regular consumer protection laws that account for any transaction made regardless of the payment method, there are several others. The most important one is the standard SEPA (Single European Payments Area) regulations for direct debit. Returns until 8 weeks after settlement without declaration of reason. If there is no valid mandate SEPA direct debits can be returned 13 months after settlement. Other payment providers offer further buyer protection (e.g. PayPal) that may increase financial exposure for the merchant.
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Common payment typesThere are too many payment method options available (>350) to list them all here, so the following list focuses on the most popular. Processes are outlined below and do not include any reconciliation requirements.
Overview of process
Direct Debit • Customer provides account details (BBAN/sortcode or IBAN/BIC)
• Customer signs mandate (e.g. clicks that he accepts it)
• Direct debit request is sent to the merchant bank
• Merchant bank collects money from the customer’s bank account
Open Invoice • Customer receives goods with invoice
• Customer transfers money to merchant’s bank account based on the invoice details, including correct references
Wallets • Customer stores credit card or bank account details (for direct debit) in wallet
• Customer selects wallet as payment option and is redirected to the wallet page
• Customer logs in via user/password
• Customer selects payment instrument (optional in case there are multiple credit cards or accounts in the wallet)
• Customer confirms payment
• Merchant will be paid by wallet vendor
Online Banking • Customer logs in via login details for the customer’s online banking
• Customer is redirected to online banking (e.g. Sparkasse)
• Customer confirms payment via PIN/TAN
• Payment initiated to merchant
Degree of popularity
Any decision that impacts the customer offer should be based on a knowledge of their requirements. For some brands, their customer is unlikely to have an iPhone so looking at Apple Pay at the moment wouldn’t bring any benefit. Likewise, customers with a poor credit history might be declined for open invoice payments. Therefore, it is important not to just understand the customer, but to also offer a degree of choice in payment methods.
Direct Debit
Open Invoice
Paypal
MasterCard MasterPass
SOFORT
Giropay
HIGH
HIGH
HIGH
LOW
MEDIUM
MEDIUM
E-wallets
Online Banking
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Fraud & risk management
A fast-growing ecommerce market like Germany requires increased attention by the merchant on fraud and risk management. The implementation of proper risk settings and a system infrastructure is the key for an efficient interaction of risk and fraud management. To be able to offer customers various payment methods during the checkout process, it is important to reduce risk but at the same time to maintain a high conversion rate. The German market has relatively lower use of payment cards online, the payments type mix provides additional challenges. For example, open invoice-related fraud phenomena (can be first party and/or third party fraud), account takeover, new account fraud, friendly fraud and identity theft. But open invoice should be considered as a payment option, because it is a conversion booster as you can see in the following graphic. It shows that if open invoice is rejected due to risk checks, and only alternative payment methods are offered, conversion rates diminish extremely.
Source: avarto
Some service providers in the ecommerce market are offering active payment control tools which are able to keep the conversion rate at a high level as well as reducing the risk of a payment default. These tools are the most effective way to check the credit information of a customer and to offer based on defined parameters the best selection of payment methods. These services require skilled risk managers and a risk management system which can be adjusted to needs of a company.
However, the market is continuously in a changing and challenging landscape, with the result that efforts are getting bigger and the technology to combat fraud is becoming increasingly important. Due to the rising desire of companies to develop more markets and to offer their customers the latest payment methods, four main criteria arise in regards to fraud:
Source: avarto
Growth of global ecommerce activity
Fraud patterns are specific to different markets.
Emergence of mobile eCommerce
New channel for fraudulent activity. Number of mobile users is rising.
Organized crime - focus on ecommerce
Fraudster’s continuously developing new ways of attacks.
Focus on data security
Risk of lost data is rising, as well as the need of enhanced security measures.
Conversion benefits of offering Open Invoice
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TOP 8 FRAUD ATTACKS
Source: MRC Global Fraud Survey 2014
If a merchant decides to enter the German market, the monitoring of cross-border transactions and activities are important to prevent fraud before it starts and in this context to be able to recognize new upcoming fraud patterns. The same goes with the emerging mobile ecommerce market. Since the use of mobile payment and dynamic multichannel ecommerce activity is becoming increasingly important for companies and merchants, new channels for fraudsters are formed for their fraudulent activity.
As part of opening new channels, companies are seeking an omnichannel business model which is increasing the business potential but which again is opening new ways of fraud. This needs to be tackled at the origin, through improved fraud detection and awareness of fraud agents. A system which offers the cross-covering of different marketplaces and markets is of great importance to ensure a high fraud prevention rate.
The constant improvement of fraud prevention systems and skilled fraud agents is a process which should not be neglected. Fraud in the area of ecommerce is not a new phenomenon and therefore it is not surprising that it has evolved to an organised crime structure. Fraudsters are becoming more professional, their methods have bigger impact and the chances of preventing their attacks are shrinking.
It is to mention in this context that the topic of data security and how customer data is stored should be on the agenda of every ecommerce-involved party. Security issues and lost customer data can have a significant impact on fraudulent activities and is offering fraudsters a wide range of possibilities.
Useful technology such as device fingerprinting or automated fraud checks based on fraud security models can help to reduce fraudulent activity to a minimum. Since there is no “one size fits all” system or service, every fraud prevention activity is dependent on the merchant and the industry. Experienced fraud management teams are able to reduce the risk of fraud additionally by conducting manual fraud checks.
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The last point is an increasing problem due to various data breaches and is the enabler for most of the fraud types mentioned above.
In general, the value of ecommerce fraud in Germany is worth about 0.5% of turnover. Fraud levels on international and mobile transactions are higher.
The tools available to merchants in the German market are very similar to other markets – 3D secure for bank cards (e.g. Verified by VISA), profile tracking, risk scoring, email validation/verification, behavioural analysis, biometric verification and entity link analysis. None of these alone can be relied on to stop fraud but combined they provide a range of tools that mitigate the risk.
Source: Merchant Risk Council global fraud survey 2014
CREDIT/DEBIT CARDS
DIRECT DEBITS
BANK TRANSFERS
E-WALLETS E.G.
PAYPAL
OFFLINE PAYMENTS
OVERALL LOSS RATE
0.5% 1.5% 0.5% 0.7% 0.1%
• Fraud losses in 2012: €144.3m
• More than 15% of orders are screened for manual review
• The activation of 3D secure reduces conversion by more than 20%
Source: MRC 2014, Paypers 2014
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Germany’s population of 81 million is very equally distributed, apart from some areas in the east which are more sparsely populated. In general, there are a few major metropolitan areas: Berlin, Hamburg, Munich, Frankfurt and Rhine/Ruhr with a larger population.
The Rhine/Ruhr metropolitan area is the most populated and largest industrial area of Germany. Having numerous warehouses, logistics sites and excellent infrastructure in the area, the region is ideally placed to support the regionally, nationally and connecting to other European countries by air or road.
LOGISTICS & DELIVERYA German market viewSection Sponsor: wnDirect
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Population Density in GermanyGermany has been one of the leading markets in Europe for consumer deliveries, where expectations have changed significantly in the last decade. In the fast-moving consumer world, expectation management plays a vital role in the success of any distribution channel. Suppliers need to deliver as promised and ensure that the consumer is kept properly informed. The rise of social media and mobile phone technology enables each individual to communicate directly with the supplier and/or carrier. This communication is one of the major changes in the last few years. It enables the supplier to be closer to the market and take a more individual approach to satisfying the needs of the end-customer.
The German market consists of consumers with high demands for low-cost shipping, fast delivery times and multiple delivery options with the ability to intervene in the delivery process in order to trigger alternative delivery locations or timeframes. The use of social media puts pressure on the carrier’s performance and quality of service.
Retailers in Germany see in 79% of orders, a positive impact on customer satisfaction or loyalty when offering multiple delivery options. (Source: A commissioned study conducted by Forrester Consulting on behalf of MetaPack, August 2014 (101 retailers across France, Germany, and the United Kingdom)
The development of alternative delivery methods seen in other territories therefore also holds true for Germany:
• Delivery to home address is the most popular with 82% of German consumers giving this as their preference
• Alternate locations (neighbour, garage)
• Delivery to work address – although less than a third (29%) of German consumers use this option
• Delivery to store (click & collect)
• Delivery to post office
• Delivery to parcel shop – preferred option for 25% of German consumers if ‘home delivery’ is not viable
• Delivery to automated locker stations – preferred option for 8% of German consumers if ‘home delivery’is not an option
Source: Hermes Usage and Attitudes survey 2014
Population Density 2006Persons per square km
Boundaries
40-105
106-123
124-188
189-417
418-1221
1222-4056
Länder
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There are a number of alternative delivery solutions operating in Germany, the most established being Hermes Parcelshops and DHL Packstations. Usually placed at central loactions where transport links meet, outside supermarkets and other areas where there are volumes of people passing – convenience is key. In 2013, Deutsche Post DHL reported having 2,500 locations, with a combined 230,000 individual compartments in 1,600 towns and cities.
In general the leading delivery carriers for B2C in Germany try to have a parcel shop or locker bank within a few miles of the consumer residence. The choice of delivery method depends on the availability of the right infrastructure. When there are no parcel lockers or parcel shops available, the consumer is limited to their choice of delivery. It is important to note that most customers expect fast delivery in the agreed timeslot (day and/or time) with the most popular delivery period being 10:00 -12:00 (38%) and 08:00 – 10:00 (20%).
(Source: Hermes Usage and Attitudes survey 2014)
The trend is that consumers will get access to more convenient delivery solutions, for example DHL’s Packstation.Source: http://www.dpdhl.com/de/presse/pressemitteilungen/2011/dhl_packstation_erreicht_zwei-millionen-kunden-
marke.html
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Customers prefer several delivery location; 2-3 out of 10 prefer non-residential locations - local differences apply (When shopping online, how often do you chose each of the following delivery options?)
Source: 6: UPS Pulse of the Online Shopper, March 2015
For retailers, the ideal outcome from offering click & collect would be to increase the tendency to purchase from the website or, additionally, in the store when the customer is picking up his or her parcel. Almost half of German shoppers stated in 2014 that he or she would like to use click & collect (Source: survey of the trbo GmbH http://www.presseportal.de/pm/112773/2823551; September 2014) and in 2015, it is already seen as a new standard for the big German retail players like Saturn, Karstadt or Kaufhof (Source: http://etailment.de/thema/logistik-and-fulfilment/ Click--Collect-wird-zum-Standard-3020).
In general, collective click & collect stations are becoming more and more popular, e.g. shopping centres offering click & collect stations in their parking garages. Customer service and convenience plays a major role: fitting rooms, return service, free parking etc. These models are still at a very early stage in Germany. (Source: Germany Trade & Invest: The e-commerce Market in Germany, issue 2015/2016)
The delivery performance in B2C is difficult to measure when you consider that consumers are often not at home when the driver wants to deliver the parcel. Usually the carriers measure a first time delivery attempt success, which is 97% next day. However, the actual delivery performance (measuring when the customer has received the parcel) is about 85%. (Source: avarto, 2015)
*85%
Delivery Performance*Measuring when the consumer actually recieved the parcel
74%
71%60%
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Regional differences Specific areas within Germany that encounter regular problems are in the south east of the country.
Most logistics sites are located in the Rhine/Ruhr area. The pressure to provide the latest possible cut-off time means that the largest areas suffer from an unstable delivery performance since they often do not connect in time. Due to the geographical size of Germany, carrier line hauls need six to eight hours to connect their most remote delivery depots. From the Rhine/Ruhr metropolitan area this would be the north/east and south/east of the country.
Source: Bürgeramt, Statistiken und Wahlen/Frankfurt am Main
The metropolitan areas within Germany.
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The above diagram shows European consumer expectations around delivery times. German consumers are amongst the most demanding for speed of delivery
The expectation on delivery lead-time can change when they the consumer is aware if the products ordered are coming from within Germany or from abroad.
A survey of 3,100 online shoppers found that 60% have already ordered cross-border. But even though it is a big share, the frequency is quite low with only 18.3% for European online shops and 10.1% for online shops outside of Europe. The main reason for not buying in international shops were “high shipping costs” (62.8%), “fear of hidden costs for customs or international bank transfers” (60.3%) and “complicated international returns process” (59.7%). (source:http://www.shopbetreiber-blog.de/2015/06/25/warum-deutsche-im-ausland-online-einkaufen/)
The main carrier in the German market is Deutsche Post AG with a 69% market share in 2014. Since they are the national postal provider they are the market leader with the highest acceptance within the B2C market. UPS is ranked second with 14%, Hermes is ranked third with 11%; DPD holds the fourth position and is looking at doubling their market share of 9% in the next few years. (Statista 2015)
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Note: Data from 2012. *Answers based on answers from multiple delivery operators Source: Eurostat, Copenhagen Economics (2012), Delivery operator questionnaire (January 2013)
Thanks to the status of the local post and the fact that they have the best infrastructure and choice of delivery options, DHL have the highest acceptance in the German market. Regular ‘last-mile’ availability is an important consideration in carrier selection.
Shipments from other EU countries are mostly delivered through carrier networks which are subcontracted under a partner cooperation.
This could affect the quality and lead time as these carriers might not have the local B2C competence. The delivery carrier does not always provide the full scope of delivery services for shipments despatched from other countries.
Many domestic retailers offer delivery free of charge (FOC) from a certain order value. Surveys show that up to almost 60% of consumers perceive free shipping options as important.
The following diagram shows how the consumer considers free shipping as important.
Figure 5: How important is free delivery to consumers? Source: PostNord “eCommerce in Europe 2014” (n=12,000)
KEY PLAYERS IN THE DELIVERY OF GOODS ORDERED ONLINE (MAX 10)
NATIONAL POSTAL OPERATOR
Deutsche Post DHL
INTEGRATORS Deutsche Post DHL, FedEx, TNT Express, UPS
OTHER CARRIERS
DOMESTIC CROSS-BORDER
DPD, GLS, GO! General Overnight Service, Hermes,
Pin Mail AG DPD, GLS, GO! General Overnight Service, Hermes
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Low-cost shipping is a key influencer for repeat purchases, which is shown in the next diagram.
Source: European Technographics Retail And Customer Experience Survey, Q4 2013, Forrester Research, Inc. (1,301 French online adults 16+ who buy online; 1,441 German online adults 16+ who buy online; 1,571 UK online adults 16+ who buy online)
Usually, a customer will see the delivery cost when the shopping cart is opened. In terms of communicating delivery costs, there are no major differences/trends to be seen across industries. Where shops have free delivery, it is very common to display the free delivery message in the header of the shop, in order to let customers immediately know that delivery is free (thereby increasing conversion rates).
Set against this customer expectation, the following table illustrates charges that a business would face in delivering parcels. This doesn’t reflect charges for a business looking to ship into Germany but does give an indication as to the costs that domestic competitors will be facing.
NPO DELIVERY (LIST) PRICE IN EUROS
DOMESTIC (GERMANY)
CROSS-BORDER, CHEAPEST EU DESTINATION
CROSS-BORDER, MOST EXPENSIVE EU DESTINATION
SINGLE 1KG LETTER TARIFF, PRIORITY
€2.40-4.60 (letter) €4.10 (packet
€7.00 (letter)
€8.90 (Packet)
€7.00 (letter)
€8.90 (packet
SINGLE 2KG STANDARD PARCEL
€5.90 €15.00 €15.00
BULK PARCELS, PARCELS OF 1KG, 10,000 PIECES
n.a n.a n.a
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The following is a non-exhaustive list of products/substances that are prohibited for transportation in international mail. Further information can be found at www.deutschepost.de/brief-international/gefahrgut
Aerosols any aerosol, including hair spray and deodorants, as they contain compressed gases
Air bag inflators and modules or seat-belt pre-tensioners installed in completed conveyance components or alone
Alcoholic beverages: containing more than 24% alcohol by volume, because they are flammable
Ammunition except air gun pellets
Batteries classified dangerous such as wet spillable/non spillable lead-acid/alkaline batteries (common in cars, electric wheelchairs). And all damaged batteries Batteries/Cells including Lithium– ion/polymer/metal –alone and in or with electronic devices (such as mobile phones or digital cameras).
Corrosives such as acids, corrosive paint and dyes, rust removers, caustic soda, mercury and gallium metal.
Carbon dioxide, solid (Dry Ice)
Electronic devices containing lithium batteries (such as mobile phones or digital cameras)
Environmental waste including used engine oil and used batteries
Explosives such as blasting caps and car airbag components, fireworks, flares and sparklers
Flammable liquids such as acetone, alcoholic beverages above 24% ABV, benzene, petroleum, lighter fluid, solvent-based paints and thinner and removers, varnishes, enamels and certain adhesives
Flammable solids: including magnesium, phosphorous, potassium, sodium, sodium hydride, zinc powder
Flammable Toiletries: such as nail varnish or nail polish, perfumes, eau de toilette and aftershave
Gases: including flammable, non-flammable, compressed and toxic gases, buthane, ethane, methane, propane, fire extinguishers, scuba tanks
Infectious and/or Biological substances (UN2814, UN2900, UN3373):
expected to contain pathogens or other agents which can cause disease in humans or animals such as bacteria, viruses, parasites, prions
Lighters: or Lighter Refills containing flammable gas or flammable liquid including cigarette lighters containing petrol and butane lighters
Matches
Oxidising materials or organic peroxides:
e.g. disinfectants and nitrates, hair dyes and other dyes containing peroxide
Pesticides: toxic herbicides and insecticides
Poisons: toxic substances that are liable to cause injury or death if inhaled or swallowed or by skin contact, such as arsenic, cyanide, rat poison
(Source: https://www.deutschepost.de/content/dam/dpag/images/B_b/Briefe_ins_Ausland/Downloads/dangerous_goods_230714.pdf)
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Returns
Returning goods is a key component of any ecommerce offer. It is a mandatory service and an intrinsic part of distance-selling in Germany. Some international service providers, like arvato and wnDirect offer cross-border return networks to make returns as comfortable as possible for the end-customer.
German consumers have high expectations about returns and returns rates are relatively high compared with other markets, potentially reaching 40%. Nearly three quarters of German shoppers report to regularly returning goods and over a third have made online orders knowing that they are likely to return them.
Fashion has a reputation for generating a high returns rate. Figures from UK returns specialists Clear Returns suggest that returns for the womenswear sector can be as high as 70%. Due to the fact that the consumer can order on open invoice, impulse ordering and multiples of the same item all increase the number of items to be returned. Similarly, free returns and concerns over fit also promote this behaviour. Free returns are the most popular additional service feature (with over 40% of German consumers). These activities drive up costs to the merchant and increase throughput on the carrier network.
Consumer products that can be challenging are cosmetics and electronics due to the need for compliance with dangerous goods guidelines. For these items the delivery methods are limited and could add cost.
German consumers usually expect returns to be free of charge and that the process of refunding will not take too long. In terms of the return process, most online shops rely on return labels in their packages to let customers send back the package right away and to collect the reason for the return.
The following graph shows a strong willingness by German consumers to use a range of different locations for returns. With the level of accaprance of parcel stores nearing the use of Post Offices, it can be seen that a mix of return channels is of benefit.
Usually the consumer receives a pre-printed return label that can be used to ship the products back. This obviously makes it easier to return products and will increase the return rate. Without a pre-printed return label the consumer needs to contact the carrier, retrieve a return label via a web portal or write their own.
Upon returning the parcel the consumer can:
• Return via parcel shop
• Return via parcel locker station
• Return via pick up request at home
• Return to store (without any return label)
• Return via postal service
One trend is to provide the consumer with the option to return into the store. This is an option that is available for click & collect deliveries, where the consumer picks up in the retail store. The strategy driving this service option is that retailers prefer to get the consumer into their stores in order to have customer contact and to drive sales.
Source 7: IMRG Collect+ UK Click & Collect Review 2015
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Source: Hermes Usage and Attitudes Survey 2014
The chart above highlights the prevalence in the German market of free returns. Interestingly, the same survey also showed that the average cost of the return was €3.26, whether paid for by the retailer or the customer.
Estimated delivery dates
The lead-time from order to delivery is 3-5 days as standard, often to a nominated place, day or time, giving the consumer the flexibility and choice to ensure they get their order where and when it suits them.
Another desire of German consumers is to know where their order is at any time in the process. This puts pressure on the tracking capabilities of the carriers to utilise real time status updates and sophisticated but consumer-friendly tracking tools.
Once the consumer has received the shipment notification via SMS or email, they can access a tracking link that shows the current status of the delivery. In many cases the consumer is offered the convenience of receiving push messages on every status update in the delivery process.
Shippers should manage consumer expectations. This means proactive information on the status of the delivery at any time is key. No consumer wants to stay at home the whole day only to wait for a courier delivery and as previously shown AM delivery is the most popular option in Germany. Hence it is important to communicate the estimated delivery date and time by SMS or email once the delivery is shipped, and communicate any relevant status update (delay/out for delivery). When the estimated date and time does not meet consumer expectation, they can select online an alternate delivery location or nominate a new delivery day and time.
(Source: Hermes Usage and Attitudes survey 2014)
Return method used
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The German B2C delivery market is well-developed and has a broad range of delivery options at relatively low prices. The AT Kearney’s Global Retail E-Commerce Index 2015 identified Germany as Europe’s second largest online market (behind the UK).
All major carriers have the ability to intervene in the delivery process to trigger alternative delivery locations or timeframes. Tracking and basic insurance is usually part of the standard service. Delivery options include home delivery and a wide range of click & collect solutions managed by carriers and/or online retailers. In addition, innovative service providers like arvato and wnDirect have emerged that offer solutions for delivery management in a multi-carrier environment and support retailers in improving their delivery management whilst reducing total cost of ownership.
The main development in the ecommerce market in Germany will be aimed towards personalisation. Consumer expectation is to receive a unique and flexible shopping experience. This requires more technical solutions to be developed in order to accommodate an individual consumer approach which will be aimed at time-saving and convenience services.
Note: Much of the underlying information on the German logistics market was provided by arvato
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ABOUT ECOMMERCE WORLDWIDE
For more information, please visit ecommerceworldwide.com or email [email protected]
ABOUT ARVATOOmni-channel retailing in fashion, beauty, luxury and other consumer-driven industries bears huge international growth potential for both established and new players. Having the right partner to manage the complexity at speed is key to success in these highly competitive industries.
arvato has successfully helped leading consumer brands such as Tommy Hilfiger, Esprit, Nestlé, Douglas, Coty, Triumph and others to build and grow their e-commerce business internationally. With 70.000 employees and 4.6 billion € revenues, arvato is one of the globally leading outsourced service providers for supply chain management & e-commerce as well as call center, payment, IT and marketing services.
Leveraging a global infrastructure of 110 fulfilment centers in 22 countries, 25.000 call center seats for customer services with 30 languages and a global payment gateway covering all leading payment methods, arvato is in a unique position to support clients at their global growth strategy across B2C and B2B channels. This includes services & solutions in markets such as China or Russia where arvato runs significant domestic operations for logistics fulfilment, call center, payment and marketing for leading fashion, beauty & luxury brands such as Yves Rocher, L’Oreal or Fossil.
arvato’s services span the complete e-commerce value chain: Implementation and operation of online-shops such as Demandware, Hybris or Magento, warehousing & transportation, domestic and cross-border, as well as financial services, customer service and digital marketing. arvato is a 100 % subsidiary of Bertelsmann SE & Co. KGaA.
• Global logistics network with 110 warehouse worldwide and transportation into 140 countries
• Special expertise with high-value luxury products, fragrances, cosmetics and garments
• Customer services network with 25.000 seats worldwide in 30+ languages
• Global payment gateway with 100+ payment methods & risk management/ fraud solution
• Global online marketing team & leverage of leading Bertelsmann media network
• 150+ developers for shop platforms (Demandware, Magento, Hybris), OMS and mobile
For more information, please contactMarcus Karten,VP Business Development, arvato SCM Solutions – Consumer Products
An der Autobahn, 33333 GüterlohPhone +49 (0)5241.80.89136 Email [email protected]
scm.arvato.com
Employees
14,000
North America 3 warehouses
APAC 65
warehouses
Global loca;ons
110
Revenue
€ 1,5 billion
Warehouse space
1,300,000 m²
GLOBAL FOOTPRINT
EMEA 45
warehouses
57
58
ABOUT HÄRTING RECHTSANWÄLTE HÄRTING Rechtsanwälte have been advising and supporting their clients since 1996. The main focus has always been commercial law. Therefore HÄRTING Rechtsanwälte have high expertise relating to Cross-Border-Ecommerce as well as new business and marketing concepts and active particularly in the field of data protection law. HÄRTING Rechtsanwälte can advise on all questions related to German, European and international trademark and brand protection together with copyright law and company law. HÄRTING’s lawyers are recognized in Who is Who Legal as well as Best lawyers and other publications.
Follow us www.facebook.com/haertingwww.twitter.com/mschirmbacher
HÄRTING Rechtsanwälte | Chausseestraße 13, 10115 Berlin, Germany | Fon +49 30 28 30 57 40 | Fax +49 30 28 30 57 44
SECTION SUPPORTERS
ABOUT wnDIRECTMore than just a logistics partner
wnDirect came to market determined to do things differently. Its international logistics offering quickly gained traction with a number of leading e-Retailers and it has since become renowned for its disruptive way of thinking.
Since launch wnDirect has evolved to offer a broad range of solutions designed to enable e-Retailers to ‘go global’. Its comprehensive services can support both large and small retailers alike to realise their international aspirations and achieve success in global markets.
We don’t just understand international logistics; we also understand retail. As a business many of the Board members, managers and staff have worked in retail and, therefore, understand you and your business – not just how to deliver your parcels.
Combining young, flexible and entrepreneurial thinking with leading edge technological developments to provide turn-key solutions which enable retailers to ‘switch on’ their global expansion plans. Supporting retailers successfully navigate the complexities of cross border trade in key markets quickly, easily, reliably and cost effectively.
For more information, please visit wndirect.com or email [email protected] to speak to one of the wnDirect team.
For more information, please visit www.haerting.com or email Martin Schirmbacher [email protected]
A full range of added value services:
• Unique fully integrated customs service – a paperless solution at the pack bench
• Full tracking and visibility throughout the entire delivery lifecycle
• Automated email and SMS updates to the consumer in their local language
• Can be integrated into a retailer’s online shopping solution
• Duty Payment & ID Upload solutions
• Access to a Global PUDO network
• Solution to support entry to the China Tmall marketplace
• Simple Returns solution
• Comprehensive bespoke reporting to your requirements
• Best-in-class, independent delivery partners trusted by your consumer
REFERENCES
This report uses content from a variety of sources, as set out in the list below. Many of these sources are available to the general public, and can be consulted for further information surrounding a specific topic.
The sources consulted include, but are not limited to:
• OECD Factbook statistics. For explanatory notes, see OECD Factbook 2014 (DOI: 10.1787/factbook-2014-en)
• www.staedtetag.de
• Retailmenot survey 2015
• E-commerce and delivery – State of play of EU parcel markets with particular emphasis on e-commerce, European Commission DG Internal Market and Services, 15 July 2013; Data from 2011* Share of individuals who used Internet within the last year, ** Cross-border intra EU trade Source: CIVIC Consulting (2011), EMOTA, Eurostat
• www.pwc.com
• GfK-eCommerce-study_fin Growth without end - vraagteken - Studie Duitsland juli 2015IMRG Hot Shop list
• www.emarketer.com
• PostNord eCommerce in Europe report 2015
• Eurostat Copenhagen Economics Delivery operator questionnaire 2013
• German Federal Statistics Office – August 2015
• IAB Europe 21/05/2015
• Radicati Group email Survey
• Faktenkontor & Toluna, November 2014 social media report
• Statistisches Bundesamt social media report
• Hermes Usage and Attitudes Survey 2014
• www.fico.com – May 2015
• Neteven Marketplace rankings as at September 2013
• www.statista.com
• www.paypers.com
• much of the underlying information in the Logistics section courtesy of arvato’Merchant Risk Council (MRC) Global Fraud Survey 2014
• Michael Bauer Research GmbH – Population density ‘heat’ map
• Forrester Consulting on behalf of MetaPack, August 2014
• Deutsche Post DHL
• trbo GmbH
• www.etailment.de
• Germany Trade & Invest: The e-commerce Market in Germany, issue 2015/2016
• UPS Pulse of the Online Shopper, March 2015
• Burgeramt, Statistiken und Wahlen / Frankfurt am Main
• European Technographics Retail And Customer Experience Survey, Q4 2013, Forrester Research, Inc.
• IMRG Collect+ UK Click & Collect Review 2015
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Cross-Border Trading ReportGerman Passport 2015
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Published September 2015
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