In the second part of this series called 'A Publisher's Guide to Expansion', Head of Fashionchick International Catharina Zientz explains how they conquered the German market.
Germany - the powerhouse of the European economy. Three years ago Fashionchick decided it was ready to take on its big neighbour to the East. In comparison to our home market, the Netherlands, Germany offers an enormous consumer base and we could not wait to help all of them find their look! Easier said than done, right?
The German market is the largest in Europe and e-commerce in the country is booming. Berlin seems to produce and unstoppable and ever increasing stream of new and innovative internet start-ups and shopping platforms. And the consumers love it – almost 75% of Germans shop online regularly.
The German online market
The German e-commerce market is mature and it generates 25% of the European e-commerce revenues. The performance market offers a vast variety of merchants, publishers, networks and supporting service providers. Germans are fairly internet savvy and they perceive online shopping as a fairly straightforward affair. Historically, consumers are used to the big mail order companies delivering all kind of goods to their homes.
Compared to all our other markets, we see the highest return rates in the German market: Sometimes more than half of the purchase orders get returned. With an attribution model based on CPA this can have big impact on a publisher’s revenue model.
Rules, rules and rules
Germans like rules. I can say that, because I am German. We encountered quite a few legal and regulatory hurdles we did not have in the Netherlands. The Impressumspflicht, for example, requires every website to have a prominent page with a legally mandated statement of the website’s ownership and authorship. Some of the rules, such us the Preisangabenverordnung, which stipulates that price comparison sites need to show possible shipping cost before the click-out, created quite a few technical challenges. We had to redesign parts of the template we took from our Dutch site.
Trust and privacy
Germans place a high value on privacy and internet security. A typical example is Facebook, where many Germans refuse to use their real name and are less likely to “like” a fan page. It even affects their preferred method of payment. Post payment per invoice upon delivery, are still by far the most used, followed by Paypal. Over the past few years alternative payment solutions, such as SOFORTüberweisung or Klarna, have been on the rise. Still many Germans would be reluctant to enter their bank details online and quite a few simply do not own a credit card. We often see our partner shops that only offer this method of payment convert significantly less than other shops. Transparency, a completely translated website and clear terms and conditions or privacy statements really do help to build consumer trust. Online shops should definitely consider investing in a certification, such as Trusted Shop.
Standing out in a competitive market
The size of the German market naturally attracts many local as well as international players. If you want a piece of that, you will have to work hard for it. A mediocre product does not stand a chance in this competitive market. The steep competition drives up prices for marketing and traffic and a new company should expect higher start-up cost because of that. The risk and investment will be rewarded. German customers are known to be extremely loyal and they love to shop. Across all our Fashionchick markets, we see the highest shopping basket in Germany – with the men actually spending slightly more per purchase than woman.
Are you planning to expand into Germany? Have you had similar or perhaps very different experiences during your expansion? Let me know and share your comments below.