Germany: Home of Oktoberfest, BMWs, the Autobahn, and… alternative payment methods? You might not know about that last one, but it’s just as noteworthy as the others for eCommerce shops. Germany has one of the largest eCommerce markets in Europe and incredible growth potential for savvy online retailers. At the same time, the local payment landscape is complicated and challenging. While other countries’ online shoppers rely on credit and debit cards, German shoppers’ avoidance of debt has given rise to alternative payment types (and a unique payment mix). In this article, we’ll take a closer look at the market and shopper preferences to understand how companies can take advantage of local payment heroes to expand into this market.
Germany is a goliath in the European eCommerce market with the fifth-highest online sales volume in the world. More than 78% of internet users in Germany shop online, and those that do spend an average of €1,000 online every year. These shoppers do have strong payment preferences and high expectations that can impact retailers’ success in the market. However, eCommerce merchants offering German shoppers’ preferred payment methods can expect to grow rapidly, as this country has the second largest eCommerce market in Europe.
What Makes German Shoppers Stand Out?
Two dominant buying traits set German shoppers apart from others: High quality expectations and risk aversion.
It’s true that many shoppers have high expectations, especially when purchasing high-end items. But German shoppers take this even further. High quality expectations, coupled with local legislation that protects consumers, means return rates in this country are exceptionally high. And if you’ve ever returned a package, you know how frustrating it is to juggle shipping fees and refund delays. It may come as no surprise then that one of Germany’s preferred payment methods – Payment-After-Delivery – combats these annoyances.
Risk aversion is the second major trait of online shoppers in Germany. Germans go out of their way to avoid debt and providing personal information online, which has, in turn, made paying with a credit card relatively unpopular. And it’s not just that credit cards are used sparingly – fewer than 30% of Germans even own a credit card. Instead, Germans rely on more secure methods of payment, such as online bank transfers or direct debit.
German Local Payment Heroes
Every European country has its own preferred payment mix. You can already start to form a picture of the German payment landscape from understanding how consumers prefer to shop online. Here’s a breakdown of German shoppers’ top three payment preferences, and the reason these options dominate the payment mix:
Connecting with the German Market
The German market is appealing for eCommerce merchants looking to expand, and for a good reason. Online shoppers in this market tend to invest in more expensive products, like fashion items, and most Germans with an internet connection turn to the internet to shop.
So, how can online retailers connect with the market?
First, you need to understand the market’s payment mix and the reasons behind it. Then, you need to invest in a partner that understands these different payment methods to reduce friction and ease entry into the market. The German payment landscape may be complicated, but the opportunity for growth is well worth the challenge.