The global ecommerce market is expected to total $4.89 trillion in 2021, and eMarketer further predicts that the ecommerce market will reach up to $6.388 trillion by 2024. Ecommerce has been slowly taking over traditional retail and high streets for many years as the industry becomes increasingly digitised and consumers more readily opt for the convenience and ease of buying products and services online. COVID-19 then accelerated the digitisation of the sector by causing mass disruption across the retail sector due to lockdowns, mandatory store closures, and social distancing around the globe.
Physical stores were forced to close, workers were furloughed, and people were asked to stay at home apart from essential outings which meant buying behaviour had to change. Whilst retail had slowly been shifting online for many years, COVID gave people no choice but to shop online. Whilst traditional retail suffered, online shopping and ecommerce exploded. Below I explore the impact of COVID-19 on the German ecommerce market, what comes next, and take a look at some of the biggest players in the space.
Christmas 2020 saw a 14% decline in sales on the German high street, which was the most dramatic fall since 2012. COVID was changing the buying behaviour of Germans, driven by the need to reduce physical contact and stay at home. But whilst traditional retail suffered during the harsh economic and social conditions of COVID, the German ecommerce sector booked a record year and is now one of the largest ecommerce markets in Europe. It’s important to note, that although COVID was an accelerator, it was not the sole cause of the high street decline. It is well known that even before COVID, consumers attach more importance to the advantages of online purchasing such as convenience, product range, and price comparison. Essentially that shift was already in motion.
Germany is forecasted to be the 6th largest ecommerce market in the world by the end of 2021, with an estimated total of ecommerce sales reaching $101.51bn (€85.86bn as of 06/07/2021). One of the biggest lessons of 2020 was that online presence and adapting to digital was fundamental to business survival. Ecommerce, unlike so many other sectors, celebrated unprecedented success. Some of the most successful ecommerce businesses in Germany during 2020 and 2021 include Amazon.de, Otto, Zalando, Media Markt, and Notebooksbilliger. These top five companies generated 47% of all revenue generated by the top 100 ecommerce businesses in Germany in 2019 and have only grown further in the years since.
Online sales increased by up to 36% during the Coronavirus pandemic, with businesses selling garden equipment, construction and DIY tools, sport items, takeaway food, groceries, media, hobby items, and cosmetics really experiencing the benefit. On the other hand, businesses selling travel and transport, and event tickets saw a decrease in demand. But overall, the German ecommerce sector did experience success even if it was across isolated sectors.
As many customers shopped online for the first time during COVID and became accustomed to it, it is likely that they will continue to buy online in the future, indicating that COVID has brought a lasting change to customer shopping behaviour. As the use of online shopping is set to continue to increase, it is no surprise that investor interest has pivoted towards ecommerce businesses and start ups across Germany.
Crunchbase estimates that there has been a huge 990 recent funding rounds across the German ecommerce sector, including businesses such Circuly (Seed round raising €1.3M), Myos (Series A raising €25M), Priceloop (Seed Round), Travelcircus (Venture Round), and Flink Food (Searies A raising $240M). There have also been a number of investments across Delivery Hero, Zalando, Otto Group and Bonial.com. Ecommerce is growing rapidly, and as expected, investment and funding in the sector is rife.
One survey showed that the share of frequent or heavy shoppers in Germany (those who make more than 5 online purchases in a fortnight), have risen from 10% to 18%, and this group of people make 52% of their purchases online. With an increasing customer base, demand for businesses to offer online services as standard is increasing.
To keep up with rapid digital transformation and to optimise the processes, technology, and products behind your ecommerce business, you need the right teams.
Top talent is in high demand, and it is becoming increasingly more difficult to build great teams.
For help futureproofing your business in a time of rapid digital transformation, partner with Maxwell Bond, the award-winning tech and digital recruitment partner of choice across Germany. We have already supported some of the biggest ecommerce businesses across Berlin secure high performing tech and digital teams to drive product and project delivery. Contact Dan Flood for more information on how we can support you thrive.