The German interactive retail sector reached new record sales of €34 billion in 2011 compared to€30.3 billion in 2010 thanks to the continuous boom in online shopping, according to the German
E-Commerce and Distance Selling Association (bvh). Further strong growth is expected this year.The strong double-digit growth of the German distance-selling industry, which is in line withthe forecasts, equalled an increase of 12.2 per cent in 2011 with its revenues now making up 8.2per cent of total retail trade, bvh executive director Christoph Wenk-Fischer said at a pressconference in Hamburg. The overall retail sector recorded a moderate growth of 2.4 per cent in 2011with annual revenues of €414.4 billion. “This shows that our sector is a stimulus for the wholeretail trade,” he emphasised.
The 2011 figures are based on a representative consumer study “Distance trade in Germany –Development of interactive B2C commerce in 2011″ which was carried out by the research instituteTNS Infratest for the sixth time on behalf of the bvh and sponsored by DHL Parcel.
Comparing the classical ways of ordering via letter post, fax or telephone with onlineshopping, orders via internet have increased dramatically generating sales of €21.7 billion in 2011which equals a year-on-year increase of 18.5 per cent. Online trade now makes up 64 per cent of thetotal revenues in German distance trade, according to Thomas Lipke, president of bvh and managingdirector of the Hamburg-based multi-channel shipper Globetrotter. “The classical ordering channelsgenerated more moderate revenues of €12.3 billion with a relatively small growth of 2.5 per centcompared to 2010. “The internet is the growth driver of the industry as such,” he stressed.
The internet is also the top medium, when it comes to obtaining information, Wenk-Fischeremphasised. However, paper mailings including catalogues are still an important inspirationalmedium accounting for 50 per cent of the information sources shoppers used last year while 32 percent went directly to the internet to look for information via search engines. “But it also dependson the age group very much,” he stressed. For 71 per cent of the shoppers within the age group of14-29 years, the internet is clearly the key information source. 59-65 per cent of the peoplebetween 30 and 59 years also use internet as their primary information source.
“The older the customer, the higher the probability for him to prefer using paper media,”Wenk-Fischer summarised, stressing that catalogues are still important and will be furtherdeveloped. Thus, the majority of people aged 60 and older are sticking to catalogues with 82 percent. A similar tendency can be seen within the age group of 50-59 year olds with 60 per cent.
“Even though print is in decline in volume terms, the traditional tools are here to stay. Forexample, internet pure players might think about how they can draw the attention of customers whomay not find them easily on the internet. In this case, paper would be a good medium,” hesuggested.
The main winners and beneficiaries of last year’s growth were the multi-channel retailersgenerating the biggest volumes, Wenk-Fischer further explained. These are companies usingcatalogues, the internet and sometimes physical outlets. They recorded revenues of €15.6 billion in2011 in total. Around half of these volumes with €8.2 billion were generated by the secondstrongest group, the internet pure players who didn’t start with catalogues but went straight tothe internet. They grew by around 30 per cent in 2011 compared to 2010. The third strongest groupare traditional retailers with revenues of around €3 billion generating the biggest growth of 41per cent compared to the others, with some of them now increasingly establishing an online presenceincluding big companies such as Media Markt and Saturn. Another group with strong shipping volumesare pharmacy retailers with an increase of 35 per cent in 2011.
In terms of sales volumes generated purely online, internet pure players are at the top ofthe E-Merchants ranking with annual revenues of € 7.5 billion, ahead of the multi-channel retailerswith slightly lower revenues of €7.1 billion. The third strongest group in terms of sales are theeBay-powersellers with online revenues of €2.5 billion showing a sales increase of 10 per cent in2011. Within the mail-order e-business, the revenues of traditional retailers who then switched tothe internet showed the strongest growth with a 45 per cent increase, followed by internet pureplayers with a plus of 31 per cent.
The most popular, growth-driving product group in German interactive trade consisted ofclothes, textiles and shoes, Lipke continued, praising the online shoe retailer Zalando. This groupgenerated total sales of €12.8 billion in 2011. The second most popular product group included “media/ image- and sound carriers” with revenues of €3.3 billion and an increase of 11 per centyear-on-year. Other well-selling products included consumer electronics and e-articles, also with€3.3 billion sales, equalling a 23 per cent increase, followed by computers, furniture anddecoration articles and household appliances, among others.
Regarding the customer base, women represent the mainstay of sales for the online and mailorder business with a 58 per cent share and €19.8 billion in annual sales in 2011 compared to themale customers accounting for 42 per cent which equals €14.2 billion. Women also generate the mostmoney with significantly larger shopping carts than men. “The industry is female. The tendency isthat women invest considerably more money in textiles than men,” Wenk-Fischer added.
During 2011, online shoppers not only ordered products but also digital services such astickets for events, train tickets or entertainment-related services worth €8 billion (€7 billion in2010) which equals a sales increase of around 14 per cent. In addition, the orders of apps for thesmartphones and music files increased in 2011 as the purchases through mobile internet are becomingmore and more important. Last year, around a third of the service purchases were carried outthrough mobile internet.
In terms of payment methods, purchase on account remains the most popular way of paying forcustomers with 42 per cent, with a slight decrease compared to last year while online paymentsincreased with meanwhile 15 per cent of all orders in the sector paid through this channel. Thisequals a 6 per cent increase in 2011. Compared to 2010, payment via credit card increased in 2011generating 80 per cent more sales in 2011.
“Purchase on account continues to be an important, customer-friendly and secure paymentmethod in our industry and will play a decisive role in the next few years. However, we can see ashift in payment channels with more and more customers using digital payment,” Wenk-Fischer added.
Asked about return rates in interactive trade, Wenk-Fischer highlighted high returns oftextiles with return rates of up to 80 per cent, especially related to women, which speaks foritself as clothes need to be tried on and often don’t fit. The return rates with other products,for example in the field of electronics, are much lower. “Women often order several sizes orcolours and consequently, will send the less appropriate ones back.” In contrast, the return ratewith books is only 1 per cent.
Social media is gaining increasingly in importance as a new modern communication medium. “Formost retailers, social media has become a must and an important component even though they don’tgenerate additional revenues from it, in most cases,” Lipke explained.
For companies, it is not important at present to be represented in all social networks. “Thesocial media presence requires smart strategies with continuous monitoring. Speed and flexibilitymust be top priority for companies represented on Facebook, Twitter and Co. to be able to reactfast and in an adequate way to postings,” bvh said.
Another emerging trend goes toward online catalogues along with traditional paper catalogueskeeping pace with changing customer needs. However, the effect of a printed catalogue is stillhigher which cannot be achieved online for the moment, Lipke stressed. The paper catalogue stillplays a key role in the mail-order business.
Wenk-Fischer highlighted the future importance of mobile commerce with the technologyadvancing day by day. “Looking at the user-friendliness of a smartphone, it is much higher thanthat of a computer. Mobile shopping is especially a topic for the age group of 18-39 year olds whoare increasingly ordering via the internet. In our recent study, we discovered that 58 per cent ofthe interactive retailers are already offering a separate mobile platform to boost mobile purchaseswhile 78 per cent rely on the rapidly growing trend ‘Always on’.”
Looking ahead, bvh expects the current growth to continue in 2012 forecasting a salesincrease of 7.4 per cent for the total distance trade which would equal €36.5 billion. E-commercevolumes are expected to increase by 16.5 per cent. For online trade only, bvh predicts salesvolumes of €25.3 billion. “We are curious how the e-commerce trends of the last two years includingmobile commerce and social media will develop further. The issue of efficiency increase in theapplications will play a role. Linking stationary and interactive trade will continue to be apriority in 2012. For the traders, the goal will be to reach customers of all interest and agegroups,” Wenk-Fischer concluded.
