No other industry can compete with the sales growth rates in the (German) e-commerce sector. In 2013 alone, the online sales volume in Germany grew by 41.7 percent to 39.1 billion euro as compared to the previous year according to BVH (German Mail Order Association). 81 percent of German mail order companies are already living from online business, whereas conventional orders by mail, fax or email continue to lose traction. The biggest driver of growth is the mobile internet. Every tenth euro earned is already generated via smart phones and tablets. This accounted for a total of 4.9 billion euro in 2013. “An increasing number of customers are’always on’ and are making their purchases at all times and places using their mobile devices”, says BVH President Thomas Lipke of the industry results.
“80 percent of shop operators will not survive the next three to five years.”
A seemingly endless variety of providers are active in this tremendous marketplace. Around 1.3 million German companies were operating their own online shop by mid-2013 according to estimates by iBusiness. This is hardly surprising in light of the fact that entry into the e-commerce market is easy due to subscription-based shop software. Most of these shops are part of the so-called long tail. This consists of online shops operated on a semi-professional or hobby basis, which don’t appear in the BVH statistics due to their relatively insignificant sales. However, the share of total sales accounted for by these small shops is continually growing – at the expense of the medium-sized shops with turnover between 100,000 and 5 million euro, which are already up against the very big corporations. In this regard, iBusiness quotes the following warning from Kai Hudetz, managing director of the IFH Institut für Handelsforschung (trade research institute): “80 percent of shop operators will not survive the next three to five years.” The pending demise of millions of online shops is based on the same problem facing many offline retailers: customers are no longer impressed by an average number of products nor average prices. They want the largest possible selection and the lowest possible prices and are finding both via the big players like Zalando, Amazon, etc. or the small very specialized retailers.
According to an analysis carried out by iBusiness, only the really big players, marketplaces and price agents on the one hand, and the small specialist shops that cater to niche markets on the other hand are, optimally prepared for the future.