Export experts: how Germany’s companies handle international expansion

Germany is the world’s third largest exporter. But how exactly do its retailers handle international expansion? Which markets are they targeting? And what can you and your business learn from them? Two new studies provide answers.

With EUR 1.3 trillion in goods exported, Germany’s export market was second only to China and the US in 2019. More than 80% of German retailers already sell internationally, generating around 32% of their revenue abroad. And this trend is only increasing, despite COVID-19.

If you’re also looking to expand abroad, it pays to get the facts first. How have other companies tackled this challenge? Which countries do they target? What role do translation and localization play in the process? Two new studies from ibi research and ECC KÖLN offer detailed assessments of the international e-commerce landscape. They’re in German, but we’ve hand-picked the most useful insights for you here.

1. The focus is on western Europe, the US and China

German exporters mostly target Austria, France, Switzerland, the Netherlands, Italy, the UK, the US and China – countries that not only speak a wide range of different languages, but also have different cultural requirements when it comes to store design, payment methods, sales channels and customer service. Here, it pays to be specific and adapt your site to each new target region – a one-size-fits-all English website won’t get you very far.

2. German exporters target their neighbors first

Germany’s top three international export markets are all neighboring countries, confirming the assumption that German retailers expand into the rest of the DACH region as a first step. The logic is simple: it’s much easier to get a foothold in the market here, as it only requires minor changes to a website’s language and sales channels. Austria is the most popular target for German retailers: around 69% are actively selling there, and Austria is in the top five countries in terms of revenue for 44% of those. At the bottom of the European rankings lies Cyprus, with a mere 7% of sales activity.

3. The Chinese are big spenders

China is the most attractive export market in terms of revenue per sale: the average value of goods in a single Chinese shopping cart is an impressive EUR 900. This means it’s even more important to take into account local shopping habits – and to opt for colorful web design and payment via Alipay.

4. The average German retailer has expanded into eight European countries

And that means they’re getting a bigger slice of the pie in comparison with retailers in other European countries: across the five biggest economic powerhouses in Europe (France, Germany, Italy, Spain and the UK), only 30% of SMEs sell abroad at all.

5. More than half of German retailers sell through their own online store

50% of sales in the B2B sector take place through a company’s own website. In the B2C sector, it’s 80%. That’s a lot, especially when you consider that use of sales platforms is currently on the rise: every third retailer currently sells their products via Amazon. Nonetheless, a fully localized website remains a clear attention-grabber.

6. 30% rely on external assistance when entering new markets

That means agencies with linguistic and country-specific expertise – like Supertext. The other 70% of retailers do it themselves – and 36% of those surveyed don’t even bother with preparatory measures or market research beforehand. Only around 12% have a team on the ground in their new target market; the rest simply work from Germany.

7. Social media is a key marketing tool for 50% of German retailers

Social media is the most important marketing channel for half of the 92% of companies who actively market their products abroad. At the same time, retailers consider marketing to be one of their biggest challenges (see point 8). We suspect this is down to a lack of linguistic and cultural expertise when sales channels are being operated directly from Germany.

8. Complaints and returns are the biggest challenges

61% of German retailers say that the complaint and return processes is their biggest challenge when selling abroad, followed by the delivery process and marketing activities. 28% of businesses find translating their website challenging, and 25% struggle to provide customer service in the appropriate language.

9. Half of German retailers don’t apply country-specific pricing

That means they’re missing out on revenue and profits. Businesses that don’t apply a localized pricing strategy or pay attention to local holidays and the associated discounts lose out on up to 50% of revenue.

To sum up: expanding into new markets offers unexpected opportunities, particularly during times of crisis – but it also presents new challenges. Language and culture are just two pieces of a puzzle that also includes technical, legal and logistical issues. Strategic preparation and optimization of your business to suit the needs of your target market should always be part of your plan. And we’d be happy to help you draft it.


International e-commerce – a retailer’s perspective on opportunities and challenges

A study by the research institute ibi research in collaboration with the Association of German Chambers of Industry and Commerce (DIHK). Three hundred retailers were surveyed.

Successful cross-border online retail – e-commerce and payment in an international context

A study by ECC KÖLN and the payment service provider Mollie. One hundred and thirty SMEs were surveyed.

Cover image via Pixabay

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