• What’s Going On With B2B Commerce in Germany?  

What’s Going On With B2B Commerce in Germany?

… was certainly THE question of the B2B Day hosted recently in Berlin by the German E-Commerce and Distance Selling Trade Association (bevh). For the eighth time, Creditreform AG and bevh teamed up to examine the current status of German B2B e-commerce, with a focus on international activities of the interviewed companies. In line with the B2B Day, Siebo Woydt, Director at Creditreform AG, Christoph Wenk-Fischer, Managing Director of bevh, and Lars Schade, Managing Director of Mercateo, shared the key results of the study.

First off: German B2B commerce merchants are, for the most part, really pleased with the development of B2B commerce in Germany in 2014, which is particularly positive given the challenging overall economic environment and the global geopolitical situation.

Creditreform and bevh interviewed 124 German B2B suppliers for the study. This blog post will cover some of the key results. For the full study (only available in German) please check this link.

Nearly half of the interviewees assessed their current B2B business situation as (very) positive (48.4%). While this number decreased a bit compared to last year, fewer merchants rated their current business situation as negative – in fact, only 2.4 %.

Figure 1: How would you assess your current B2B business situation? (very good, good – satisfactory – insufficient)

Larger firms with more than 100 employees are (very) happy with their economic development in 2014. Nearly three-quarters of the companies rated their business situation as (very) positive.  Companies with less than 21 employees however, were not as positive. “Only” 42% rated their current economic status as positive.

Looking at the expectations of the interviewed companies with regard to the future, the study found that ~45% of the interviewees are very optimistic about their business in 2015 – slightly less than 2014 but still the majority. However, 4.8% of the interviewees have very low expectations for 2015 – compared to only 1.6% in 2014. The fairly weak overall situation of the global economy and the uncertain global geopolitical situation left their marks, that’s for sure.

Let’s talk numbers
Another part of the study looked at the quantity of orders that B2B suppliers received in 2014. 45.2% of the companies reported increased order numbers compared to the previous year, while 21.8% had to deal with decreasing order numbers.

The aforementioned uncertainties lead to 12.1% of the interviewees expecting a decrease of orders in 2015, nearly 50% more than in 2013. Still though, 41.1% are expecting growth in their order numbers.

Revenue and profit
More orders should – in the best case – lead to better overall financial results, shouldn’t they? According to the study, they did!

46.8% of the companies reported on increased revenues. Only 21% of the companies faced decreasing revenues over the past year – a much better situation than last year’s study showed. It appears that B2B companies prepared themselves for the increase in competition that had been predicted in last year’s study. Not only did revenues increase for most companies, but also profits. 39.5% of the companies had higher profits in 2014 compared to the previous year. Although companies tend to be slightly more cautious if you ask them about expectations for 2015, the overall trend is very bullish.

Figure 2: Revenue expectations for 2015 (growing – stable – decreasing)
Figure 3: Development of profit balance in German B2B commerce

Globalization as the main trend of German B2B Commerce
A very positive observation that the study revealed is the fact that most German B2B suppliers are already very active in international markets – 77.4% to be precise. The bigger the company the more likely it is that they have business abroad. 80.2% of those companies earn up to 25% of their revenue from international business.

What does ‘international’ mean in that context?

It’s not very surprising that international focus is mostly on Western European countries. Common cultural preferences, fewer language barriers, as well as less legal/customs constraints lead to more optimal business conditions.

Figure 4: Where are you doing business abroad?

How do the companies tackle their international efforts? Is online the key to international success, same as it is for local success? Emphatically yes. The majority of the B2B suppliers offer their goods via online channels such as shops and marketplaces. And 39.3% of those companies that do business abroad are still using catalogs as a tool as well, and no less than 25% use direct sales representatives.

Figure 5: Distribution channels in foreign countries

The interviewed companies seem confident that the results will improve further through 2017. In preparation for this growth, 50% want to grow their export activities, while 47.9% plan to keep current activity levels.

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