In this series, we are taking a close look at the current state of cross-border payments. In our first installment, we considered how the growth of cross-border commerce and globalization has changed payments forever. We then looked at the great strides happening in the United Kingdom. In our third post, we addressed some of the biggest challenges that hinder cross-border payments, and how these effect businesses and the global economy. And in our last article, we double-clicked on the trends happening in China today. That brings us to today’s post centered on Germany, another E-Commerce powerhouse.
Germany equals quality. Whether you’re behind the wheel of one of the country’s coveted cars, flipping schnitzels in a luxury German kitchen, or cheering on the best international soccer team in the world, Europe’s wealthiest nation doesn’t do things by halves.
When it comes to E-Commerce then, it may seem surprising at first glance that the most populated country in the continent comes a distant second to the UK in terms of turnover—especially given Germany has almost 20 million more people online than the UK. But take a closer look, and the numbers reveal an E-Commerce landscape expected to blossom faster than any other in Western Europe, with the anticipated 12% yearly growth through 2017 outstripping any of its nearest neighbors and underscoring its enormous potential.
In 2013, Germany achieved a B2C E-Commerce turnover of over $71 billion, with an average consumer spend of $1,797, according to Ecommerce Europe. Its leading European rival, the UK, topped the world for customer spending per-head at around $3,000, with $120 billion in turnover. Despite Germany’s status as Europe’s wealthiest nation, the lower per-head spending has been attributed to the more cautious nature of German shoppers online, especially when it comes to purchasing expensive goods.
Adding to this characterization of cautiousness, a recent report by The Paypers revealed that German shoppers preferred online payment methods that felt closely tied to their banks. Bank transfers specifically still accounted for 11% of all payments in 2013—a markedly different statistic to the UK, where only 1% used the same method. Similarly, only 21% of Germans used credit or debit cards for online purchases in the same timeframe, compared to 88.5% in the UK and 60% in the United States; highlighting an appetite for greater perceived security, as well as an apparent openness to alternate payment methods.
While GTAI (Germany Trade & Invest) recently noted that Germans are likely to increase their per-head spending on the Internet as they develop greater trust in transaction systems, the current trend implies that B2B traders looking to do business online with Germany may be wise to integrate the most robust payment solutions possible. And it’s a country well worth doing business with.
The vitality of the German economy is no secret, and the country’s B2B leaders share the pressing appetite of other E-Commerce superpowers to start maximizing the potential of B2B E-Commerce revenue streams. Where Germany stands out is in the sheer level of the possibilities. Already the third most active country worldwide in import and export E-Commerce, 90% of German companies recently said they are already conducting elements of cross-border business online. When coupled with the fact that a massive 99.7% of all companies in Germany are small and medium-sized enterprises—whose DNA is tech and market innovation—the ground seems incredibly fertile for future B2B growth.
If Germany is synonymous with success, it’s a carefully-calculated success that runs deep—starting with its school curriculum and culminating in world-leading results. The numbers, and infrastructure, suggest the story is destined to repeat itself as the country steadily embraces its rich E-Commerce possibilities.