Natalia Wiszewska Estimated reading time: up to 8 minutes
In today’s world, e-commerce is becoming increasingly popular and accessible to every entrepreneur. Expanding into foreign markets is a natural step for many manufacturers who want to increase their global presence and sales.
One of the attractive targets for many companies is the German market. But is it worth selling there as a manufacturer? In this article, we’ll analyze the potential of cross-border trade in the context of online sales in Germany.
Is it worth selling on the German market?
The German market is one of the largest in the world and offers tremendous opportunities for entrepreneurs. Germany is known for its high standard of living and has a stable economy, making it an attractive destination for sellers. It’s also worth noting that Germans are active online consumers, which creates significant opportunities for manufacturers.
It is expected that by the end of 2024, there will be a significant shift in consumer behavior in Germany: as many as 74.2% of customers will be making purchases online. This trend is likely to continue into 2025, with the percentage of online buyers in Germany reaching an impressive 80%.
In the case of cross-border trade, there are also many benefits. The online selling process provides the opportunity to reach a wide audience without the need for physical presence in the German market.
In Germany, there are over 65,000 online stores. In the B2B sector, according to Statista, turnover in 2022 amounted to approximately 1.67 trillion euros, with a forecast of 1.8 trillion euros in 2023.
The German market is characterized by a high level of competition, so it’s crucial to develop a unique sales strategy that sets our company apart from others. Germans value quality, reliability, and professionalism, so it’s important to build a brand based on these values.
Your advantage could be the fact that according to a study conducted by Sana-commerce, as much as 67% of surveyed companies in the DACH region (including Germany, Austria, and Switzerland) that have not yet operated an online store still have doubts about whether they should establish an online sales channel in the future.
This means there is significant potential for your business. You can confidently capitalize on this weakness of the competition by catering to customers who prefer convenient online shopping. By doing so, you can attract new customers who want to purchase goods without leaving their homes and establish a strong position in the e-commerce market.
The bane of entrepreneurs: VAT OSS and other legal aspects
Basic information
Since July 1, 2021, with the introduction of the EU VAT OSS (One Stop Shop) system, VAT settlements for distance sales to Germany have become extremely complicated.
If you conduct distance sales to Germany as B2C, you must register for VAT OSS in Germany. An additional challenge may be the requirement to submit monthly VAT OSS declarations.
These declarations must include all transactions covered by this system. VAT is then distributed to the respective EU countries.
ATTENTION!
B2B goods deliveries cannot be reported through OSS. The same applies to goods deliveries that you supply to another taxable person and which actually cross the border of another EU country.
Tax identification
As a manufacturer selling abroad, you must have a VAT number in Poland and a VAT ID number. In Germany, you can obtain two tax identification numbers: Steuernummer and Umsatzsteuer-Identifikationsnummer (USt-IdNr).
The Steuernummer is used to identify companies in Germany but is not applicable to intra-community transactions.
Entrepreneurs participating in trade in goods and services between EU member states must have a USt-IdNr, with the exception of companies benefiting from the Kleinunternehmerregelung (small business regulation). These numbers must be provided on invoices and other documents.
Sales records
You must keep records for supplies of goods and services outside the national territory within the European Union. A record is in other words a document containing the dissected revenues of the company.
Logistics and delivery to Germany
Well-designed logistics and delivery are crucial for the success of cross-border trade. It’s important to choose the most efficient ways to deliver goods to Germany.
Up to 99% of German deliveries are handled by just 6 service providers. Collaborating with them enables quick and reliable delivery, minimizing the risk of delays and import-related issues.
Popular shipping methods in Germany
- DHL (48 %),
- Hermes (16 %),
- UPS (12 %),
- DPD (10 %),
- GLS (7 %)
- FedEx/TNT (6%)
When choosing a logistics partner for deliveries to Germany, it’s important to check the reviews of other customers and thoroughly understand the terms of the agreement. A well-constructed logistics contract can provide clarity and transaction security.
List of goods subject to restrictions in Germany
Not every product will be able to be delivered without issues. Goods subject to restrictions cannot be imported into a given country unless you obtain permission or a special license for it.
Among such products are:
- Cash
- Fireworks
- Tools for torture and weapons
- Medicines and narcotics
- Food, including wild mushrooms, potatoes, dietary supplements
- Animals and plants, products containing animal or plant substances
A detailed list of goods can be found here.
What should you know before selling in Germany?
To assess whether it is worth selling in this country, you need to know what sells in Germany. After all, your customers are only interested in products that you are able to sell to the consumer.
Another important aspect of cross-border trade to Germany is customer service and their requirements. German consumers are known for their high standards. Language is key – make sure ordering is accessible to everyone, even if they don’t speak another language.
How do B2B customers place orders in B2B? Germans mostly order through online channels offered by their partners (e.g., Droplo). Surprisingly, 45% of companies still place orders in writing! Keep in mind that fax is a very popular communication tool.
Why do German online store owners opt to purchase from foreign suppliers? In the majority (72%) of cases, it’s the desire to buy goods at a lower price. Other reasons include:
- Access to products unavailable in Germany (49%)
- Desire to discover innovative, interesting products (34%)
- Higher quality of products (29%)
- Affordable shipping costs (24%)
What payments should you provide to your contractors?
| Payment Method | Main Advantage | Main Disadvantage | How Important for E-commerce? |
|---|---|---|---|
| Invoice Purchase | High incentive to buy | Risk of non-payment | Essential |
| PayPal | Extremely popular | Fees | Essential |
| Payment Request | Seamless | Risk of payment request returns | Very important |
| Credit Card | Seamless | Risk of credit card fraud | Very important |
| Quick Transfer | Fast action | Sharing bank data with external provider | Very important |
| Giropay | Fast action | Restricted circle of participating banks | Not necessary |
| Amazon Pay | High customer trust | Fees and unclear data usage issues | Good if your target audience is linked to Amazon |
| Prepayment | Security | Delayed shipment | Only if customer is willing to wait |
| Cash on Delivery | High level of security | Frequent failed delivery attempts | No longer justified |
| Coupons | Significant advertising impact | Margin costs | Useful as a supplement |
Characteristics of the German customer
German customers exhibit individualism and pragmatism, which manifests in their preference for freedom of choice and customization of offers. They also stand out for their preference for substantive communication and specific product information, while expecting high-quality service.
They are characterized by achievement orientation and planning, demonstrated through organization, punctuality, and thoughtful purchases based on thorough analysis and comparisons.
Moreover, they place a strong emphasis on honesty and keeping promises, expecting sellers to be honest and transparent in their actions.
Additionally, they are sensitive to price but don’t solely opt for the lowest offer, appreciating high-quality customer service and the possibility of easy returns. They prefer online payments and secure payment methods
Too much to do at once? We have the solution!
Cross-border trade to Germany is increasingly popular and dynamic. However, going to a foreign market for the first time can be overwhelming. Fortunately, you can easily do so with Droplo‘s e-commerce platform!
All you have to do is add your products and foreign online shop owners will see your offer straight away. Not sure where to start? We also offer support from our e-commerce professionals who are happy to help you every step of the way.
