After several years, the value of online retail purchases is falling. According to the latest assessments by Bevh (Germany’s e-commerce association), gross sales of goods fell by a double-digit rate of 11.8% to €79.7 billion in 2023 as a whole, down from €90.4 billion in the previous year.
The share of e-commerce with goods in total retail in the narrower sense (including food, but excluding pharmacy sales) fell from 11.8% to 10.2%.
This marked the first time since 2020 that industry sales had dropped below €100 billion. Taking into account sales generated by telephone, fax, or other ordering methods, total sales in 2023 were €93.6 billion.
“We expect that German e-commerce will bottom out over the course of the year. With a decline of 7.1%, the fourth quarter of 2023 was the first quarter with only a single-digit decline since early summer 2022, and indicates that sales will stabilise in the future. Last year, online retail was strong in product groups such as clothing and entertainment items, where German consumers particularly saved money. However, the sector continues to be popular among all age groups, continues to enjoy excellent customer reviews, and remains true to its role as an innovator,” says Gero Furchheim, President of Bevh and Spokesperson of the Board of Cairo AG, a German online furniture retailer.
Sharp declines in sales in all areas
Business-to-consumer (B2C) sales declined by 11.1% in Germany compared to the previous year.
Marketplaces and online retailers recorded declines of 8.5% and 14.7% respectively. The most significant decline in sales was in multichannel retail at -18.1%, although this can be attributed to the fact that customers increasingly used stationary contact points again.
Low-cost foreign providers could benefit
As a result of the economic crisis, consumer behavior has also changed. More and more customers are willing to buy cheaper but well-preserved second-hand goods (“preloved goods”).
Among 19 to 29-year-olds, 18.4% of those surveyed said they ordered such goods online “more often” and 31.9% “occasionally.” Among those aged 30 to 39, 11.7% and 40.1% of those surveyed said the same respectively.
There is also a noticeable tendency among consumers to buy from foreign shops when prices are lower. 22.1% “completely” agreed with this, significantly more than in the comparison measurement from 2022 (16.8%).
Overall, 61% of customers would currently “somewhat” or “completely” prefer a foreign provider if shopping there was cheaper. In fact, Chinese providers, in particular, are becoming increasingly popular in Germany. Currently, for example, Temu is the absolute top dog among the free apps in Germany.
In an interview with SWR, Richard C. Geibel, managing director of the E-Commerce Institute Cologne, sees the danger that Chinese providers such as Temu or Shein could flood the market with cheap products.
Some potential bright spots for the year ahead
In their joint forecast, the Bevh and the EHI Retail Institute assume that the prospects for e-commerce will improve over the course of 2024. For the year as a whole, nominal sales growth in the overall market of 2% is estimated.
For many retailers, the focus in the near future will be not only on surviving this difficult time but also on laying the foundations for new growth, emphasises Bevh.
“Companies that are now streamlining their processes, optimizing costs, and focusing even more closely on customer needs now have the chance to come out of the crisis stronger and grow above the overall trend in retail,” says Lars Hofacker, head of the E-research department at EHI Retail Institute.