Germany is the largest European marketplace. Thus, many companies try to expand their products or services to capture market potential. Forecasts show that the German E-Commerce Market will increase to an €84.123 Mn market in 2021. The Revenue is expected to show an annual growth rate (CAGR 2021- 2025) of 5.35%. The average revenue per user currently amounts to €1302 p.a.
However, investing a lot of resources into your expansion to Germany without having a clear roadmap will lower the probability of you having a successful expansion to Germany.
Before considering your expansion
Is your product ready to scale? Does your business have a mature operation structure? Broadening your target audience means broadening the demand for your offer. This means you need to have structures build that help you to serve the demand without decreasing the overall quality. I’ve met many entrepreneurs that thought of expanding their business model without having a stable business. Just save yourself the energy and resource and be honest to yourself before you decide to expand.
Do your homework first and research the market
You need to understand your market in Germany first in order to make an intelligence-driven decision. Collect secondary data from different sources such as statista.com, springer or other information aggregators. Forming a clear goal before starting your little research helps you to stay focused. The more you dig into the data, the more questions you will have. Always make sure that you validate the value of your question beforehand to avoid ‘nice to have’ information.
After you have a clear image of your general market, you will know exactly which competitors you’ll need to check closely. Which strategies (price, product, etc.) do they apply? How does the retrospective growth look like? What were their recent activities in detail? You’ll need to gather this information to estimate, how your competitors are positioning themselves on the market. This information will play an important role in your launch strategy later.
Why should you do your research in advance? To avoid spending resources for an expansion planned to fail. Thus, you need to also check if the legal environment offers the framework your business can operate freely. Which tax or legal regulations are there? Don’t underestimate the very wide and complex legal system of Germany.
Localize your product
The majority of the German population doesn’t speak English nor is Germany (besides Berlin) anyways close to being described as ‘international’. Thus, you need to make sure that your offer is communicated in perfect German and has no spelling or grammar mistakes. Do yourself a favor and get a native speaking person for that.
German user behavior and expectation differ strongly from other countries. Therefore, placing elements in your communication that increase the trust of your customer is the key to a sustainable country set up. Did you know that PayPal and Invoice is a must-have payment method on your website?
Apply your growth strategy
Let’s come to the stage where most of the action happens, the growth stage. Applying the right growth strategy distinguishes in the end if your expansion becomes successful or not.
First, create a strategy that is backed with the information that you have collected in the research stage. Invest in the activities that have the biggest impact by targeting potential customer in the bottom funnel area.