4 in 5 German consumers shop online by mid-November and consumers intend to make even more online purchases in December – particularly in Media/Entertainment

AfterPay Insights’ latest research, now containing survey responses from more than 18.000 interviews with German consumers shows that - by mid-November - online purchases in Germany grow to +42% compared to the number of purchases made mid-March. Heavy Shoppers (5 or more bi-weekly online purchases) comprise 18% of all online shoppers by mid-November, but they stand for 49% of all online purchases in Germany.

The main driving force behind German e-commerce growth is that online shoppers shift a larger share of their purchases from brick-and-motar stores to online. Another contributor to e-commerce’s growth is the expansion of the online customer base: it grows from 72% in March to 80% of all German consumers by mid-November. The inflow of new consumers to online is the largest among the older consumer groups. 60% of all consumers aged 55-64 purchased online in March, and this share has grown to 76% by mid-November, equivalent to a +27% growth of consumers in this age bracket.

Looking into December, German consumers intend to increase their overall shopping. At the same time they aim to shift even more purchases from brick-and-mortar stores to online channels. The fact that only 23% of German Christmas gifts are purchased by mid-November also indicates continued e-commerce growth in December. German consumers say that they will mostly shop in Media/Entertainment in December, but Fashion and Toys also stand out.

With the growth of online purchases since September, German consumers’ worries about their personal health also increase in October. Even though we know that worries about health relate to spending more time at home (which is in turn is related to making more purchases online), a seasonality effect and the effect of ‘second wave’ lockdown measures (creating barriers to shop in physical stores) are more likely to be at play here. And even though worries about health increase, German consumers’ worries about finances decrease.

We also see that consumers’ satisfaction with merchants’ performance increases significantly. During the first corona wave, satisfaction with delivery times suffers. And even though online purchase volumes are at a high by mid-November, consumers’ satisfaction with delivery time does not drop to the same extent as during the initial impact of the pandemic.

We are currently analyzing the effects of the Black/Cyber week and will bring you this story in the coming weeks.

German consumers intend to increase purchases in December and continue to shift to online

During the summer (June-July-August) German consumers intend to decrease their overall shopping, but in September this started to shift. And from the first half of November, the share of consumers who intend to increase their overall shopping is larger than the share intending to decrease shopping. German consumers also state that they want to shift more purchases from brick-and-mortar stores to online channels – the intention to favor online over offline is stable since June.

Trusting German consumers’ intentions, both overall purchases and the share of purchases made online are expected to increase during December. Another indicator of further December growth is that consumers in Germany only purchase 23% of their expected Chrismas gifts up until mid-November.

Media/Electronics sticks out as the category where the largest share of consumers expect to increase purchases in December – followed by Fashion and Toys. We also see that online Toys purchases increase dramatically from the first half of November and is by mid-November at +167% growth – the single category that has grown the most.

Online purchases of Home Deco/Furniture, Kitchen Appliances and Hardware/Building Materials also increase significantly in November and are now at +90 to +110% growth. But consumers are hesitant to increase purchases in these categories during December. Tickets and Travel/Transport, however, are at -71% and -38% respectively to date, and the outlook for a December growth does not look positive.

Bear in mind, this graph does not take category size into account. For example, Toys stand for 7% of all online purchases in Germany while Fashion, being the largest category, is more than twice as large accounting for 16% of all online purchases in mid-November.

German Peak Season drives e-commerce purchases to 2020’s highest peak so far

E-commerce purchases in Germany have - by mid-November - grown to +42% compared to mid-March. This is a yearly high, and is based on consumer interviews that ended Sunday before the start of Black Week.

The overall e-commerce purchase development in Germany, along with the changes in consumer motivations for purchasing online and the restrictions imposed due to the pandemic, reveals five distinct development phases – so far.

The first phase in April/May sees a boom in e-commerce purchases. Our results show that this is driven by restrictions and a virus scare. During this period, E-commerce purchases in Germany peak at +37%.

During the second phase, in June and July, restrictions ease and e-commerce purchases dampen. Consumer motivations also change, convenience replaces being (partially) locked down as the key driver for online purchases.

Going into the vacation period, the third phase of development shows a seasonality low point where e-commerce purchases bottom out in Germany during the second half of August at ±0%, i.e. returning to the same level of online purchases as in mid-March.
In the fourth phase we see a strong post-vacation recovery of online purchases starting in early September. E-commerce growth continues to increase at a steady pace throughout October, as the second pandemic wave hits and country restrictions again are tightened.

And during the fifth phase – the phase that we are currently in – we enter peak season with Black Friday and Cyber Monday. Even before this week, e-commerce purchases hit a yearly high at +42% in Germany surpassing the initial peak that we saw in May (at +37% growth).

Five out of six overarching online categories grow post-summer

In order to shed some light on the drivers of this growth in E-commerce purchases, we look at the development of the online customer base (having made at least one bi-weekly online purchase) across six overarching categories.

In mid-March we see online Food/Health Product shoppers doubling, from 16% of German consumers to 32%. And Fashion/Cosmetics’ journey is also impressive, but more gradual. 23% of German consumers are regular online shoppers in Fashion/Cosmetics’ before the pandemic. And by April almost one third of Germans are buying Fashion/Cosmetics online. However, Travel/Tickets suffers, starting out with 8% of shoppers and this dropped almost overnight to 1%.

Focusing on the post-summer growth of online purchases in Germany, where overall online growth goes from ±0% in the second half of August to +42% by mid-November, we see that all six overarching online categories but Travel/Tickets grow in share of consumers.

Two categories stand out in terms of relative growth rate. The share of consumers purchasing online in Household/Home Improvement grew from 13% to 21% (+64% growth rate). And Sports/Craft/Play grew from 15% to 24% of consumers (+58% growth rate), primarily driven by the sharp November increase in Toys.

However, Fashion/Cosmetics and Food/Health Products dominate in size as one third of German consumers buy online in these categories during November, with a growth rate of +26% and +41% respectively.

German e-commerce growth is driven by the inflow of new consumers in combination with Heavy Shoppers buying more

Zooming out to German e-commerce as a whole, we see that the overall share of consumers having made at least one online purchase shows a significant initial inflow at the outset of the pandemic – from 72% of consumers pre-Corona to 77% of consumers by the second half of April. This online shopper base stays stable at around 70-75% from May until August. During the vacation period the share of online shopppers drops a couple of pct points. But from the first half of September online purchases grow – and so does the online customer base to 80% of German consumers by mid-November.

The other force at play is existing online shoppers buying more. Before the pandemic, the share of German consumers who made 5 or more online purchases on a bi-weekly basis is 10%. During the initial development phase, the share of Heavy Shoppers almost doubles to 18% of consumers at peak purchases during May. When online purchases bottom out, during the second half of August, the Heavy Shopper share is 11%. And by mid-November this share returns to the previous high (at 18%) simultaneously as overall purchases hit the 2020 high at +42% growth.

The key take-out here is that online purchase growth is driven by a combination of the existing online customer base shifting more purchases to online – as well as brick-and-mortar shoppers venturing into the online space. The effect of loyalizing existing online shoppers is also evident as Heavy Shoppers stand for a disproportionately large share of online purchases; by mid-November 18% of German consumers were Heavy online Shoppers, but they stand for 49% of all online purchases in Germany.

The online customer base grows most among older consumers

In March, around 60% of the older consumer groups were classified as online shoppers (had made least one bi-weekly online purchase), and this share is at around 75% in November. The largest growth is among consumers aged 45-54 and 55-64, with a relative growth rate of +26% and +27% respectively. And due to the growth in these age brackets, all consumer groups aged 18-54 are by November approximately at the same online shopper share (84-87%). The spread in online shopper share across age brackets is significantly smaller in November compared to in March.

We also see that earlier lockdowns in the spring of 2020 have a significant impact on the online shopper share across all age groups. The August vacation period has the most impact on online share among the younger age groups.

German consumers’ worries about health increase

In line with for example the Netherlands, German consumers are generally more worried about their health than their personal finances. In mid-March, 51% of German consumers express being worried about their health, compared to 39% expressing a worry about their personal finances. In June, German consumers worries about their health drop to about 40%.

But during the past two months, German consumers' worries about health increase while worries about personal finances decrease. The result is that the gap between worries about health and worries about finances is now larger than it was in mid-March.
Our previous analytics have also shown that worries about health are related to spending more time at home, which is in turn is related to making more purchases online. And even though we see tendencies of a lagged correlation between worries about health and the online purchase growth, the seasonality effect and the effect of lockdowns (creating barriers to shop in physical stores) are likely more at play here.

Consumers’ satisfaction with merchants increases

German consumers’ satisfaction with merchants undergoes quite dramatic changes during the initial phase of the pandemic. Overall, the conclusion is that the e-commerce eco-system manages the increase in volume, but delivery time suffers in the early phase.

As customers' satisfaction with delivery time improves during the peak purchases in May and still recovers at a continuous rate, we can see that merchants have managed to improve their processeses significantly. By August, relative customer satisfaction levels across the main dimensions measured even out.

But during the dramatic growth in online purchases in October and November, German consumers’ relative satisfaction with delivery times decreases again, but not nearly to the same extent as we see in April. Even though online purchase volumes are higher in November compared to April/May, consumers’ satisfaction with delivery time does not drop to the same extent as it does in April/May. This is a remarkable improvement by merchants. Consumers’ lowered expectations of fast delivery times during peak season could also have impaced these numbers. But considering the difference, this effect is to be considered small.

What is next?

Stay tuned for an updated mid-November deep dive into Norwegian e-commerce behavior very soon. And we will also take a closer look at consumers’ behavior during Black and Cyber Week.