German e-commerce purchases +36% following April. Growth is driven by increase in heavy shoppers: 18% of consumers stand for 53% of all online purchases

Data from AfterPay Insights’ research into the e-commerce behavior of 3,400 German consumers shows that purchases are up +36% compared to before the corona outbreak.

The increase of online purchases is largely driven by existing online shoppers buying more. Both infrequent- and heavy shoppers have increased e-commerce purchases, and our research reveals that only more frequent online shoppers are prone to shifting purchases from brick and mortar stores to online in certain categories - this is especially noticeable in the food categories.

We see that online shoppers are expanding their repertoire by venturing into new categories online. This is especially evident in Fashion where 18% of the online shoppers made at least one purchase in the second half of March, and 26% have done so in the second half of April. This partly explains the growth of Fashion with +53% in number of purchases since the corona outbreak.

Heavy shoppers make up 18% of all German online shoppers but they account for 53% of all online purchases. In order to attract and retain heavy shoppers’, merchants need to focus on having products in stock and managing a fast delivery. In addition, merchants must also find ways to help these shoppers overcome their worry about the risk of getting contaminated by packages ordered.

Significant increase in e-commerce purchases since the corona outbreak

Compared to before the corona outbreak, e-commerce purchases in Germany were up 7% after the second half of March. And purchases have continued to increase, by the second half of April they were up 36% compared to before the corona outbreak.

Dividing the German e-commerce shoppers into groups by online purchase frequency reveals some interesting insights. First of all, we can see that the share of heavy shoppers (having made 5 or more purchases during the last two weeks) has increased continuously - from 10% of the online shopper base prior to the corona outbreak to 18% by the second half of April. From a merchant perspective, heavy shoppers are a relatively small but critical segment. This segment only represents 18% of German online shoppers by the last weeks of April, but they stand for 53% of all online purchases. Not only has the heavy shopper segment increased in size, but their share of total purchases has also increased from 47% at the end of March to 53% by the end of April.

And at the other end of the spectrum, the share of infrequent online shoppers (having not made any purchases during the last two weeks) has decreased over time, i.e. they have also started making more online purchases.

The merchant critical heavy shopper segment is over-represented among people aged 18-44, holding a full-time job with a mid to high income. The segment comprises more women than men, one fifth of the segment are women aged 18-34 and it is over-represented among families with kids living at home. As heavy shoppers have increased from 10% of online shoppers preceding the corona outbreak to 18% at the second half of April, there has also been a shift in the demographic composition of this segment. Most notably, in Germany the inflow to this segment are males and middle-aged consumers without kids living at home.

The medium shopper segment (as defined by having made 2-4 online purchases in the last 2 weeks) has reduced marginally in number of consumers. Overall, this segment has a demographic profile that resembles the average German online shopper. However, they are slightly younger – but not as young as the heavy shoppers.

The light shopper segment and the no purchases segment are over-represented among older consumers (aged 55+) and among men and consumers in the post-family life stage. Their disposable income is also lower compared to the other shopper types. The average age of consumers in the segment has shifted over time to become even higher.

Why are German consumers changing their e-commerce behavior?

From the outset of the corona outbreak up until mid-April, the number one driver for German consumers to increase e-commerce purchases was to avoid meeting other people in physical stores, i.e. to prevent themselves from getting infected. As the lock-down has continued, this driver has decreased significantly in importance. The current main reason for buying more online is now due to stores and restaurants being closed. In addition, a continuously increasing number of consumers are motivating their increase in online shopping with the fact that products are cheaper online.

Among the reasons related to being locked down at home, the convenience of online shopping is the largest driver to make more purchases. And the share motivating increased online shopping by ‘cannot leave home due to taking care of family’ has decreased since the corona outbreak.

German consumers have shifted quite dramatically in the reasons for making more online purchases, starting from emotionally driven worries directly following the corona outbreak to more rational reasons lately.

Deep diving into the purchase frequency segments, heavy shoppers’ increase in purchases is, relatively, more driven by convenience and the fact that stores can have a limited product availability. These motivations are of more importance for heavy shoppers than to avoid meeting people in physical stores. The patterns regarding the other drivers are quite similar between heavy shoppers and the other online shoppers.

At the start of the corona outbreak, German consumers claimed the main reason for making less e-commerce purchases was more or less a practicality, ‘we need to consume less in general’. But tracking the German online population over time tells a partly different story.

The general financial uncertainty is still a main driver for decreasing online purchases, including the confidence in consumers’ personal finances, even though these drivers have decreased in importance.

However, what is most notable among Germans is that the direct virus-related worry has also decreased, this includes the worry about being contaminated by packages as well as the concern that packages might get delayed or not delivered at all.

As the inherent trait of a heavy shopper is to shop more online, consumers in this segment also need to encounter heavier barriers in order to make a conscious decision not to shop online.

The most important barriers of these heavy shoppers to make more online purchases resemble that of the average German online shopper. I.e. the top reasons are due to consuming less in general and financial concerns. But what is interesting is that an almost as important driver for heavy shoppers is the worry of getting contaminated by corona from the packages. This barrier is considerably more prevalent among heavy shoppers than it is among medium- and light shoppers.

How have German consumers’ worries developed since the corona outbreak and what is the impact on e-commerce?

The general level of worry among Germans online shoppers has decreased since the start of the corona outbreak. The worry about personal health has decreased the most, from 51% at the second half of March to 45% by the second half of April. In that same period, worries about personal finances decreased from 39% to 37%.

Without a doubt, the level of worry about the corona outbreak has a powerful impact on consumers’ e-commerce behavior.

A general conclusion is that the more worried a consumer is about corona from a health- as well as financial perspective, the more online purchases that consumer does. Heavy shoppers are the most worried, followed by medium shoppers and light shoppers.

For a deep dive on worries and the impact on e-commerce purchases, look into our earlier blog. 

How have German consumers’ purchases in product categories developed since the corona outbreak?

Fashion, Kitchen appliances and Home décor/furniture were, directly following the corona outbreak, negatively affected showing a decrease in online purchases. But all of these categories have since bounced back and are, compared to the number of purchases before the corona outbreak, now up by at least 50%. The other categories in the chart below have also grown continuously since the corona outbreak.

We have another set of categories in Germany, that have been affected but not to the same extent. Here, we see small increases followed by decreases or vice versa since the outbreak. The exception being Travel and transportation’, which is very much in the negative numbers.

And there are some categories which increased following the corona outbreak but where the curve is pointing towards a decline moving forward. The outlier here is Tickets which never increased and has continued to decline in number of purchases.

Deep-diving into shopping frequency, analytics show that consumers’ share of online purchases made within the categories Food and groceries as well as Take away food  is correlated to online purchase frequency. The conclusion here is that you have to be a quite frequent online shopper (heavy shopper) in order for you to shift your food purchases from offline channels to online.

Will German consumers shop more or less in May?

We can still expect the number of online purchases in Germany to grow in May. This is because the share of consumers claiming they will increase online purchases in the coming month exceeds the share saying they will decrease purchases. But at the same time, we see an increasing trend in the share claiming they will buy at the same level as before – indicating that the growth rate of e-commerce will be a bit dampened in May.

As might be expected, heavy shoppers are more positive to increasing their number of online purchases in May compared to the other shopper segments. But in line with the overall results, the share claiming they will buy at the same level as today is increasing also among heavy shoppers – and this pattern is consistent across all shopper types.

Which products will German consumers buy more or less in May?

For most categories, the rate of recent growth is in line with the expected growth that we predicted in early April. But there are some exceptions. Hardware/Building materials, Home décor, Gardening tools and Kitchen appliances have shown a dramatic increase recently, but the future outlook is pointing towards a dampened rate of growth. And Hobby articles along with Pet food/supplies and Sporting goods has declined since the corona outbreak, but these categories seem to return to growth numbers in May.

As described above, the main reason for the 36% total increase in e-commerce purchases in Germany is that current e-commerce consumers have started to buy more – as opposed to the increase being driven by offline consumers switching to online purchasing.

But what we also see is that online purchasers are expanding their repertoire by venturing into new categories online. This is especially evident in ‘Fashion’ where 18% of the online shoppers made at least one purchase in the second half of March, but where this number in the second half of April is 26%.

German consumers indicate higher demands on merchants

When analyzing the full online consumer base in Germany, the most important driver for choosing an online merchant is that a website has the lowest price. This differs quite significantly from consumers in the Netherlands and Norway. That a consumer has used the webshop before and that the webshop is well-known are the second most important aspects. These are also connected to having a previous experience with the webshop.

We see a very clear link between the number of online purchases made and the amount of demands put on merchants. The ranking of the demands is similar across the different segments based on online purchase frequency, with some interesting differences.

Analyzing the share of consumers who state if needs have become less or more important, the overall conclusion is that all demands on merchants have become more important. Compared to before the corona outbreak, the need that has increased the most in importance is ‘lowest price’. 

These demands have increased the most for all purchase frequency segments (heavy shoppers, medium shoppers as well as light shoppers). 

In addition to this, German heavy shoppers have also increased their demands on merchants regarding delivery, both flexible and reliable delivery but not necessarily fastest delivery. During the second part of April we also see increasing needs by the heavy shoppers related to wide range of products and lowest price.

How are German consumers’ changing demands affecting merchant performance?  

German consumers’ satisfaction with how merchants’ deliver is highest regarding shipping and delivery, as well as for the payment process. The lowest levels of satisfaction are measured for customer service and return process.

But the aspect that has decreased the most since the corona outbreak is consumers’ satisfaction with shipping and delivery in general and fast delivery time specifically.

Interestingly, the overall level of satisfaction with merchants’ performance does not differ significantly between light shoppers, medium shoppers and heavy shoppers. But the satisfaction differs per area.

Light shoppers are relatively more satisfied with products in stock, low price and fast delivery. But they are on the other hand less satisfied with customer service, payment process, return process and security.

Merchant considerations:

Medium shoppers’ level of satisfaction on all areas are more or less in line with the average across all online shoppers.

Merchant considerations:

Heavy shoppers are more satisfied with merchants’ return process and payment process. But they are considerably less satisfied with low price. But what sets heavy shoppers apart is their dissatisfaction with fast delivery time, products in stock and shipping & delivery. 

Merchant considerations:

What is next?

Coming up next is a deep dive into e-commerce in Norway. We will also take a closer look at how perceived security impacts e-commerce behavior. Stay tuned.