German e-commerce will return to growth in September, after predicted August decline, driven by Fashion and consumers’ continued shift to online

German consumers are most positive towards increasing purchases in online Fashion in September. This could significantly impact overall September online purchase volumes. In addition, German consumers’ projections for September are to shift more purchases from brick-and-mortar stores to online.

At the same time, our second half of August research – now covering more than 12.400 interviews with German online shoppers – reveals that German consumers made less online purchases in August. The total number of e-commerce purchases made by consumers is at the same level that we saw in mid-March. And since consumers’ attitudes related to future e-commerce purchases and worries about personal finances have been stable throughout July and August, we can conclude that consumers’ attitudes are not the cause of the decrease in e-commerce purchases. It seems more like external forces are at play here, among them certainly the summer seasonality effect.

The fluctuations in German online purchase development are primarily driven by the share of Heavy Shoppers in the marketplace. Heavy Shoppers currently comprise 11% of German consumers, but they conduct 40% of all online purchases. The connection is evident: as the share of Heavy shoppers has decreased, the total number of e-commerce purchases also has decreased. A secondary driver for German e-commerce growth is the inflow of new consumers who shift purchases from brick-and-mortar stores to online. Fashion and Food have been most successful in attracting new consumers since mid March.

We are currently in an exciting phase of e-commerce development as we come out of the summer season. We will continue monitoring these changes and will bring you the continued ‘autumn-story’ in the next month.

German consumers say they will shift purchases to online channels in September

The trend that German consumers claim they want to consume less overall has been consistent for the past three months. But at the same time, German consumers say they want to shift more purchases from brick-and-mortar stores to online channels. And overall German consumers are positive to increase online purchases in the majority of categories during September. Here, Fashion sticks out. Even though Fashion purchases have decreased slightly during the summer, it is the category where German consumers are most positive to increase purchases in September.

Other categories that consumers say they will likely purchase more of in September are Entertainment and Health/Health food products. The categories that has increased the most to date in Germany are Fashion +26%, Toys +25% and Food/Groceries +24%, and consumers project to buy at the same level or more in these categories during September. Tickets and Travel/Transport, however, are at -60% and -70% respectively to date. This differs from, for example, The Netherlands where these two product categories have almost recovered to normal levels.

Bear in mind, this graph does not take category size into account. For example, Toys only stand for 5% of all online purchases in Germany while Fashion, being the largest category, account for 21% of all online purchases.

German consumers venture into new online product categories

We see that the share of consumers having made at least one online purchase in several product categories was dramatic. In Food/Health Food, for example, only 16% of consumers were buying Food/Health Food online prior to corona, and within a couple of weeks this figure doubleled to 32% of consumers.

And Fashion/Cosmetics’ journey is also impressive, but more gradual. 23% of German consumers were regular online shoppers in Fashion/Cosmetics’ prior to corona, and by the second half of April one third of German consumers were buying Fashion/cosmetics online. However, Travel/Tickets has suffered hard, starting out with 8% of online shoppers. This dropped almost overnight to 1%. It has been a long road to recovery since then, at 3% by the second half of August.

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

If we leave the product category perspective, and zoom out to German e-commerce as a whole, we again see that the overall share of consumers having made at least one online purchase shows a sudden initial inflow – from 72% of consumers pre corona to 77% of consumers by the second half of April. This inflow of new online consumers has, however, gradually decreased to 70% by the second half of August, but it is - both from a category as well as an overall view – a driving force behind the German e-commerce development.

The other force at play is existing online shoppers buying more. Pre-corona, the share of German consumers that made 5 or more online purchases bi-weekly was 10%. During the initial development phase, the share of Heavy Shoppers almost doubled to 18% of consumers at peak purchases during the second half of April.

Both of these factors have affected the overall e-commerce purchase development in Germany, but we do see a stronger correlation between the share of Heavy Shoppers and the total e-commerce purchase growth, i.e. overall e-commerce purchase growth is driven primarily by Heavy Shoppers. This is also evident as Heavy Shoppers stand for a disproportionately large share of purchases; at the second half of August 11% of German consumers were Heavy online Shoppers, but they stand for 40% of all online purchases in Germany.

German e-commerce development during the past six months

As mentioned above, German e-commerce grew initially but has then declined to where the number of online purchases by the second half of August is on par with the level prior to corona. However, our analytics of the overall e-commerce purchase development, along with the changes in consumer motivations for purchasing online, reveal three distinct development phases – so far.

In the first development phase, directly following the corona outbreak, we see a boom in e-commerce purchases that peaks during late Apil/May when German consumers made +37% more online purchases compared to their purchase behavior in mid March. The key drivers for this growth are being locked-down at home in combination with reduced access to restaurants and stores. Barriers to purchase online also exist, primarily the fear of picking up the virus from packages, but these barriers are not strong enough to dampen the e-commerce purchase boom.

In the second development phase, during June and July, the e-commerce purchase growth dampened to a growth of +15-20%. During this period, the key drivers for purchasing online also changed. The convenience and good prices online grew as a key motivators, at the same time as the lock-down driver decreased in importance. In addition, a not to be underestimated barrier to purchasing online also emerged during this period, and that was consumers wanting to support local physical stores.

From the second half of July and through August, the third development phase, e-commerce purchases dampened even more to where growth in Germany per the second half of August is at ±0% compared to before the outbreak. What forces are at play here? We will know more when we have gathered data from the first half of September, so stay tuned.

German consumers’ worries about health increase in August

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 expressed being worried about their health, compared to 39% expressing a worry about their personal finances. After the second half of April, consumers are less worried and this remains stable to the first half of July.

But from the second half of July and during August, German consumers' worries about their health increase significantly. What to expect as a result? Is there a time lag that will result in changed consumer behavior during September? We are monitoring this and will analyze it, so keep posted.

Note that, during this same period the worries about finances are stable. The result is that the gap between worries about health and worries about finances is now at almost the same magnitude as in mid March.

Consumers’ satisfaction with merchants is back on track

German consumers’ satisfaction with merchants underwent quite dramatic changes during the initial phase of the pandemic. Overall, the conclusion is that the e-commerce eco-system managed the increase in volume, but delivery time suffered in the early phase – and to some extent also logistics (by keeping products in stock).

As customers' satisfaction with delivery time improves following the peak in purchases in May and still recovers at a continuous rate, we can see that merchants have managed to improve their processeses significantly. By the second half of August, relative customer satisfaction levels across the main dimensions measured have evened out. I.e. there is no specific aspect of customer satisfaction where merchants now are underperforming.

What is next?

Stay tuned for an updated second half of August deep dive into Norwegian e-commerce behavior very soon.