Learn how to expand your business on Amazon in Germany and reach more customers with an effective sales strategy for the German market.
Jannick Troelsen
When it comes to e-commerce in Germany, Amazon is virtually impossible to avoid. It did not take long after Amazon entered the German market for it to claim the top spot in German online retail. In fact, it has left competitors such as OTTO, Apple and Zalando far behind – not just a little, but Amazon is now bigger than OTTO, Apple and Zalando combined in the German market. It is estimated that about half of all online purchases in Germany are made on Amazon, and Amazonās growth in Germany shows no signs of slowing.
This makes Amazon a crucial – if not the most important – consideration for e-commerce in Germany. Here, we cover what you need to know about Amazon in Germany and the key areas you should pay particular attention to.
Table of contents
Amazon is simply a huge platform that directly connects sellers with customers. This connection is not just to a handful of potential buyers – Amazon has over 300 million users worldwide, with several million in Germany, which is Amazonās second largest market. This has also influenced the behaviour of German consumers, who increasingly use Amazon for product searches instead of Google – something we have yet to see in Denmark.
German e-commerce trends make the market quite different from Denmark. For example, it is not unusual for many smaller German businesses to sell their products exclusively through Amazon, foregoing a traditional webshop altogether – simply because it is more profitable for them. While this may not apply to all businesses, it is very difficult to avoid Amazonās platform. Here are the main reasons why:
Entering Amazon requires thorough consideration, as it is a highly competitive platform. It is essential to gain insight into how Amazon works and have the patience needed before seeing significant results. In other words, it is important to allocate sufficient time to find the right strategy and develop a realistic timeline. The German market is larger than the Danish one, which naturally means more sellers and fiercer competition.
A simple search on Amazon will quickly give you an idea of your competitors and their products, as well as the price levels you should consider whether you can match. Pricing is a key factor for your productās ranking, as Amazonās algorithm places heavy emphasis on it.
You should also consider whether your product is entirely generic or not. With so many German (and international) sellers, generic products – for example, a plain white t-shirt – can be difficult to sell, especially if your price is similar to those of your competitors. In addition, existing sellers may have longer histories and more reviews, which are extremely important on Amazon. Selling generic products is time-consuming, as there are fewer opportunities for differentiation, making it harder to create unique listings that help potential customers find your product. However, if you are selling your own brand, have competitive prices, or offer something unique, you can still achieve success.
Selling on Amazon in Germany requires significant preparation. Your product will be listed alongside thousands of similar items, so you may quickly find yourself in a price war. It is therefore important to consider whether your company can withstand Amazonās price competition.
Poor reviews on Amazon can quickly put you at a disadvantage, and reviews play a major role on the platform. You must ensure that your products and services meet customer expectations – otherwise, it will be difficult to establish yourself on Amazon.
Can your product be copied? – Yes, products are copied on Amazon. In some cases, Amazon itself will copy a product and launch their own private-label version, starting a price war. Product copying can happen anywhere, but it is important to be aware that Amazonās wide and deep selection did not create itself. In fact, according to a 2016 analysis by German Wortfilter, German sellers account for only 53.17% of the market on Amazon.de. This means that just over half of current sellers on Amazon Germany are actually from Germany. However, this also suggests that your business has good opportunities to ship products to markets beyond Germany.
There are generally three different ways to sell on Amazonās platform.
The most obvious and user-friendly, but also the most demanding, is called Merchant Fulfilled. Here, you sell through your own account, known as Seller Central. You are responsible for all the usual tasks associated with running a webshop, including customer service and order fulfilment. Many smaller German businesses choose to register as Merchant Fulfilled sellers and forego their own webshop, as they can handle all these tasks through Amazon. However, it is not only smaller businesses that choose Merchant Fulfilled – we will return to the advantages and disadvantages later.
The second method is FBA (Fulfilled by Amazon). Here, you register your products with Amazon, who then handles everything for you – from customer service and order processing to packing and shipping. You simply send your products to one of Amazonās fulfilment centres, and they manage your stock according to their guidelines. This allows you to focus on optimising other aspects of your business in the German market.
Last but not least, there is Vendor Central. Here, Amazon buys products from your company and sells them B2B through their own channel. Please note that not everyone can join Vendor Central, as it requires a special invitation, and Amazon must approve your prices as profitable. If you are accepted, you gain access to a range of exclusive opportunities.
Here is a quick summary of the two most relevant options:
It can be difficult to decide whether to start with MFN or FBA. There are many questions, but what should you actually know, and where do the main advantages and disadvantages lie?
The most obvious advantage of MFN is that you have full control over the process. This ensures that your products are packed and delivered properly, potentially resulting in fewer complaints and returns.
When you register as an MFN seller, you can also customise each parcel for each customer, including tailoring each invoice. This can have a significant payoff in many cases. However, the downside is that as an MFN seller, you are responsible for handling dissatisfied customers and must devote resources to packing and shipping. In many cases, MFN is a better choice, especially for large or heavy shipments, as FBA charges fees based on package size and warehouse space at Amazon.
See examples here of what it costs to sell through Amazon.
If you do not ship many products and your profit margin is low, MFN will be the more profitable option in most cases. Companies with established warehouses, employees and strong logistics networks also typically focus on MFN, as it is simply more profitable than paying the monthly FBA fees.
There are many advantages to using FBA, particularly for companies with good profit margins that sell large volumes and can still make a healthy profit after paying Amazonās FBA fees, which include charges for shipping, storage and optional services.
One of the biggest advantages of FBA is that you can become eligible for Prime shipping – offering especially fast delivery, which customers greatly appreciate. As an FBA seller, you can also offer all shipping options provided by Amazon. But letās return to Prime.
There are over 100 million Amazon Prime members worldwide, and according to Consumer Intelligence Research Partners, Prime members spend $300 more per year than regular users[1]. This means that FBA gives you the opportunity to satisfy the many Amazon Prime customers. Amazon itself has stated that nearly half of its customers often exclude sellers who do not offer Prime shipping. In addition, Amazon boosts FBA sellers by allowing customers to filter their search results to display only companies that ship with Prime.
Are there no downsides to FBA? There are, and the biggest is – the price. You need to get out your calculator to determine the most profitable method. It is also possible to experiment, using both MFN and FBA depending on the product in question.
Finally, it is worth mentioning that top-rated MFN sellers can achieve a special status: Amazon Seller Fulfilled Prime, which gives MFN sellers access to Prime features and other benefits usually reserved for FBA sellers.
The answer is yes. Many businesses choose to run their webshop alongside their Amazon account. However, there are several factors to consider when selling through multiple channels. One of the most important is pricing, as German consumers often carry out extensive research on a product before making a final purchase. Make sure you do not offer your products at vastly different prices across sales channels.
Amazon also pays close attention to every seller, especially whether they comply with Amazonās guidelines and can deliver the products as promised. You must have your inventory management in order so that there are no issues with shipping, which is not well received by Amazon. In most webshops, it is possible to integrate inventory management with Amazon, helping you avoid problems with both Amazon and your customers. Like many other companies, Amazon places great emphasis on customer satisfaction. It is vital that you can offer a quality product and provide excellent service to succeed on Amazon in Germany.
Another aspect you should be aware of is customer data. Amazon retains ownership of this data, so you cannot use Amazonās customer data for remarketing, newsletters or similar marketing activities. Therefore, you need to build customer contact through other means, with customer reviews remaining the most important factor. Failing to deliver a product results in a penalty from Amazon, and a complaint is taken even more seriously. That is why it is essential that your delivery methods are top-notch and your customer service is up to scratch, as this is a central issue on Amazon.
At WeMarket, we are focused on Amazon. We spend a lot of time following developments on the platform so we can guide you through the process. No matter what stage you are at, or if you simply want information about the opportunities on Amazon, we are happy to help.
Read more about how WeMarket can help you get started on Amazon here.
[1] https://qz.com/1256217/amazon-has-100-million-amazon-prime-members/
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