Online retail has been booming for years – especially because of the high demand for furniture, exercise bikes and televisions during the Corona crisis. In some areas the trend continues.
Those who want to buy new shoes, headphones or a laptop now often use their smartphone instead of going to the store. After all, almost everything can be ordered online from the comfort of your sofa. Many people took advantage of this opportunity, especially during the Corona crisis.
Almost 15 percent of total retail sales were generated online in 2021. Online sales that year amounted to almost 87 billion euros. Those who have started shopping online in recent years have generally stuck with it, as the German Trade Association (HDE) reported. But the online retail boom is over for now.
Internet sales have been stagnating since the record year of 2021, as the HDE’s current online monitor shows. The share of online sales in total retail fell to just over 13 percent last year. For the current year, the HDE is forecasting a new record turnover of more than 88 billion euros. But that doesn’t come close to the high growth rates of the Corona years. “Measured against the very dynamic growth from 2019 to 2021, the development has been consolidated,” said HDE deputy managing director Stephan Tromp.
Supermarket products are increasing
The sectors that particularly benefited from the online boom during the pandemic lost out: DIY and gardening supplies, home and furnishings, but also electrical goods were significantly less in demand last year and recorded declines in online sales. However, demand for supermarket products ordered and delivered online, especially food and drinks, has increased.
The food delivery service Getir recently announced the end of the highly competitive German market for itself and the Gorillas brand. But Tromp assumes that the segment will continue to grow and that established providers such as the supermarket chains Rewe or Edeka could prevail here.
The online delivery service Picnic, in which Edeka is involved, expanded its offering to 50 additional cities last year alone. “We are currently opening up a new city every two weeks and hiring 100 to 200 new employees,” said the co-founder of Picnic Deutschland, Frederic Knaudt. However, the company is not profitable.
Euphoria seems to be over
Companies are also showing that the hype surrounding online trading is calming down somewhat. “The euphoria with regard to online that arose during the Corona years seems to be over,” the association writes in the report. The proportion of retailers who also sell their goods online fell from 45 percent in 2020 to 41 percent last year. Of those who sell online, almost two thirds do so via their own online shop.
However, online trading continues to be dominated by large platforms, especially the US retail giant Amazon. According to HDE-Monitor, more than 40 percent of online sales were generated via its marketplace, where retailers can list their products. If you include the group’s own trading, Amazon accounts for around 60 percent of all online trading in Germany – 8.5 percentage points more than the year before.
Fashion and clothing as well as electronic goods remain the mainstays of the online business. Together they account for around 45 percent of sales. Trade in leisure products such as bicycles and other sporting goods also remains strong.
Fast fashion platforms are increasing
In the fashion sector, the increasing popularity of so-called fast fashion platforms from China, especially the Temu and Shein companies, is of particular concern. The term fast fashion describes cheap clothing that is designed to be worn briefly and is often quickly thrown away.
“Temu and Shein have worked very hard on their awareness,” emphasized Tromp. The problem: “Test purchases by their own member companies as well as figures from the Federal Network Agency show that a large proportion of the products that are purchased on these platforms often do not comply with product safety and security comply with local regulations.” However, due to the large volume of deliveries, the authorities cannot adequately check the items during import.
“We are overwhelmed by the need to enforce controls here that ensure that the applicable laws in Europe and Germany are actually complied with,” emphasized Tromp. According to HDE, around 45 percent of the items ordered online abroad now come from China.
Consumers are not always aware of this. In a survey commissioned by the market research institute IFH Cologne, 40 percent stated that they only discovered that the ordered goods had come from abroad when they were delivered.
Source: Stern
