Corona’s impact on brands and e-commerce in Germany is unprecedented. The pandemic has caused the shift from offline to online shopping to gain enormous momentum. Achim Berg, partner at McKinsey: “We’ve seen a transition that would have normally taken six years in only eight months.”
What does this rapid change mean for your brand when operating in Germany? How can these growth opportunities benefit you? And which strategy ultimately yields the best results? In this article, I will share our findings and learnings with you.
How consumer behavior has changed in Germany
Firstly, let’s zoom in on the change in consumer behavior. What changes are most noticeable? Research by Google uncovers three major changes in the German market. The results may not surprise you, but it’s important to take a closer look at them.
- Online shopping has become the new norm.
- German consumers do more online research. People have more free time and use it for digital window shopping.
- Consumers have become more conscious about their shopping. Sustainability and buying local have become important aspects.
The same research by Google offers us another important insight: more than ever, media consumption is centered around mobile, social and video. This is nothing new of course, yet the growth of online media consumption is impressive:
- 29% watch more streaming media; impactful from an advertiser’s perspective since these are channels that don’t offer advertising opportunities.
- 49% spend more time on mobile devices.
- 25% watch more online videos, for example on YouTube.
The most important finding however is this:
German consumers have thoroughly embraced online shopping
- 87% of Germans are happy about the transition to online shopping.
- 62% of Germans will continue to shop online, even after the corona crisis ends.
- 24% of Germans buy online as much as possible, even products they previously bought offline.
Zooming out, we notice four major developments.
- People spend more time online (more frequent and longer).
- More people have started to buy online. Even the late majority and laggards are now following suit.
- People buy more of the same products online.
- People increasingly buy different, new products online. A good example is Auping, for whom we now sell beds online in Germany.
The online piece of the pie has clearly become much bigger and more attractive. At the same time, online marketing has grown increasingly complex as everyone tries to get in on the action. It’s against this backdrop that we as FSG say that now is the time to invest more in online marketing.
We notice that e-commerce organizations are speeding up investment in their (mobile first!) platform, CRM, fulfillment and value added services. Personalization, marketing and automation are also part of that effort. As a result, these things will become hygiene factors rather than distinguishing features within a few short years. Since standing out from the crowd is vital for growing your brand, we pose the following question:
How do you distinguish yourself?
What strategy makes your brand excel and yields the best results? At FSG, we advise brands in the German market place the following:
- Invest in digital brand awareness, now
Firstly, investing in digital brand awareness now will lower your cost per acquisition down the line. By down the line we mean the moment your campaign needs to generate a spike in sales, for example surrounding a product launch or during an event such as Black Friday.
- Create an overarching 360 degree campaign
Real online sale success doesn’t come from a singular focus on product campaigns. You need to invest in overarching 360 degree campaigns with a relevant theme.
- Extend the customer journey
This might seem counterintuitive, since most companies strive to spend their media budget as efficiently as possible. However, this is a smart investment. The more online moments of contact a consumer has with your brand, the more top of mind your brand will be, increasing the willingness to buy. We can clearly see this in the data of our clients. Check out the example further on.
- Content, content, content!
This shouldn’t need explaining. Content is king in the online world, so invest in good quality, localized content.
Taking these four points of advice to heart will likely cause a short-term dip in your ROI. Not surprising, since you’ll need to invest. In the long run however, your yields will go up. As your piece of the online pie gets bigger, the same will happen to your gross profit margins.
Allow me to demonstrate this with a campaign we did for Paula’s Choice in Germany.
Campaign example: Paula’s Choice
To maximize the ‘corona’ growth opportunities during the Glamour Shopping Week (a large online event in Germany) we developed a 360 degree campaign for the cosmetics brand Paula’s Choice. This campaign started eight weeks before the event with an overarching theme, anti-aging in this case, which we tied to the launch of a new product.
During the first stage of the campaign, we used expensive acquisition channels including top influencers and communities, YouTube and TikTok. Additionally, we set up collaborations with key online players like Niche-Beauty and Breuninger.
Through these channels, we started to fill the funnel way before the peak of the campaign.
The campaign almost doubled the revenue compared to last year’s campaign. But the most striking result? The large majority of revenue growth and new customers came from prospects who had touch points to the campaign through five or more channels.
This is why we recommend to extend the customer journey. You create more touch points with your brand and this will pay off during the peak of the campaign.
Doubling the revenue required raising the media budget by over 200%. Now you might wonder: why do you consider that a success? Well, it is. And as strange as it may sound, we have corona to thank for it. Because the lockdown has drastically increased the online pie over the last year. This allowed us to realize a 75% increase of the gross profit margin for Paula’s Choice. And in the end, that’s what it’s all about.
Benefit from growth opportunities in Germany?
Is your brand operating on the German market? And would you like to benefit from the growth potential the corona crisis offers? Reach out to Radboud Langenhorst and discover a world of opportunities.