How to start selling on the German market?

The size and attractiveness of the market

Germany is our neighbor. A neighbor with over twice as many inhabitants and even more purchasing power. The proximity and economic power of Germany make it the most important trading partner for Poland (Yes, the article is written from the Polish perspective 😊, but the German market is attractive for everyone). According to 2022 data, sales of goods to Germany accounted for nearly 28% of Polish exports. It is worth noting that exports to the Czech Republic, which ranks second in this ranking, were more than 4 times lower, accounting for only 6.6% of total national exports (www.trade.gov.pl).

Of course, there would be much to write about the structure of this exchange and its causes, which have deep historical conditions. Nevertheless, the German market continues to attract growing interest from other Polish entrepreneurs. The short distance and the absence of major barriers (such as customs) due to the membership of both countries in the European Union make the German market very attractive for Polish companies operating in the e-commerce sector.

It is estimated that the turnover volume in the German e-commerce market will reach 89.4 billion euros by the end of 2023.

Sales channels

If you decide to start selling online in Germany, you must first answer the question: which sales channel to choose? The main sales channels concerned are as follows:

Ebay

Amazon

Own online store

Ebay

Setting up and managing a business account on eBay.de is possible for companies registered in Germany or foreign companies that have a representative office in Germany. It is also possible to sell from a Polish account - to do this, you need to log in to ebay.de using the same ID and password used on ebay.pl.

Goods sold from a Polish account with the option of delivery abroad can be purchased by foreign users, provided they do not limit their search to the region of their country. Unfortunately, buyers tend to limit their search geographically.

Amazon

If you decide to sell on the German market through Amazon.de, you have a choice between two modes of operation, designated respectively by the abbreviations FBM and FBA.

What do these abbreviations mean?

FBM (Fulfillment by Merchant) – you, as a seller, mark and ship the goods from your warehouse.

FBA (Fulfillment by Amazon) – in this option, Amazon stores, packs, and ships the goods from its warehouse. There are three variants in this model:

Amazon European Fulfillment Network (EFN) - Your goods are stored in an Amazon warehouse in one country, but you sell throughout the European Union.

Amazon Multi-Country Inventory (MCI) – the goods are stored in a few selected Amazon warehouses, in several countries of the European Union, and you sell throughout the EU.

For sellers on the German market, there is also an option where the seller allows you to store goods in warehouses located in Poland, the Czech Republic, and Germany.

Own store

Selling directly from your own online store is a form of sales that makes the seller the most independent. However, they must assume and bear the costs of promoting and positioning their store themselves. This option allows you to achieve a relatively high margin on sales.

In the case of selling from their own online store on the German market, many Polish entrepreneurs practice selling from a separate store (separate domain), offering their products at higher prices than in stores intended for customers in Poland. In this way, they utilize the potential of the German market and the purchasing power of the German customer. It is worth considering this option when planning commercial expansion into the German market.

Handling returns Legal conditions

::: Who pays for the return? ::: Direct return management? Is it managed by companies specializing in return processing?

Returns

In accordance with the regulations in force in the European Union, the customer can return goods purchased online or through any other type of distance selling within 14 days without giving a reason. In this case, the seller is obliged to refund the total amount spent by the customer for the purchase, including shipping costs. Many stores offer an extension of this period to 30 days or even more.

National returns

Return costs are borne by the buyer in accordance with community legislation. The seller, of course, can offer to cover these costs to meet customer expectations.

International returns

In the case where the customer needs to send returned goods to another country (for example, from Germany to Poland 😊), the cost of this return is borne by the seller. This significantly increases the cost of sales on the foreign market, in this case, Polish sales on the German market. If the subject of the sale was low-value items or sold with a low margin, it is possible that our business is not only unprofitable but also generates a loss...

In this case, it is advisable to obtain a local address for returns, namely a return address in Germany. And here, you can take advantage of our offer for entrepreneurs related to return management in Germany. As part of this service, we provide you with a reliable and secure address to which your customers can direct their returned goods. Of course, in addition to the address itself, we give you the opportunity to take advantage of a number of additional services related, for example, to parcel and returned goods control, as well as return documentation and reporting of the entire process. The needs of each of our clients are slightly different, which is why we agree with each of them individually on detailed service terms. Our service is like a tailored suit. And just as you feel comfortable in a well-fitting suit, by using our services, you optimize your business in terms of costs.

Packaging tax - also called waste tax

All Polish companies selling on the German market must register in the LUCID system. This is a public register administered by the Zentrale Stelle Verpackungsregister available at the following address: https://lucid.verpackungsregister.org/. This register must include all entities placing products on the market in packaging that are delivered in the last stage of distribution to individual end-users. These entities are required to declare the quantities of packaging placed on the market in the LUCID system, and they must also have a signed agreement with the organization for packaging placed on the market in Germany (registration in LUCID alone is not sufficient).

These obligations result from the German Packaging Act (VerpackG), which has been in force since 01.01.2019 and replaced the German Packaging Regulation (VerpackV). This law is a direct consequence of the EU directive and aims to increase the collection and recycling of packaging and the transition to more environmentally friendly packaging materials, as well as to ensure control and transparency in fulfilling packaging obligations by all market participants.

Of course, it is difficult to resist the impression that it acts as a non-tariff barrier on the market ☹

Failure to comply with this obligation can result in fines or a distribution ban in Germany. If you do not have a contract with a recovery organization, you will be fined up to €200,000 per item.

What else to pay attention to? Translation When selling in Germany, you need to ensure that your offer is translated into German as best as possible.

Imprint

This is basic information about the company, such as: address, telephone number, email address, tax identification numbers. Every online store and even every company in Germany with a website has a subpage entitled "Imprint". This is due to the obligations imposed on entrepreneurs by the legislator.

Terms and conditions Called AGB

AGB (Allgemeine Geschäftsbedingungen) in short, it is an indispensable element of an online store in Germany, just like on the Polish market.

Summary

As you can see, you can enter the German market in many different configurations. The choice of different options depends on the initial status of the company at the time of the decision to enter the German market. Larger companies can start on a large scale, starting from organizing a warehouse in Germany and shipping and handling returns, operating physically directly on the German market.

A significant number of Polish e-commerce companies are small businesses. Therefore, they are forced to search for smart enough solutions to help them successfully enter the German market without incurring significant investments at the beginning of this path.

And it is for these companies that we have created our service offer related to handling returns in Germany.

By using our offer, you gain an address for returns in Germany, and thus:

reduction of sales costs on the German market

customer trust, who feels safer seeing that the return process is anchored in Germany.