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 discussing e-commerce in Germany, it is difficult to ignore Amazon. It did not take long after entering the German market for Amazon to become the dominant force in German e-commerce. In fact, it has left competitors such as OTTO, Apple, and Zalando far behind. Not just slightly, but Amazon is actually larger than OTTO, Apple, and Zalando combined in the German market. It is estimated that roughly half of all online purchases by Germans are made on Amazon, and the platform’s growth in Germany continues to rise. As such, Amazon is a key – if not the key – consideration for e-commerce in Germany. We will walk you through the most important aspects of Amazon in Germany and highlight which areas require special attention.
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Amazon is simply a huge platform that connects suppliers directly with customers. This connection is not limited to just a few potential clients – Amazon has over 300 million users worldwide, including several million in Germany, which is Amazon’s second largest market. This has had a significant impact on German consumers, with a growing trend of using Amazon for product searches instead of Google. That is something we have not quite seen in Denmark yet.
German e-commerce habits make the market quite different from Denmark. For example, it is not uncommon for many smaller German businesses to sell exclusively through Amazon, completely bypassing a traditional webshop – simply because it makes better financial sense. While this is not the case for every company, it is very difficult to avoid Amazon’s platform. The main reasons are summarised below:
Entering Amazon requires careful consideration, as it is a highly competitive platform. It is therefore essential to gain insight into how Amazon works and to have the necessary patience before seeing significant results. This means dedicating sufficient time to develop the right strategy and timeline. The German market is larger than the Danish, so naturally there are more suppliers and greater competition.
A simple search on Amazon will quickly give you an overview of competing businesses and their products, as well as the price level you may need to match. Pricing is a key factor for your product’s ranking, as Amazon places significant weight on this in their algorithm.
You should also consider whether your product is generic or not. Given the vast number of German (and international) sellers, generic products such as a plain white t-shirt are much harder to sell – especially if your price is similar to your competitors’. They are also likely to have been listed longer and have more reviews, which is a huge factor on Amazon. The slow pace of selling generic products is due to fewer opportunities for differentiation, making it difficult to create unique descriptions that help a potential customer find your product. However, selling your own brand, offering strong prices, or using a unique approach can make a significant difference.
All in all, selling on Amazon in Germany requires thorough preparation. Your product will be listed alongside often thousands of other similar products. This can quickly lead to a price war, so you must carefully consider whether your company’s prices can withstand the downward pressure on Amazon.
Poor reviews on Amazon can quickly make things difficult for you, and reviews play a major role on the platform – even more so than elsewhere. It is crucial that your products and services live up to customer expectations. If they do not, 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 may choose to copy a product and launch a private label version under its own name, starting a price war. Product copying can happen anywhere, but you should be aware that Amazon’s vast range of products did not appear by accident. In fact, German sellers account for only 53.17% of the market on the German section of Amazon, according to a 2016 analysis by German Wortfilter. This means just over half of current Amazon sellers are actually from Germany. This result also suggests that your business can potentially ship products to markets beyond Germany.
There are generally three different ways to sell on Amazon’s platform.
The most obvious and user-friendly, but also most demanding method, is Merchant Fulfilled. Here you sell directly via your own central, known as Seller Central. You are responsible for all traditional webshop tasks, from customer service to order management. Many smaller German businesses choose to register as Merchant Fulfilled sellers and do away with their own webshop, as Amazon allows them to manage everything in one place. However, it is not only smaller businesses that register as Merchant Fulfilled; we will cover the advantages and disadvantages in more detail later.
The second method is FBA (Fulfilled by Amazon). Here, you register your products with Amazon, which then handles all operations for you – from customer correspondence and order processing to packing and shipping. You simply send your products to one of Amazon’s central warehouses, and they take care of the rest according to their guidelines. This allows you to focus on optimising other areas of your business in the German market.
Last but not least, Vendor Central is worth mentioning. Here, Amazon acts as a B2B buyer for your business. Please note that Vendor Central is by invitation only, and Amazon must approve your prices to determine if they are viable. If your business is accepted, you gain access to a wide range of exclusive opportunities.
To summarise, the two most relevant options are:
It can be difficult to decide whether to start with MFN or FBA. There are many questions, but what do you actually need to know, and what are the key advantages and disadvantages?
The main advantage of MFN is that you control the entire process. This means you can ensure your products are packed and delivered properly, potentially reducing complaints and returns.
When you register as an MFN seller, you can also customise each package for each customer, including personalised invoices. This flexibility can be very beneficial in many situations. However, the downside is that MFN sellers must handle all dissatisfied customers and spend resources on packing and shipping. For many, MFN is the better option, especially for large or heavy shipments, as FBA charges according to package size and for storage space at Amazon.
See examples here of what it costs to sell on Amazon.
If you do not ship many products and your profit margin is low, selling via MFN is often more cost-effective. Companies with established warehouses, staff, and robust logistics networks also tend to focus on MFN, as it is generally more profitable than paying monthly FBA fees.
There are many advantages to using FBA, especially for businesses with good profit margins, high product turnover, and the ability to remain profitable after paying Amazon’s FBA fees, which include shipping, storage, and optional services.
One of the biggest benefits of FBA is the opportunity to offer Prime delivery. This means especially fast shipping, which customers greatly appreciate. As an FBA seller, you can also offer all the shipping options Amazon provides. But let us come back to Prime.
There are over 100 million Amazon Prime members worldwide, and Prime members spend $300 more per year than regular users, according to Consumer Intelligence Research Partners[1]. With FBA, you can reach this large group of Amazon Prime customers. Amazon has also publicly stated that nearly half of their customers often avoid sellers who do not offer Prime shipping. In addition, Amazon gives FBA sellers a boost by allowing customers to filter search results by those offering Prime.
Are there any downsides to FBA? Yes, and the main disadvantage is the price. You will need to get out your calculator to work out the most profitable method. However, it is also possible to experiment, using both MFN and FBA depending on the specific product.
Finally, it is worth mentioning that the highest-rated MFN sellers can achieve special status – becoming 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 keep their webshop running alongside their Amazon account. However, there are many factors to consider when selling through multiple channels. One of the most important is price, as many German customers will thoroughly research a product and compare it across different sellers before making a purchase. Be careful not to set very different prices across your sales channels.
Amazon also keeps a close eye on each seller, especially regarding compliance with Amazon’s guidelines and the ability to deliver the promised product. You need to have proper inventory management in place to avoid shipping issues, as Amazon does not tolerate fulfilment problems. Inventory management can usually be integrated with Amazon in most webshops, preventing issues with both Amazon and your customers. Like many other companies, Amazon is very focused on keeping customers happy. It is therefore vital to deliver a quality product and provide excellent service in order to succeed on Amazon in Germany.
Another aspect to be aware of is customer data. Amazon retains ownership of this data, so you cannot use Amazon customer data for remarketing, newsletters, etc. You will need to establish customer contact through other means, with customer reviews remaining the most important factor. Failing to deliver a product will count against you on Amazon, and a complaint is even more damaging. You must therefore ensure that your delivery methods are reliable and your customer service is top-notch, as these are crucial elements on Amazon.
At WeMarket, we are focused on Amazon. We spend a great deal of time keeping up with developments on the platform so we can support you throughout the process. No matter what stage you are at – or if you just want information about your opportunities on Amazon – we are here 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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