German eCommerce trends: Investments in online retail

German eCommerce sales continue to grow, increasing by 16 percent compared to the previous year. In 2016, some 546,293 professional enterprises were active in online retail, whilst the number in 2017 is exactly 633,626 companies. The total revenue growth in eCommerce, however, increased by only 12.5 percent. This means that the number of competitors is growing faster than sales themselves are. This was discovered by the trade journal ibusiness in its study. To draw deeper insights into the current competitive situation, ibusiness asked retailers about their investment focal points for 2017. Over 52 percent said they were investing higher sums than last year in their online shop, 40 percent by the same amount and 8 percent by less. In the following, we evaluate the focus of these investments and offer a brief assessment.

Investment focus point #1: Marketing

Effective advertising strategies are fundamental to a successful online business. All online shop operators surveyed were agreed on this. Some 70 percent of the German online retailers surveyed plan to increase their investment in this area. To satisfy the larger market and meet its challenges, a specific and well-thought-out marketing shows the promise of success. With more than 600,000 online shops in Germany, it is becoming increasingly important to stand out from the crowd and to be clearly distinguished by your brand. This process is comprehensive and requires appropriate specialists.

Brands enjoy success when they generate recognition value amongst customers. Retailers and manufacturers must find, define and communicate the core of their brand accordingly. How that is achieved, we show you in our blog “Successful branding – how to establish your products“.

Investment focus point #2: Expansion of product range and establishing an own brand

Investments in the expansion of product range come in just behind marketing. Many online shops would like to broaden their range of offerings and thus generate buyers. This is hardly surprising, if they do not want to be taken out by the bigger retailers. Shops should, however, ensure that the selection of their assortment corresponds to the shop concept itself. The goal should not be to emulate the big shops like Amazon and Co and offer as much as possible, but instead to become a specialist. It is not the breadth of the shop that is decisive, but its depth instead. As a highly specialised supplier, the shop creates trust among buyers and also creates a loyal customer base for itself. The future lies in niches. You can learn how to establish a niche shop in our blog, “Expert status: How to sell your high-value products.”

A further specialisation advantage is offered to online shops in the establishment of an own brand. Here, retailers are also telling the survey of their intent of investing higher sums. Offering an own brand can be an intelligent move. Properly implemented, the image of the retailer improves, while at the same time escaping the pricing spiral. The prices of exclusively offered products can not be compared and the retailer thus gains a greater leeway in margins. How to establish your own brand and thus strengthen your position in the market, we show you in our blog: Own brands in eCommerce: How to bolster your online retail.”

Investment focus point #3: Shop design

Online retailers have learned that gradual and minor adjustments in their shop have a more effective impact than major relaunches. This gives customers the time to get used to a changed design gradually and find their way around more quickly. Accordingly, the high costs of a relaunch are eliminated for the shop operator. For this reason, only 19 percent of respondents said that they would invest more money in shop design in the future.

Shop design, nevertheless, remains a wise investment: In online retail there are significantly fewer impulse purchases than in stationary trade. Online, 46.8 percent of customers compare prices for an unplanned purchase. In stationary retail this amounts to only 15.7 percent. An ingenious and attractive shop design strengthens the purchasing impulse of the customer and also increases the conversion rate. With which tools you can make your shop profitable, we show you in our blog, “Emotional imagery – How to employ purchasing impulses Part 2.“

German eCommerce trends: Investments in online retail

Only 19 percent of German online shops put their investments into shop design in 2017. Nevertheless, this plays a decisive role in conversion. The aim should be to transfer the advantages of stationary retail over to the digital realm.

Investment focus points #4: Big data

The auditor and business consultant PwC discovered on behalf of the JDA Software Group that 73 percent of all German CEOs plan to increase their spending on mobile applications and big data analytics. Customer needs can be determined at an early stage by means of big data analyses and appropriate offers can be personalised. Companies have recognised the opportunities that promise a digital transformation: Improving customer experience, strengthening market position and offering the best price. However, only 49 percent of companies have so far implemented big data strategies. The uncertainty still seems to be significant.

There are pertinent aid remedies here that deliver important information from the mountains of data. This information provides a helpful basis for marketing and pricing strategies. You can read more on this in our blog, “Data visualisation – How to draw conclusions from data.“ A balanced pricing strategy after all is the basic foundation for success in the digital price war. Our blackbee Business Intelligence software helps you to find the right price for your products. How we use big data for this and with which processes we help you to find the ideal price, we show you in our blog “Matching for competitive advantage using big data.

The investment focus points show that German online shops are concentrating themselves on pure digitisation. Investments in retail space are almost completely absent. With the right marketing and shop design, retailers can reach a broad audience and thus finalise their sales. A well-deliberated expansion of product range, which fits the concept of the shop, best of all protects against descent into the pricing spiral. Ultimately, the major focus should be on investing in big data. Knowledge is power – and it is data analyses that provide this knowledge. This is how blackbee evaluates your data and the data of other competitors, whilst also helping you to develop the ideal pricing strategy. How you can win the price war. Strengthen your position on the market using blackbee and its big data analyses.

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