The shopping experience is being transformed by Covid-19. At the beginning of the pandemic, ninety per cent of people in Germany said they would avoid stationary shops, postpone unnecessary purchases and buy as much as possible online. Fifty per cent of customers ordered products online that they had never bought online before, and they most frequently purchased food, household goods and toys. Online shops that offered food, drug store items or medicines recorded the most significant growth. According to Statista, the mail order business across all sectors achieved a 24.1% increase in turnover in April 2020.
After online retailers initially scaled back their forecasts and had to contend with delivery difficulties or production problems, they are now much more optimistic. For example, fashion mail order company Zalando is expecting a sales increase of between 10% and 20% in the second quarter. Home & Living online sales Westwing (Source: dgap.de) is reporting an increase in demand of about 80% in the second quarter.
The victims of the change in customer behaviour are department stores such as Galeria Karstadt Kaufhof, whose situation has become even more acute due to the Corona crisis and which have now announced numerous store closures following the insolvency proceedings applied for in April. Even before Corona, Karstadt-Kaufhof had yet to succeed in attracting more and, above all, new customers. The bans on opening stores recently did the rest.
Challenge as a digital opportunity
Intending to reach new customer groups, companies are also discovering Corona as an opportunity and investing more and significantly faster in digitalising their processes. According to a study, retail companies in Germany, the USA and Great Britain are planning to expand their digital offerings. In addition to setting up online shops or selling on digital marketplaces, the focus is also on their mobile apps or the increased use of artificial intelligence. More than half of the decision-makers for marketing and e-commerce services will rely on digital technologies in the future to improve their business activities.
First steps into online trading and expansion into Europe
Marketplaces such as Amazon and eBay are benefiting from the change in purchasing behaviour through higher overall sales and successfully recruiting stationary retailers. Since the sellers have suffered some drastic losses in their core business, they are now venturing into e-commerce thanks to the platforms. This is easier than setting up their online shop and taking care of the entire sales process. According to the argument of Amazon & Co., this is how retailers are venturing into other growing markets such as Poland, Romania, or Bulgaria.
However, merchants should pay attention to the VAT rates applied to cross-border sales of their products. This is always at the trader’s expense if current VAT rules are not applied. In individual cases, such errors can also threaten the business’s existence.
