Germany's retailers intend to further expand sales on the Internet. 84.4 percent of pure-play online retailers and 69.4 percent of offline retailers with additional online sales will invest in Internet sales in 2005. More than half of retailers anticipate a growing share of online revenue. These are the findings of the representative study "eCommerce 2004", commissioned by Deutsche Postbank AG in fall 2004.

Retailers forecast growth in online retail – offline sales stagnating

Retailers forecast growth in online retail – offline sales stagnating At 51 percent, more than half the retailers surveyed are forecasting an increasing online share of total revenue. A mere six percent believe that the online share will decline. Retailers that have so far only generated a minor share of their total revenue on the Internet are highly optimistic. This primarily applies to larger companies.

On the whole, larger companies are more confident than smaller ones. Among companies with revenue over €2.5 million, two-thirds (66.7 percent) are anticipating an increase in Internet revenue, in the comparison group of smaller companies with revenue of less than €2.5 million, this figure is only 47.5 percent.

In a sector breakdown, providers of digital goods and services and healthcare and wellness products are most optimistic: 62.5 percent and 64.8 percent respectively are assuming an increase in revenue. This correlates with trends in the consumer survey, which determined the greatest growth potential for medicines, office supplies and film and music downloads. However, in the tourism/transport segment, sentiment is more muted: 60 percent of retailers anticipate revenue growth, seven percent are forecasting declining sales.

Internet helps small shops to reach international markets as well

The positive sentiment of retailers is due in no small part to the boom in cross-border retail: almost 40 percent of companies already generate more than five percent of revenue through sales abroad – a potential increasingly leveraged by small shops thanks to the World Wide Web.

International activities are also reflected in the payment methods on offer: The greater the share of foreign sales, the more frequently customers pay using electronic systems, particularly with credit cards. 88.9 percent of retailers generating more than 50 percent of total revenue through international sales offer electronic payment methods (total random sample: 64.8 percent).

Retailers investing more intensively – product ranges to be expanded

72.7 percent of retailers surveyed are planning to expand their Internet activities, in contrast, 23.5 percent will be investing in offline sales. The greatest investments are expected in the tourism and transport sector: 86.7 percent intend to expand Internet selling. However 45.8 percent of foodstuff providers and 41.7 percent of companies in the hobbies and leisure industry are not planning any investments in the near future.

In particular, electronic appliance retailers are relying on offline sales: 37.5 percent of them are hoping to generate an increase in revenue with investments in sales channels other than the Internet.

Pure-play online retailers are looking to be highly active, with 77.9 percent of them planning further investments. However, at 5.6 percent a small portion intends to establish other sales channels in addition to pure-play online sales.

Discrepancy between retailers' and customers' wishes in payment

There is still a discrepancy between what retailers ask for and what customers want with regard to payment. In a payment system, retailers primarily look for a low risk of default and easy operation. Customer friendliness and low costs follow in third and fourth place.

Customers are primarily also interested in security when paying. This must be made clear in every step of the payment process. Fast, uncomplicated settlement is almost equally important.

Payment systems that equally satisfy customer and retailer requirements are rare. From the companies' point of view, invoicing is the most customer friendly form of settlement – though retailers tend rarely to offer it on account of the high risk of default. Bank transfers enjoy high acceptance by both parties. Retailers prefer advance payment and 71.8 percent of online shoppers (79.3 percent of heavy shoppers) use or would like to use online bank transfers to make their purchases. Online bank transfers are the preferred payment procedure for Internet auctions in particular.

Three-quarters of retailers offer more than three payment methods

Three-quarters of retailers offer more than three payment methods More than half of retailers use a combination of conventional and electronic payment methods. 74.2 percent of retailers offer their customers a range of more than three payment methods, 64.8 percent have at least one electronic payment system in their portfolio.

The trend is clearly heading in the direction of electronic systems. Unlike credit cards, invoicing and cash on delivery have little development potential.

Growth market Germany

Growth market Germany The results of the survey correspond with the most recent estimation of the European Information Technology Observatory (EITO), which predicts a superproportional growth of online retail in Germany. According to EITO, Germany will realize more than €80 billion on the internet with end-consumers in 2007 and therefore turn out to be the biggest market in Western Europe. In 2003, Germany`s online retail reached a revenue of €15.4 billion and came shortly behind Great Britain (16.8 bill.), before France (8.0 bill.), Italy (5.9 bill.) and Spain(2.9 bill.).

The study: random sampling, statistics methods, publication

The investigation was conducted by Europressedienst Research, Bonn, and commissioned by Postbank in September 2004. In total, 264 online retailers and 1,020 private persons were surveyed throughout Germany. The companies were selected in line with a specific industry allocation for Internet shops (see also the 18th W3B study, Fittkau & Maaß 2004) and interviewed by telephone. The basis was a questionnaire with standardized questions and item checklists. The private persons were interviewed in person using standardized questions and item checklists.