How to Start a Dropshipping Business in Germany

Do you hate working jobs that often suck away your inspiration and motivation? Do you want to pursue a dream of entrepreneurial success and earn money doing something you enjoy?

Now is the time to become your own boss. Thanks to the current state of technology, you can shed the traditional responsibilities that come with operating a business. If you want to have a super flexible work schedule and work wherever there is a stable Internet connection, you can learn how to start a dropshipping business in 2021 safely and legally.

Perhaps you have heard that dropshipping is an easy way to start a side hustle and make some extra money. However, remember that it can be a highly profitable business if executed correctly. Dropshipping is a great gateway to online retail that requires a lower initial investment than a regular online store, plus you do not need a warehouse to get started.

If you’re thinking about becoming a dropshipping entrepreneur in Germany but need some help in finding out how to set up a dropshipping business in this country, you have come to the right place. 

But before diving right into how to start a dropshipping business in Germany, let’s see what characterizes the German online buyers and the e-commerce market, and why someone would want to open such a business in this country. 

Germany’s Population

According to the latest statistics, the current population of Germany is over 83 million people. With a population of over 83 million residents, Germany is the most populous country in Europe after Russia and makes one of the biggest economies in the world.

A Brief Overview of the State of the E-Commerce Market in Germany

Now, let’s take a closer look at this country’s e-commerce market. Germany has a strong and stable economic environment.

It is the second-largest online market in Europe after the United Kingdom, and the fifth-largest online market in the world. The total projected revenue in the e-commerce market for 2021 is expected to reach about $95 billion. 

Digital buyer penetration

Germany is a heavily populated country with shoppers that are tech-savvy and well-acquainted with online shopping.

Therefore, buying things online has become a common practice among Germans, and digital buyer penetration is expected to hit 77.0% in 2021 and 81.9% in 2025.

Preferred payment methods

Germans are security-oriented and often do not like paying upfront. So, it comes as no surprise that the invoice has been their preferred online payment method for years.

However, according to a survey carried out in 2020, PayPal was the most preferred payment choice among respondents. 

Popular online shopping categories

Fashion is the most popular online shopping category for German consumers, followed by consumer electronics and digital devices.

To be more specific, in 2019, the clothing and apparel market was valued at about $17.3 billion, followed by the consumer electronics and digital device market valued at $15.9 billion.

Return rates

The rate of returns for online products in Germany is high. One in eight online purchases is returned to the seller.

According to a survey conducted by the digital association Bitkom, in Germany, around 12% of online purchases are returned to the online retailer.

This means that the German online market has one of the world’s highest return rates. 

Logistics and delivery

With its location and size, logistics technology, and infrastructure quality, this country is a leader in the logistics market in Europe.

The domestic carrier DHL plays an important role in the European shipping landscape. Other carriers include DPD, Hermes, and UPS. 

Tax laws and regulations

If you intend to address possible customers in Germany by way of your website or online store, you need to take German law into consideration.

As the country is a member of the European Union, you need to check the EU directives before starting a dropshipping business in Germany.

Also, you should make sure your online business complies with German laws. When it comes to the Value Added Tax (VAT), you can learn more about it here.

How to Start a Dropshipping Business in Germany

As an economic powerhouse in the heart of Europe, this country has a lot to offer and represents a good opportunity for new e-commerce companies. So, now, we will talk about how to launch a dropshipping business in Germany:

  • Choose a dropshipping business idea

As you probably know, what you sell can either make or break your business. That’s why you need to take some time to come up with a great dropshipping business idea.

It is not advisable to pick a niche you are passionate about. Just because you are “kind of interested” in a particular niche does not mean there is a market for it.

Being passionate or knowledgeable about a specific niche is not enough. 

You need to select a profitable dropshipping niche and sell products that can generate a high sales volume. We know that choosing what to sell can be tricky.

But there are various product research tools available that can help you in this regard. Some of these tools include Google Trends, FindNiche, Thieve.co, etc. 

  • Do market research and analyze your competition 

Once you have chosen what to sell, you should now learn more about who your competitors are, what they sell, and how they sell their goods. Simply type the name of the product you want to sell into Google and see what companies show up on the top of Google search. This is a great indicator of your competition in a certain location, for example, Germany. 

It is important to understand that you may find your business in a highly competitive market space. Also, you may be competing with giant e-commerce stores. But remember that this can have a positive impact on your business. The higher the level of competition, the higher the demand for the product. This means that many consumers find the product desirable and wish to purchase it. 

  • Pick a domain for your online store

The most exciting part of setting up a dropshipping business is expressing its unique identity. Your domain name is really important, especially if you want to build a long-term brand. 

Make sure you pick a short, pronounceable, and easy-to-remember domain name for your business. This can help people find you online as well as connect your business to your website. To choose a domain name quickly and easily, you can use free business name generators such as Instant Domain Search or Lean Domain Search. 

  • Choose a website builder to create a dropshipping website 

The easiest way to create a website, which supports a dropshipping business model, is to use a simple e-commerce platform like Shopify or BigCommerce. Fortunately, you do not have to be tech-savvy or have great technical skills to use these platforms because they are simple and user-friendly.

These e-commerce platforms have the ‘build your store’ option and plenty of apps to help increase sales. That can be a major advantage, especially in the beginning. They make it easy to build and launch your e-commerce website. They are comprehensive, hosted platforms that offer hosting and technical support. 

For a small monthly fee, you can get hosting and access to a support team that will take care of most issues. You just need to add items and upgrade your store depending on your needs and preferences.

  • Find a reliable supplier

Your business reputation depends on the supplier you choose to work with. Therefore, this may be the most difficult part of starting your dropshipping business in Germany. 

However, finding a trustworthy, certified dropshipping supplier with an impeccable reputation is a crucial step toward building a fruitful dropshipping business. From phone calls to online supplier directories, there are multiple ways to find legitimate suppliers for your business.  

Regardless of how you choose to find a dropshipping supplier, you should thoroughly check out each of them to confirm legitimacy. You should be extra careful, and check their online reviews, product quality, return policies, delivery times, profit margins, and minimum order quantities before starting collaboration. 

As mentioned above, the largest segment of the online market in Germany belongs to the fashion category. To explain it more clearly, clothing and accessories remain the most popular items for German online buyers. Germans are very interested in buying clothing and apparel online, both branded and not. So why not partner with a B2B wholesale and dropshipping supplier of luxury clothing and accessories, such as BrandsGateway, and make Germans fall deeply in love with unique pieces from world-famous brands like Dolce & Gabbana, Roberto Cavalli, and Michael Kors?

  • Advertise your business 

Once you have created and launched your dropshipping website, you should do your best to bring in customers. Making your dropshipping business stand out from competitors may be hard and expensive. Also, as a new dropshipping entrepreneur, you may have a limited budget to promote your business.

But you can reach your target audience through a strong, yet affordable marketing campaign, which is a combination of social media ads (Facebook, Instagram, Pinterest, and LinkedIn), email marketing, and paid ads (Google). You can even advertise your dropshipping store for free with the right know-how. 

The Bottom Line

As the second-largest online market in Europe with a well-established logistics network and high digital buyer penetration, Germany is attractive for dropshippers and online merchants. The country is an interesting market as it has a few unique characteristics in comparison with other countries. Particularly, the United States and the United Kingdom. 

Although there is a large number of online buyers in the country, many consider Germans as picky and demanding customers. As an e-commerce market, Germany may have certain disadvantages. This includes demanding customers and high return rates, but it is still a great place to start a dropshipping business and offers one of the biggest market opportunities in Europe.

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