The race with the online mega-platforms: How German online retailers can stay ahead of the pack

A few weeks ago, a drastic slump in sales shook the German retail sector. In an exclusive guest article, Georg Sobczak, Head of Mirakl's German business, takes an in-depth look at the industry. Find out why the transformation to an online marketplace and the smart use of artificial intelligence are crucial for success in the changing world of e-commerce.

Just a few weeks ago, the survey results of the e-commerce association BEVH caused German retailers to sit up and take notice: A slump in sales of almost 12% compared to the previous year and the key industry indicator of regularly active online customers who have made a purchase within the last seven days also fell to just 34% (BEVH). Added to this are high storage costs from the coronavirus period and a general reluctance to buy on the part of consumers. At the same time, sales on the new online mega-platforms such as Temu and Co. are booming. One in four German consumers has already ordered something via Temu at least once (Appinio). A mixed situation that is further increasing the pressure on German retailers and the major German online retailers.

However, there is reason for optimism if German retailers focus on what they have always been good at: Quality, service and flexibility. In addition, there is the smart use of technology, above all AI, and the expansion of the webshop to include an online marketplace where third-party products can be found.

Marketplace as a competitive advantage

A recent Mirakl survey showed that in a direct comparison, more than half of German consumers already prefer websites that work with a marketplace approach when shopping online (Mirakl). The reason: if retailers develop their own online store into a marketplace and also allow third-party providers onto the platform, customers not only benefit from a larger product selection, but also from more attractive prices. Conversely, retailers can see much more quickly which trends are currently in demand and can react accordingly. Personalization and product quality are the key words here. In addition, retailers do not have to set aside large reserves for storage and logistics. A win-win situation for both sides. The figures speak for themselves: in the years 2019-2021, the annual growth rate of online marketplaces in terms of turnover was twice as high as the average in online retail (Mirakl).

However, it is also clear that a marketplace alone will not help. It is crucial that the right retailers and products are on the platform, that the quality is right and that retailers can be transparent about the ecological footprint of their products, for example.

AI as a game changer

The potential uses of AI will be a real game changer for many online retailers in the international race - it's worth taking a closer look:

The most promising advantages of AI undoubtedly lie in tasks that previously had to be carried out manually at great expense of time. These include, for example, the description and assignment of products to certain categories in the online store, the translation of operating instructions or the automatic recognition of critical feedback in customer service. In addition, AI can optimize online retailers' stock levels by forecasting demand more accurately and suggesting repeat orders to the retailer before demand peaks. In this example, AI not only provides helpful data points, but also ensures a significant increase in sales at the end of the day. Where AI is also being used in some areas: improved recommendation functions. We're all familiar with those recommendations that come out of nowhere and don't really match our interests. The combination of machine learning and AI will make this a thing of the past in the future. Retailers will be able to put the pieces of the puzzle together much more intelligently with information about their customers, so that recommendations will be much more tailored to the consumer's personal preferences in the future.

Customer loyalty will be key

There is no doubt that 2024 will be another challenging year for German online retail. However, if the major e-commerce brands manage to offer their customers good quality, a high level of service and a wide range of products with individual offers, they will be well equipped to stay ahead of the race. Because in the long term, one thing is clear: the winners will be those who continue to positively surprise their customers, offer a good user experience and retain them in the long term. E-commerce is a real marathon.

About the author

Georg Sobczak is head of the German business of the French e-commerce unicorn Mirakl. Mirakl is the world's leading provider of marketplace and e-commerce services. In Germany, Mirakl helps MediaMarkt, Douglas, Decathlon, Conrad and Home24, among others, to develop their webshops into e-commerce platforms. More than 450 online marketplaces worldwide run on the Mirakl platform via an API connection. We first reported on Mirakl on the Startbase in February 2024 .