25. February 2013–
OK, so we all know of the challenges facing European brands that want to go global, or break into emerging markets. But what about brands from other markets that are eyeing up the potentially lucrative German market?
French startup Leetchi.com is one brand looking to do just that. Here, Country Manager Julia Alunovic explains the challenges they have faced in entering Germany and how to avoid the five most common pitfalls.
1. Quality is made in Germany – not elsewhere!
Germany is famous all over the world for its savoir-faire in technics and engineering. “Made in Germany” is a globally acclaimed indicator for quality, and German cars, machines etc. are highly appreciated. So it is not very surprising that Germans equally prefer products made in Germany – and it’s hard to blame them.
Being a foreign company is already an obstacle in itself. Given the love-hate relationship between France and Germany, being a French company makes it even harder. Telling Germans that you are *the* top innovative service in France is not exactly a selling proposition – unless you sell makeup or handbags.
Since Germans tend to be sceptical about foreign online services, you might not wish to make a big deal out of it. Getting your website translated is only the first step. Make sure to hire a German native who is able to answer customer inquiries in flawless German. Have the means to open an office in Germany? Go for it, as a German postal address is always highly appreciated.
2. What on earth is ELV?
So you've heard of Visa, of Mastercard and probably also of PayPal. That’s great. But if you successfully wish to establish a shop or a service which requires some sort of payment in Germany, you need to do your homework on German payment methods. When opening a bank account in Germany, you usually receive a debit card that comes with your account. These cards must under no circumstances be confused with credit cards – which are not very common in Germany. They go under the name Girokarte or EC-Karte and every German has one of those. As they are accepted in most ATMs and points of sales even abroad, Germans do not necessarily use an extra credit card.
If you do not accept those cards on your website, you might lose a large number of potential customers. So be prepared to open up a German bank account, to partner with a German payment service provider and to enable payments via the so called “Elektronisches Lastschriftverfahren” (ELV) on your website. Sounds like a lot of work? Yes, it absolutely is. Furthermore, it’s a pretty complex topic which also comes with an increased risk of fraud. But unless you wish to limit your clients to the lucky few who actually posses a credit card, you will need to swallow the bitter pill.
3. Good luck with the press...
With more than 1,500 different newspapers, Germans have a more diversified press landscape than many other European countries – which definitely is something to be proud of. However, those newspapers are not necessarily open to news from foreign companies – unless they are the size of a Fortune 500.
A Munich-based entrepreneur once told me that even he was having a hard time getting press coverage from the tech media in Berlin, as Munich is simply not on their map. So getting press coverage in Germany is a lot of hard work. Even if you are willing to pay in order to appear in the media, it’s not that easy: advertising in German media – both online and offline – might be significantly more expensive than it is in your home country.
Considering the size of the country and its media system, hiring a press agency based in Germany might be a good idea. Sounds expensive? Yes, it is. But high costs are a fact you will have to face if you wish to establish a foreign business in Germany: If you do not have a certain budget, you might prefer to go somewhere else first.
4. Berlin is the capital. Or is it?
In France, the deal is very simple. Virtually every company is based in Paris. So is every journalist. So if you want to do business in France, just come to Paris. If you wish to organise an event for bloggers or journalists, just come to Paris.
In Germany, the deal is not that simple. Berlin is often praised as the German – or even the European – capital of startups. Nevertheless, tons or startups you might want to cooperate with are based elsewhere – in Munich, in Hamburg or even in towns you've never heard of. The same holds true for journalists. There is a certain number of tech- and startup-media that is based in Berlin. But big magazines are largely present in Munich and Hamburg.
Germans also love their regional newspapers, some of which are very influential. The problem is that those are located all over the Bundesrepublik. It’s even worse when it comes to bloggers, who are seriously spread all over the country.
So when organising a trip to Germany, make sure to choose your destination(s) wisely. It might be more useful to go on a little round trip, rather than to focusing on just one city.
5. Achtung! Achtung! Achtung!
Discipline, punctuality, order, efficiency… It might sound like a cliché, but Germans just love security – especially when it comes to entering their personal data and payment information on a website. Even if they are very avid online shoppers, they choose where they spend their money wisely.
Recommendations, either of friends, family or the online community, of course are one way to gain somebody’s confidence. In Germany, it’s even better if this recommendation comes from an acknowledged institution.
There are numerous ways to indicate that you are a trustworthy business. In Germany, it is highly recommended to have your website audited by organisations such as the TÜV, Trusted Shops etc. After a successful audit, you will receive a quality seal that you might place on a prominent position on your homepage. Attention: Like most things in life, those things do not come for free…
The five points described above, even if exaggerated, make it clear that entering the German market is not exactly a walk in the park. It takes time and money to adapt your product, to get press coverage and to gain the confidence of German consumers. However, given the Germans’ affinity for anything online and their high purchasing power, it is a highly attractive market for any online service. So even if it’s risky, it might be worth a shot – viel Glück!
For related posts, check out:
How to be German – Part 1
Should startups and politics mix? Meet the organisation that wants to lobby German law-makers to be more “founder-friendly”
“Germany’s startup ecosystem is 20 years behind Silicon Valley”: 10 Things I Know – Startup Camp’s Sascha Schubert