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Business

Christmas Brings Cheer to Germany's Online Retailers

After 11 months of doom and gloom, German retailers have something to look forward to this Christmas: An 83 percent increase in holiday purchases online.

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Gift from Santa himself

In a year when Germany's growth shrank in virtually every other area but budget deficits, one sector did manage to chalk up a winning score: online shopping.

Internet sales in Germany this year are expected to total €8 billion ($8.15 billion) and make up 1.6 percent of retail sales in the country, a 60 percent increase over the previous year, the German Retailers' Association (HDE) found in a recent report. A hefty dollop of this year's sales will come during the Christmas season -- with Germans beating a winter cold spell by staying indoors and ordering the latest bestsellers, duds and music for their family and friends.

According to HDE, a minimum of 10 percent, or €800 million, of this year's online purchases will take place as Santa's little helpers get into the spirit of giving. And HDE isn't alone in its optimism.

A record Christmas for Europe

Forrester Research, which has its European base in Amsterdam, is predicting a record this Christmas for online shopping in Germany and across Europe. Sales Europe-wide are expected to increase 86 percent over last year, with total revenues of €7.6 billion. Forrester predicts purchasing decisions influenced by the Internet -- meaning sales that come as the result of research conducted by consumers over the World Wide Web -- will hit the €20 billion mark, with €5 billion in Germany alone.

But though Germany has the largest single market for Internet consumers in Europe, with 18 million shoppers, it won't be No. 1 for actual sales. German retailers will pull in an estimated €2.2 billion compared to €2.6 billion in Britain. Still, that's an 83 percent increase for Germany over last year. Explaining the gap in consumer behavior, Forrester researchers found that Germans tend to make purchasing decisions online, but when it comes to executing them, they prefer traditional brick-and-mortar stores.

A key reason is that only 36 percent of Germans own a credit card (compared to 67 percent of Britons), and though many e-commerce sites allow consumers to provide bank account information most are reluctant to do so. "They feel less secure about sharing personal information online, which is necessary for online payment and fulfillment," the Forrester report stated.

Amazon and Otto lead Germany

According to a recent report in the Süddeutsche Zeitung newspaper, Germany's largest online retailer, Amazon.de, ships more than 100,000 packages a day during the holiday season. A spokeswoman for the company declined to provide specific figures on German sales for DW-WORLD, but she did confirm the company is anticipating an increase of up to 28 percent of worldwide sales in the fourth quarter to $1.42 billion. However, the company's international growth has been particularly strong, spokeswoman Christiane Hoeger noted. During the third quarter the company experienced 90 percent growth in its international market -- consisting of Japan, France, England and Germany -- over the same period the previous year.

Hoeger attributes the company's success in Germany to a handful of factors ranging from continuing growth in Internet users, an increase in the number of online buyers, to selection, prices and convenience. She also notes the success in Germany of the company's Marketplace feature, which allows customers to conduct Ebay-like online auctions. When it launched in March, users offered 500,000 products in the Marketplace; today, the number has swelled to 10 million.

Germany's second-largest online retailer, the mail-order firm Otto, is also expecting a strong year. Acknowledging a recent report confirming the company has 2.19 million online customers, Otto's director of new media, Thomas Schneiders, said: "We are certain that we'll be able to confirm these words of encouragement during the Christmas holidays when we expect more than 10 million visitors to our www.otto.de Web site."

Next year looks even more promising: HDE is forecasting a 38 percent increase in online shopping in Germany, with a total of €11 billion in online sales. But that will only represent 2.1 percent of all retail sales -- showing just how much opportunity still remains unexploited by online businesses.