MARTIN SCHULZ-DANSO

PARTNER, MAZARS IN GERMANY

"E-commerce companies will have to establish appropriate
measure flanked by information services in order to comply with data protection regulations."

There are some who call Germany the ‘gateway of Europe’. With its advanced infrastructure encompassing road, rail and waterways it seems to have a strong foundation for such a title. Do you agree with this assessment, and if so where do you see areas of improvement?

With its central geographical position and its extensive network of roads, rail and waterways Germany is indeed the‘gateway of Europe’.
However, maintenance of roads and railway systems have been neglected in the past. Actually, there are a lot of road surfaces and bridges which have to be renewed or reconstructed in order to guarantee the safety to traffic. This leads to an increase of traffic jams. Especially trucks are required to take alternative routes which causes massive delays and additional costs in the transportation sector. This development contradicts the aim of short delivery times. Due to the actual diesel-crisis several cities plan to impose driving limitations for certain areas. Such limitations could impact the delivery of goods to private customers as most of the carriers use a diesel technology.
A further area of improvement is the roll-out of broadband networks especially in rural areas in order to link people and enterprises. In a digital world people and enterprises are dependent on a fast and secure data transfer.
Finally, companies might think about the development and the usage of new technologies within the logistic process, i.e. e-mobility or the usage of drones.

A success story in Germany is Zalando, and the establishment of its efficient logistics in Germany. One aspect of their success was the optimization of the logistic centers. In what way do you see this developing in the future?

The optimization of logistic centers is essential for the success of e-commerce retailers. The main aspects to be addressed are as follows:

1. The number and geographical position of logistic centers in order to efficiently distributing the goods to consumers.

2. The level of automatization within the logistic process in order to minimize handling-, and storage time and packaging costs and to optimize working capital.

 

3. The capability of data analysis in order to check the availability of goods and to improve the ordering process.


4. The policy and process of customer returns. On the one hand, e-commerce companies are anxious to avoid the return of goods as such returns materially raise handling and transportation costs and causes questions of reutilization or disposal. Measures to avoid returns may be seen in a better product placement or the decision to participate the customer in the costs of returns. On the other hand, companies are keen to simplify the process of returns in order to raise consumer satisfaction.

What are the opportunities and challenges for businesses to apply business ethics in their online trading? Generally, and more specifically for Germany?

In a global world, compliance and sustainability aspects will increasingly impact the judgment of consumers. The choice and origin of raw materials, producing conditions as well as ethical and ecological aspects will become more and more important to the question if a consumer is going to buy a product.
Just right now, in Germany large companies are obliged to report on sustainability and ethics in a regular and detailed manner. Consumer trust in brands and companies will more and more depend on such reports. It will be crucial that these reports do not only serve as lip service.
Communication via e-mail is efficient with regard to online trading but less attractive for consumers in case of troubles. E-commerce companies will have to find ways to better convince consumers other than by concepts
based on pricing and simplicity.
Part of the German consumers is very sensitive regarding data ownership and data protection. Especially e-commerce companies will have to establish appropriate measure flanked by information services in order to comply with data protection regulations.

 

What are the three main tips you give to foreign companies coming to Germany? Specifically small- to mid- sized companies?

First, companies should challenge their business model to market expectations. It is essential to verify that the business ideas will be accepted by German consumers and that the business model will be competitive.
Second, the choice of location is crucial for the e-commerce business. Creative talents, especially in marketing, IT and logistics may only be found in certain cities and urban areas. Due to rapidly changing environments, technologies and customer expectations companies will be required to gain the best talents in order to successfully develop their business.
Last, but not least, small and mid-sized companies should seek to nominate an advisor who is capable to deal with legal, magisterial and tax matters. Germany is governed by a high density of rules and regulation to comply with. Especially small and mid-sized should better concentrate
on their business and delegate legal, tax and regulative
issues to an external advisor.