Since the first products were sold online, e-commerce has been evolving rapidly in scope and coverage, becoming an increasingly important part of the economy growing at 14% annually within the last five years in Germany.

Departing from a relatively narrow range of physical products sold by mail order companies, e-commerce has changed, transforming the very nature of the products being sold and the transactions taking place: From a physical book to an e-book to a podcast that can be downloaded and listened to everywhere. What started largely as a business-to-consumer model is now much more driven by business-to-business transactions that generate three to four times larger online revenues in Germany today. At the same time, e-commerce is enhancing the space for other buyer-seller relations, where consumers are selling to peers, for example. Today services are an essential part of e-commerce, accounting for 39% of the total e-commerce revenue in Germany in 2019.

Online marketplaces, which make up almost half of German B2C transactions, drive SMEs into the online space where they can start and scale their business on equal terms with their larger counterparts.

Survey evidence concludes that among German companies selling online, the smallest companies sold almost 30% through web shops and apps, while for larger companies this share ranged between 19% and 21%. Direct-to-consumer sales are facilitated, revolutionising the space of commerce and bringing online companies closer to their customers, which moves the area of commerce from a push driven approach towards a more customer centric, pull driven model.

The development of e-commerce is creating substantial economic value for consumers, businesses and the wider society in a number of dimensions. Productivity increases as efficiency gains are harvested throughout the value chain driven by increased competition, scalability options and specialisation.

The ability to tap into wider markets allows for more innovation as costs can be spread on a wider base of consumers. Mark-ups in the retail link are lowered, decreasing consumer prices by 0.2% relative to offline sale. When modelling a shift from offline to online shopping, it is estimated that the productivity gains from e-commerce could amount to 0.15% of German GDP, which corresponds to €5bn in 2019.