Parallel Trends: Sustainable E-Commerce

The coronavirus pandemic has revolutionized how Germans shop, especially for groceries. And the change has come hand in hand with increased concern about ecological and social issues. International investors are meeting this demand with organic, local and eco-friendly produce.

December 2021

Germany in the winter of 2020 was a country in the grip of a renewed partial lockdown to contain the spread of coronavirus. City streets were relatively empty. One exception: the increased numbers of young cyclists braving the cold temperatures with large insulated boxes on their backs, delivering hot food to customers at home.

Whether it’s food and groceries, clothes and shoes, or electronics and entertainment, online purchases have risen dramatically during the pandemic. According to the German Retail Federation (HDE), e-commerce in 2020 accounted for 12.6 percent of retail revenue in Germany, up from 10.8 percent in 2019. For comparison, in 2010 that figure was just 4.7 percent. But with more and more Germans shopping online, sustainability has become a pertinent issue, one which encompasses carbon emissions, packaging and product sourcing. That’s prompted something of a sea change in the sector.

FDI Perspective

Last summer, Knuspr, part of the leading Czech online grocery conglomerate Rohlik, commenced operations in Munich. It aims to reach some 30 million customers across Germany in the next three years as it extends its services to Frankfurt, Stuttgart, Hamburg, Cologne and other cities. Unlike its rivals that emphasize speed of delivery, Knuspr promotes sustainability by focusing on fresh regional products: It purchases more than 95 percent of its stock directly from producers and farmers rather than wholesalers or intermediaries, and more than 30 percent of its products are sourced locally.

30%

of Knuspr’s product range comes from local
suppliers such as butchers and bakeries

190M

is the capital raised by leading European online
grocery business Rohlik Group

Ethical, sustainable and local

In response to customer demand, German e-commerce giant Zalando is making sustainability a key part of its business model. The company has tripled its ethical and eco-conscious clothing offerings to 80,000 products and also made sustainability assessment mandatory for its more than 3,500 brand partners and private labels. It’s also sourcing 100 percent renewable electricity in its facilities and has already achieved a 64 percent decrease in emissions since 2017. “The desire of many people for a sustainable way of life is increasingly shaping consumer behavior,” says HDE managing director Stefan Genth.

Sustainable alternatives, including organic and local produce, are also picking up steam in the food sector. The trend was already well established in traditional bricks-and-mortar German grocery stores, Genth notes in a recent HDE report, but that demand has now carried over to online. Furthermore, home cuisine exploded in popularity during lockdown and consumers have become far more conscious about the source and sustainability of the food they eat.

The Bottom Line

The pandemic not only moved German shoppers online, it made them more conscious of the environmental and social impact of delivery services. International companies that can meet their enhanced expectations have a good chance of success.

Home delivery boom

The sale of groceries on the Internet has been growing faster than any other area in online retail for years, according to Germany’s Institute for Applied Ecology (Öko-Institut). The surge in demand has been so pronounced over the last 18 months that many delivery services were barely able to meet orders. And that’s despite the plethora of grocery and restaurant delivery services springing up last year, including the entry of international companies such as Knuspr, Getir, GetFaster and Wolt.

Turkish grocery delivery firm Getir began operating in Berlin in June and plans further rollouts across Germany in the coming months. “Germany is the biggest economy in Europe and therefore the most important market for us to introduce and grow our business,” a Getir spokesperson says. “We see great potential here to win over enthusiastic customers with our innovative technology and high-quality service.”

Last year saw the Russian start-up GetFaster opening its store in Düsseldorf and the Berlin launch of Finnish company Wolt as a restaurant delivery service. Wolt has since expanded to Frankfurt, Munich, Hanover and Cologne and has increased its range to include local market vendors.

Facts & Figures

150%

Increase in organic food revenue in Germany from 2010 to 2020

14.6BN

Organic food revenue in Germany in 2020

82%

Percentage of people in Germany who say it is important that grocery products are sourced locally

Source: Knuspr; Federal Ministry of Food and Agriculture (BMEL)

Convenience meets eco-sense

The fact that all these service providers make their deliveries with bicycles and electric modes of transport underscores how the convenience of home delivery dovetails with sustainable and socially responsible products.

German start-up Flink, for instance, promotes itself on the organic quality of its fruit and vegetables. And Knuspr from the Czech Republic (see page 20) is hoping to tempt German consumers by focusing on regional produce.

Moreover, with many delivery services honing in on urban areas, there are still opportunities out there for new players to serve the more overlooked and rural regions, Öko-Institut notes. Especially, if they can convince customers that using their services is good for the planet as well.

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