Germany seems logical… but is it really the smartest choice?
If you ask ten European e-commerce founders where they want to expand next, seven of them will say: “Germany.”
It makes sense on paper. Germany has the largest population in Europe (84 million), a high GDP, and a strong digital infrastructure. It is the “safe” bet. The logical giant next door.
But here is the uncomfortable truth: “Logical” does not always mean “Profitable.”
For many businesses, Germany is not a goldmine; it’s a graveyard. It is one of the most competitive, legally complex, and expensive markets to enter. While everyone is fighting for expensive ad space in Germany, your actual jackpot might be waiting in Poland, Sweden, or Italy.
How do you know which market is your true winner? You need to look beyond the population size. Here are the 3 signals that reveal if a market is a smart move or a pitfall.
Signal 1: The CPC vs. Purchasing Power Ratio
Germany is expensive. Because everyone wants to be there, the advertising costs (CPM and CPC) on Google and Meta are sky-high. You might pay €2.00 for a click in Germany that would cost you €0.40 in a country like Poland or Spain.
The question isn’t “do they have money?”, but “how much does it cost to get that money?”
We often see that Nordic countries (Sweden, Denmark, Norway) or emerging tech hubs (like Estonia or Poland) offer a much healthier ratio. The purchasing power is high, but because fewer international brands target them aggressively, the cost to acquire a customer (CAC) is significantly lower. You keep more margin, even with slightly higher shipping costs.
Signal 2: The Return Rate Culture
This is the silent killer of profitability in Germany, specifically for fashion and retail. German consumers are the world champions of returns. It is culturally accepted—and legally protected—to order three sizes, pick one, and return the rest for free. Return rates of 50% to 60% are not uncommon in German e-commerce.
If your logistics and margins aren’t set up to handle a 50% return rate, Germany will bankrupt you, even if your sales revenue looks great.
Compare this to Southern Europe (Italy, Spain), where return rates are historically much lower. Consumers there tend to buy to keep. A lower top-line revenue in Italy might result in a higher bottom-line profit than a high-revenue, high-return operation in Germany.
Signal 3: The "Local Hero" Dominance
Germany has Amazon. Amazon dominates the German market more than almost anywhere else in Europe. If you sell generic products, you are not just competing with other shops; you are competing with Amazon’s logistics machine.
However, in other markets, the landscape is fragmented. There might be no clear market leader for your specific niche. These are the “Blue Ocean” markets. Entering a country where the competitors have outdated websites and slow shipping gives you an instant advantage. You can disrupt the market simply by offering a modern, customer-friendly experience.
So, should you avoid Germany?
Not necessarily. Germany is fantastic if you are ready for it. If you have unique products, strong margins, and a legally compliant localized shop, it can scale your business to the moon.
But don’t choose it by default.
Successful internationalization is about finding the path of least resistance and highest ROI. Sometimes, that path leads to Berlin. But often, it leads to Stockholm, Milan, or Warsaw.
Don’t follow the herd. At Your International, we analyze the data before we build the roadmap. We check the competition, the costs, and the consumer behavior to find your specific jackpot market.
Curious which country offers the highest potential for your brand?