Expansion

How US brands can capitalize on 23% growth in the European e-commerce market

Image of Berlin, a logistics hub for many D2C fulfillment providers

Germany is proving to be a key logistics hub for direct-to-consumer (D2C) brands worldwide due to its ideal location. This article will give you an overview of why more and more D2C brands from the United States are working with third party logistics (3PL) providers based in Europe.

Here is an overview of what you will learn in this article:

  • E-commerce in Europe - D2C booms with over 23% growth
  • Where is the most ideal logistics location in Europe?
  • Why is Germany becoming increasingly important as a logistics location for international D2C brands?
  • The emergence of young logistics service providers – what sets them apart?
  • Germany – a logistics mecca for companies and talent
  • Expansion of fulfillment providers - great potential for D2C brands?
  • 9 reasons to cooperate with a fulfillment service provider in the EU
Fulfillment Center – crucial for scaling D2C Brands

E-commerce in Europe – D2C booms with over 23% growth

The pandemic has accelerated the global e-commerce market. While Amazon is creating 100,000 new jobs in America, one particular market is growing fastest in Europe - D2C e-commerce (+twenty three percent cumulatively from January to September 2021). In many countries, Amazon is the largest marketplace. However, consumers are still looking for a personalized shopping experience similar to that of a brick-and-mortar store – but from the comfort of their own homes. 

Many North American D2C brands are capitalizing on this desire for a personalized shopping experience, and the potential for them in the European market is high. However, due to the high shipping costs, long delivery times and possible customs inspection of the shipment, many European consumers avoid buying from across the Atlantic.

International D2C brands should not underestimate the complexity of the European market. The multitude of borders in Europe is associated with various import laws and customs clearance, several shipping companies, as well as a range of different languages. The right fulfillment service provider can help to overcome these challenges and support sustainable expansion.

Complexity of receiving and shipping in fulfillment center

Where is the best logistics location in Europe?

Across Europe, you are spoilt for choice. There are quite a few good locations in Europe to ship your orders to your customers. Poland has a favorable labor wage, Germany has an excellent infrastructure, the Nordic countries have lucrative consumer behavior, the list goes on.

There are many factors to consider when choosing your location. Among the most important are short delivery times. However, no single location is suitable for two-day shipping throughout Europe. Therefore, it is important to choose a strong fulfillment partner that supplies its Europe-wide fulfillment centers from a central logistics hub in the most efficient way.

Why is Germany becoming increasingly important as a logistics location for international D2C brands?

The German market achieved rapid growth in the overall direct-to-consumer market of 23.2 percent in 2021. This development demonstrates that consumers increasingly prefer the individual online shopping experience to alternatives. For globally expanding D2C brands, this indicates great potential in the German market.

In comparison with other EU countries, Germany excels with a high-tech and expertly integrated logistics and supply chain network. Its geographically central location has meant it has been a transit country for many years already. It is therefore not surprising that many major traditional logistics companies have their headquarters based there. 

By the way: logistics is the largest economic sector measured for Germany – in an EU comparison, Germany even accounts for a quarter of the total sales volume.

What sets Germany apart when compared with many European countries is the density of young talent looking to revolutionize the traditional logistics industry.

Strategic decision making to excel merchants

The emergence of young logistics service providers – what sets them apart?

In addition to ambitious businesses, first-class founding teams, and employees, a strong network of logistics service providers is developing in Germany.

Germany – a logistics mecca for companies and talent

Berlin is the hotspot for the logistics service providers of tomorrow. Followed by Munich, Berlin is the largest start-up hotbed in Germany. Many logistics start-ups have their headquarters in the capital; for example: 

Last-mile delivery service providers and quick commerce providers from Berlin are also expanding into the wider world. Their agility and understanding of technology shine a new light on the traditional logistics industry. For example:

  • Dropp – E-commerce delivered to your doorstep in 3 hours 
  • Gorillas – Groceries delivered to your doorstep in just a few minutes
  • Flink – Also delivers groceries in minutes

The companies mentioned above are often supported by the same investors. These open up their network and grant access to knowledge as well as corporate strategies. The professional and personal growth opportunities available attract ambitious talent, making these startups some of the most sought-after employers in the country. 

This development is also interesting for D2C brands, since the more sustainably their logistics partner grows, the more cost-effectively and faster they can ship or open up new markets.

Image of a freight ship loaded with cargo

Expansion of EU fulfillment providers – great potential for US D2C brands?

What has distinguished Amazon over the last few years is above all its gigantic network of warehouses and the high level of interconnectedness of its inventory management – but other fulfillment providers are starting to catch up. 

Hive is expanding its network of fulfillment centers across Europe to create an interconnected network managed under one app. The headquarters is located in Berlin with further Hive run fulfillment centers in France, Italy, and Spain and the UK following in later 2022. This allows brands to choose whether they fulfill from one central European location, or split their inventory across the continent to ship as fast as possible to all countries. 

9 reasons to cooperate with a fulfillment partner in the EU rather than fulfilling from the US

Using a Europe-based 3PL partner rather than shipping across the Atlantic can provide many advantages, namely:

  • Fast scaling
  • Cost-effective delivery
  • Short process times
  • High processing quality
  • Specific market knowledge
  • Outsourcing of labor-intensive activities
  • Digitalized goods management
  • Access to logistics operations partner network
  • Professionally handled returns management

Why Hive's locations makes it an ideal third party fulfillment partner (3PL) for US D2C brands in Europe

As we have discovered, Germany is an ideal fulfillment location for international D2C brands due to its central European location and strong network of logistics providers.

Hive is a 3PL company with an in-house developed warehouse management system that allows calculated distribution of stocked goods from D2C Brands between its own fulfillment centers across Europe. This service is highly data-driven and complex. For scaling D2C Brands, Hive has worked out a unique feature with its pan-European management system. This makes it much easier for customers of this service to enter new markets.

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