Addressing the E-Commerce Challenge

Meeting customer expectations for stock availability, a convenient shopping experience, quick deliveries, fast returns, and a fuss-free customer service translates into increasingly complex challenges in supply chain and operations management for e-commerce businesses. To keep up with customers and competitors alike, e-tailers need to make sure that their front office, back office, supply chain, and logistics functions operate at the highest quality and lowest cost possible.

Choosing the right operational base is key. A location with world-class infrastructure, unparalleled global connectivity, a superior logistics ecosystem, plug & play sites, and offices as well as a constant supply of fresh tech talent at the centre of Europe would therefore be ideal for any e-commerce business. Germany’s Leipzig region is that location.

The Region of Leipzig

Leipzig is Germany’s most dynamic metropolitan economy with an average annual employment growth rate of 7+ percent. Since 2005, it has welcomed 110,000 new inhabitants, making it the country’s fastest growing city. It is projected to reach a total population of 650,000 by 2030.

With an average age of 42, Leipzig’s population today is predominantly young and educated – nearly a third have university degrees. Offering affordable rents, high quality of life and eclectic, open-minded community, the city continues to show especially strong growth in the 18 to 25 age group – a crucial demographic for becoming a tech hub.

E-Commerce & Digital Economy

Digital and tech is Leipzig’s fastest growing sector. More than 1,200 companies employing roughly 14,000 people currently have operations in Leipzig. The city is home to Germany’s densest digital and tech ecosystem, with almost 35 percent of all available office space taken up by start-ups, scale-ups, and large ICT companies.

Leipzig has always been a city of innovation in retail and trade too. Europe’s second oldest mail order fashion business, May & Edlich, was founded here in 1870. The Aughts gave rise to international e-commerce success stories like Spreadshirt and Mr Spex that all have its origins in the HHL Leipzig Graduate School of Management.

Leipzig’s e-commerce sector comprises quite a few notable companies. Major players like Amazon, momox or Future Electronics run major fulfilment operations in the region. Numerous leading service providers along the e-commerce value chain – like Radial, blugento, dotSource or diva-e – are also located here. The Mercateo Group, one of Europe's leading operators of internet platforms for business customers, recently announced the relocation of its 500 strong headquarters from Munich to Leipzig.

Since 2009, Leipzig is home to the most important e-commerce event for Germany, Austria and Switzerland dedicated to the Magento shop system – Meet Magento DE. Händlerbund – Europe’s largest e-commerce association with more than 80,000 secured online presences – is also headquartered in Leipzig. Moreover, the Central German Logistics Network, a member organisation that comprises logistics and other companies with a stake in the logistics sector aims to provide a platform for companies in the Leipzig-Halle region to develop joint ideas, concepts and also business models.

Digital Innovation Ecosystem

Established in 1898 as the Handelshochschule Leipzig, the HHL is one of the oldest business schools in the world. With a strong focus on business innovation and entrepreneurship, it has spawned more than 300 start-ups so far. The HHL has a particularly strong track record in churning out successful e-commerce and digital business founders. Companies like trivago, AboutYou, Delivery Hero, Auto1, IONIQ, Mr. Spex, Spreadshirt or Flaconi all count HHL Alumni to their founding members.

With differing regulatory frameworks, varying languages, market-specific consumer trends and payment preferences, staying on top of everything can pose a challenge for any e-commerce business. Having the right set of business partners and specialist service providers available on location allows for flexible operations management in multiple markets.

The Logistics Living Lab in Leipzig is driving innovation along the logistics value chain. Bringing together academia, start-ups, and large companies the lab’s aim is to accelerate the technology transfer of cloud logistics, IoT, sharing economy logistics, big and smart data analytics solutions. Industry partners working with the lab get the opportunity to test technologies under real life conditions and with the brightest minds. In addition, a consortium including the University of Leipzig, the Hasso Plattner Institute of SAP fame, and several private sector partners develops IoT-driven smart last mile logistics solutions in Leipzig’s project SMile.

Global Connectivity, Multimodal Infrastructure & Logistics

The online consumer wants a global marketplace with access to products from all over the world. Being able to source, ship, and fulfil orders for international markets from a single hub therefore is a major advantage for e-commerce businesses with international footprints.

Located at the intersection of some of Europe’s oldest trade roads, Leipzig has always been an important node for international trade routes and supply chains. Within Europe, the Leipzig region is ideally positioned to not only directly the German market with its 82+ million residents, but also the 150 million consumers in the nine neighbouring countries to the north, south, east, and west.

Access to the German E-Commerce Market

Germany is the largest e-commerce market in Europe and one of the largest in the world. Total e-commerce sales reached EUR 72 billion in 2019, putting Germany in fifth place behind China, the US, Japan, and Great Britain. The German Federal Association of E-Commerce and Mail-Order Trade reports that gross sales of e-commerce goods grew by 11.4% year-on-year – a growth trend expected to rapidly increase in 2020 and beyond. With 65 million people – 80% of the German population – Germany not only has the most internet users but also the greatest e-commerce market potential in Europe.

Access to Talent

Testament to its growth strategy and ongoing growth potential, Leipzig has been named a ‘city of the future’ by fDI Intelligence’s latest rankings of leading European cities and regions that have strong investment potential for the long haul. Leipzig was ranked 7th place for "Human Capital and Lifestyle".

More than 40,000 students attend the University of Leipzig and its other institutions of higher education. The Central German Metropolitan Region ("Metropolregion Mitteldeutschland"), with Leipzig being the very centre, has more than 155,000 students attending its many universities and research institutes.

Plug & Play

In many locations, existing industrial and logistics stock no longer meets current business requirements. Owing to the persistently strong growth of the logistics sector, the Leipzig region offers state-of-the-art sites and spaces. Current developments in the Leipzig region include bespoke plug & play solutions managed by two major players in the industrial and logistics sector.

A Lower Cost Base

Keeping costs as low as possible is essential to running a profitable e-commerce business. At the same time, neither operational excellence nor the quality of products and services must suffer. A successful location strategy in the EU must therefore take into consideration total operating costs, labour costs, inbound and outbound transportation expenses as well as quality and productivity issues. Running a business in the Leipzig region is significantly cheaper than it is in the "Blue Banana" corridor yet offering the same levels of quality and productivity "Made in Germany".

Our Services

Invest Region Leipzig (IRL) is an economic development organisation funded by the City of Leipzig, the Leipzig Chamber of Industry and Commerce and the local authorities of Northern Saxony and Leipzig. We support companies that consider expanding their business and/or R&D operations into Germany’s thriving Leipzig region.

We help you shape a bespoke location strategy for the Leipzig region. IRL provides key decision-making data on market opportunities, competitors and suppliers, the regional workforce and talent pipeline, as well as available investment incentives. Working with our partners in the real estate sector, we help business clients find the right office, industrial or logistics properties at the right cost. Our recruitment experts help you accelerate the staffing process, providing clients with our wide network of recruitment agencies, university career as well as job centre partners. All our services are completely free of charge and treated with absolute confidentially.