Sales to Switzerland: opportunities and challenges for German companies
Our neighboring country Switzerland is an attractive business location. Due to its 8.7 million mostly affluent inhabitants, sales to Switzerland are of interest to many German companies. But what are the hurdles to market entry in our neighboring country? And how can the Alpine republic become a lucrative customer for your own products?
Valid advantages of distribution to Switzerland
Countless suppliers based in Germany sell their products and services to the Swiss Confederation. It is therefore not surprising that Switzerland imports the most products from Germany. Looking at the import and export figures, it quickly becomes clear that Germany is the Confederation’s most important trading partner. There would certainly not be so many suppliers selling to Switzerland if there were not various advantages.
Advantage #1: High purchasing power
Switzerland is known for its high purchasing power and its penchant for high-quality products. Per capita purchasing power in Switzerland is a whopping EUR 49,592. In Germany, on the other hand, it is only EUR 26,271. That is a difference of almost 50 %. Prices in Switzerland are also significantly higher in many areas than in Germany. As a result, German companies may be able to achieve higher prices and better profitability for their products.
Advantage #2: Stable economy
Switzerland is considered an extremely stable business location with a low unemployment rate and high competitiveness. This robust economic situation in our neighboring country enables German companies to build long-term relationships and enter into sustainable business partnerships. The stability of the market provides greater security and enables companies to plan and grow in the long term.
Advantage #3: Geographical proximity
Switzerland’s geographical proximity to Germany enables goods to be transported quickly and efficiently. Short delivery times and lower logistics costs are attractive factors that support German companies in their sales to Switzerland. The short distances mean that companies can respond quickly to customer inquiries and ensure a high level of customer satisfaction.
Advantage #4: Excellent infrastructure
Switzerland has an excellent infrastructure that enables smooth business operations. Reliable transport connections, modern communication technologies and well-developed logistics networks make it easier for German companies to access the Swiss market. The high level of efficiency and professionalism in business processes support the success of sales and contribute to customer satisfaction.
Advantage #5 Younger clientele
The average age in Switzerland is 42.7 years, compared to 44.6 years in Germany. The higher proportion of younger people is primarily of interest to the e-commerce sector. This is because younger providers are generally characterized by a greater digital affinity.
Why distribution to Switzerland can be a challenge
However, distribution in Switzerland does not only offer advantages. It is also associated with a number of hurdles that German companies should consider before they start selling to Switzerland.
Process returns efficiently
Anyone who sells products online must expect returns. In 2020, 315 million parcels were returned in Germany. These were mainly goods from the fashion industry. Even in Switzerland, retailers are not immune to returns. It is therefore necessary to offer customers a domestic return address. There are special service providers who offer this service. However, the handling must be paid for and factored into the sales price.
Buyer protection for sales in Switzerland
Buyer protection is more relaxed in Switzerland than in Germany. Nevertheless, there are some regulations to be observed. For example, there is no prescribed right of return. This must be agreed individually.
Most Swiss online retailers allow a period of two weeks for returns. There are also no legal requirements for the delivery period. However, if a retailer promises a certain period of time, they must adhere to it. An online store must be run in accordance with Swiss law. This includes the provision of:
- Proof of identity
- Address
- E-mail information
The customer must also be informed clearly and comprehensibly about the individual steps involved in concluding the contract. It is also necessary to incorporate the technical requirements that allow errors to be quickly identified and corrected during the ordering process.
It is crucial to avoid legal pitfalls and ensure smooth business operations. Working with local lawyers may be necessary to comply with legal requirements.
Tax aspects and customs regulations
If you are considering expanding your sales to Switzerland, it is essential to clarify your tax obligations and sales regulations in advance. Companies that ship products from Germany to Switzerland must register with the Swiss Federal Tax Administration. This is necessary for the settlement of VAT. This regulation applies to retailers who send parcels with a maximum value of CHF 65 and an annual turnover of over CHF 100,000.
Switzerland is not part of the EU, so customs regulations must be observed for cross-border sales. In the Alpine republic, the fees are calculated according to the weight of the imported goods. The number of grams used for the calculation consists of the product plus filling and packaging material. The sale of heavy products with a low price may therefore not be worthwhile.
Important considerations before starting sales in Switzerland
When selling to Switzerland, there are a number of influential aspects that German companies should consider.
Market analysis and customer demand for sales to Switzerland
A thorough analysis of the target group in Switzerland is crucial in order to better understand the needs, preferences and purchasing habits of Swiss customers. It is essential to identify the potential of your product or service on the Swiss market in advance.
Particularly lucrative sectors in Switzerland are:
- Tourism
- Lifestyle
- Electronics
- Smarthome
- Ecological products
Local partnerships and networks
German companies can benefit from working with local distributors, dealers and sales partners. This provides them with valuable expertise and support for sales in Switzerland. It can also make sense to use e-commerce platforms with a dealer program. The following providers, among others, are suitable for this:
- Zalando
- Amazon
- Aliexpress
- Galaxus
- Stores Digitec
Which platform is most suitable varies from person to person and depends, among other things, on the goods on offer.
Adjustment of the marketing and sales strategy
It is sometimes necessary to develop separate marketing messages, advertising materials and communication channels for the Swiss market. This allows the target group in the region to be better addressed. The appropriate channels for sales in Switzerland must also be identified and developed.
Risk management for sales in Switzerland
Switzerland uses the Swiss franc (CHF) as its currency. Companies must inform themselves about the effects of exchange rate fluctuations and possible hedging strategies. Thorough knowledge of Swiss legislation and compliance requirements is essential to minimize legal risks and avoid possible sanctions. In addition, it should be checked whether specific insurance policies such as liability insurance, product liability insurance or transportation insurance are required to protect against possible risks.
Customer service After-sales support
Due to cultural differences, it may be advisable to offer Swiss customer service. In particular, the different languages spoken in Switzerland should be taken into account. Ideally, customers can choose between advisors who speak German, French, Italian or Romansh. German companies should also consider whether they want to offer a local after-sales service in order to be able to respond to customer problems more quickly and efficiently.
Competitive situation and barriers to market entry
Before German companies enter the Swiss market, you should take a look at the local competition:
- What does the competitive landscape look like?
- Who are the strongest competitors?
- What are the strengths and weaknesses of the competitors?
The costs for market entry in Switzerland must also be calculated. There may be further barriers to market entry, such as the necessary official approvals.
The solution for distribution in Switzerland: utilizing advantages and avoiding challenges
If you are targeting the affluent Swiss clientele but want to avoid the hurdles of sales in Switzerland as far as possible, you should choose a German location close to the border. This is because the Swiss like to go shopping in Germany. More than a quarter of the population regularly crosses the border to go shopping. A further 26% of the Swiss come to Germany occasionally for bulk shopping. These people can be targeted with a retail space in the border region.
But renting large retail and storage spaces is expensive. Showrooms are a practical solution. These are physical sales areas that enable online retailers to display their products on site. The goods are presented clearly. As a rule, there are only specific items on display that can be tried out. Purchases are then made online.
Advantages of a showroom near the border
Those who are convinced by the showroom concept can look forward to various advantages. Because by operating a regional sales area, German companies benefit from, among other things:
- No need to open a store in expensive Switzerland.
- Fewer returns because customers have already been able to test the product.
- Reaching a broad audience of Swiss customers.
Buyers from Switzerland are also impressed by a showroom. Instead of only being able to view German goods and services online, they can now see the functions, quality and design for themselves on site.
All questions are answered competently and personally in a detailed consultation. This creates a unique sales experience, which strengthens customer loyalty.
The Showme Stores showroom in Bad Säckingen on the Swiss border
As a provider of showrooms and exhibition space in showrooms, we at Showme Stores are looking for particularly attractive locations for our customers. Accordingly, we have also looked around other Swiss borders and have rented a showroom in Bad Säckingen in the Küchen Dick building, which was recently opened. If you are interested, please get in touch with us, as not all showrooms are currently rented out.
The location, Bad Säckingen, is characterized by its easy accessibility for Swiss customers. Online retailers who would like to benefit from the advantages of the concept and present their products to a Swiss audience are cordially invited.
Our showrooms are characterized by a pleasant atmosphere with a homely design. From a size of 10 square meters, the staggered arrangement offers flexible presentation options. Dedicated specialist advisors provide customers with individual support and advice on site. They also provide support with online purchases during the showroom visit. As a result, the showroom not only serves as a pure exhibition space, but also becomes a direct sales area.
