The biggest prob for the Germans (and to some extent for the Russians too after the war, when they "liberated" countries) was that they were very bad at making friends. Germans may have occupied all of Europe, but they had guerilla insurgence or resistence movements in every last country they got into. Even their ally Italy was riddled with partisans.
Many of their "allies" were forced into being that and tried to avoid a deeper involvement (the Finns, though not big fans of Russians after being invaded, still didn't want to invade Russia beyond their old borders, Bulgarians wouldn't invade it either, Rumanians and Italians switched sides as soon as Soviets/Allies got there, etc). Apart from some people with deep fascist indoctrination (from Spain, Croatia, Slovakia, Hungary, also Flemmish, French and Scandinavian volunteers), noone was eager to help Germany win the war (and even these ones all also had a strong anti-nazi resistence).
Compare that with the Allies? Even though the capitalist west hated the communist Soviet Union, they still sent it tons of help to defeat the nazis. None of the Allies (Soviets included) had a network of insurgents, spies and saboteurs working in their rear areas, like the Axis were plagued with, where they could never be sure any train would reach its destination, etc.
Allies (Soviets included) used labourers to manufacture their arsenal, that wanted to defeat Germany, Germans used slave labour that also wanted to defeat Germany and sabotaged every little bit they could (even my grandmother suffered through a concentration camp that suplied workers to a slave plant that manufactured Junkers bits, and she testified they did try to screw up anything they could without getting caught).
Wherever Germans came, summary executions of civilians were the norm to keep the population in check. Even in places (such as parts of Ukraine and Baltic countries), where Germans were first welcomed with open arms, people soon realised they were far from civilised liberators they had hoped they'd be. Allies on the other hand? How many public hangings, shootings, etc did they do?
To sum up, the whole world hated the Germans. You cannot win the war like that. Even if they had avoided all the military mistakes we now know they made, they could have just kept the bloodshed going a while longer. In the end they couldn't succeed.
For the same reason the Soviet Union failed and fell apart in the end. You cannot rule, in spite of all your might, if too many people hate you, if you can't make friends. Somethings the remaining superpowers of today should also be more aware of.