Otto Group

Sale and delivery of a variety of consumer goods - from clothes and shoes to household appliances and toys. The company specializes in catalog sales, online and mobile devices, as well as direct sales in stores.

Assets

The Otto Group holding for 2012 includes 123 companies, including not only trading, but also financial, logistics, transport organizations.

The company annually produces over a thousand catalogs in twenty countries in Europe, North America and Asia. Orders are processed in a thousand centers on three continents, and catalogs are published three times a year and vary by country with a total circulation of two hundred million copies.

As of 2012, Otto operates in 400 stores worldwide and 50 online stores.

Activity indicators

2019: Otto Group online revenue amounted to 8.1 billion euros

In the 2019/2020 financial year, Otto Group's global online revenue grew to 8.1 billion euros. This is more than 5 percent more than a year earlier.

In 2018, Otto Group's e-commerce sales amounted to 7.7 billion euros. Now it has increased again in its domestic market in Germany, where revenue amounted to about 5.6 billion euros (5.3 billion in 2018).

2011: Sales volume 11.4 billion euros

In 2011, sales rose by twelve percent - to 11.4 billion euros.

History

1949: Foundation of the company

In 1949, a catalog of goods from the German company Baur was mistakenly thrown into the mailbox of the unemployed and almost impoverished Werner Otto; ironically, she will subsequently join the Otto Group holding. He immediately clung to the idea of ​ ​ postal shoe trade and in August 1949 registered Werner Otto Versandhandel ("Werner Otto Postal Company") with the Hamburg Ministry of Economy and Transport. The newly made company occupied two tiny buildings in a suburb of Hamburg, and at first only three people worked in it.

There was no question of what exactly to sell: in the end, Otto knew no less about shoes than a gas shoemaker (see his biography). A manual catalog appeared six months later: Werner himself cut out photos of the boots, carefully pasted them into the brochure and signed the price. He did not shy away from work: he posted booklets, took orders, made delivery. One of the first three hundred catalogs with images of 28 pairs of shoes on fourteen pages is still stored in the Company History Museum in Bonn. The idea was by no means new: in 1950, hundreds of mail-trading companies functioned in Europe, of which at least half were larger than the Otto affair. However, a year later, the proceeds from sales were enough to produce the first printed catalog; along with shoes, it offered suitcases, trousers and umbrellas^[1]

1952: Saving Profits

Later, the head admitted that during these years the company was saved exclusively by an accounting error. "At first, very inexperienced girls worked in accounting," Werner Otto shared with his biographers. - When in 1952 we received reports for the previous two years, we saw that the company suffered significant losses - such that we actually had to immediately file for bankruptcy. But the profit in 1952 was so large that it more than blocked two unprofitable years. Negligent accounting eventually saved us from a rash move. " Be that as it may, the company clearly got on its feet: five years after the opening, it brought 28 million marks a year, while the starting capital was only six million.

The company managed to cope with both red lines in the balance sheet and with competitors - and it was necessary to compete with the same sellers of goods by mail, and with ordinary retail stores. It was literally possible to reach every buyer: the products of the post-war "economic miracle" became available even to residents of the hinterland, which traditional retailers have not yet reached due to the transport infrastructure destroyed by the bombing. The post office has always worked everywhere. And even too well: the main problem was, perhaps, to stand out against the background of advertising waste paper, which clogged the mailboxes of burghers to the tie.

Otto managed to win the hearts of consumers by offering them completely new services and demonstrating incredible trust: for example, payment in Otto could be made after delivery of the goods on the invoice, while competitors demanded cash when issuing the goods. The loyalty of consumers was influenced by the system of discounts issued after the second order. The system of attracting new customers also worked: buyers who made a parallel order in the name of relatives, neighbors or friends received a discount of five percent.

1963: Start receiving orders by telephone

Werner Otto tried to stand out with the help of a more technological service. In 1963, he was the first to come up with orders for goods by phone, and later decided on vertical diversification, creating his own logistics company Hermes-Versand.

In those years, few took trading by mail seriously, but in just ten years, Werner Otto managed to radically change the idea of ​ ​ this business. The company's performance grew arithmetically. In 1958, the thickness of the Otto catalog was no longer fourteen, but two hundred pages, and in 1967 - eight hundred, which were published in a million copies. A year later, in 1968, the publication of additional specialized catalogs of a narrow orientation began. The range of products, initially limited to shoes, expanded to men's, women's and children's clothing, linen, home textiles. The company purchased the lion's share of products from suppliers, owners of international brands, but placed a small part of orders in external factories on its own: it had its own designers of clothes and shoes. Such a business scheme, by the way, has been preserved so far (2012). The company's turnover was rapidly approaching a billion German marks. Otto's customer base covered all ages and social categories - but the most important reason for the envy of competitors was its loyalty. The "town business," as the mail trade was scornfully called before, gave rise to the largest, aimed at innovation and creativity, a balanced organization in which more than a thousand people were employed.

1965: Entry into the real estate market

In 1965, Otto entered the real estate market, creating the developer ECE Projektmanagement GmbH & Co. As of 2012, it is one of the largest developers in Europe specializing in the construction of shopping centers, logistics centers and industrial buildings. In North America, Werner Otto's Sagitta Group and Paramount Group own many skyscrapers in New York and Toronto.

1965: Opening of the bank

In his native Germany, Otto opened Hanseatic Bank in 1969. At first, the bank only issued loans to buyers, but since 1975 it has switched to universal service. In 2004, as part of a program to focus on core business, the Otto group of companies sold its 75 percent stake to the French bank Societe Generale.

Busy with third-party projects, Werner Otto began to gradually move away from business in the parcel trade. In 1966, Gunther Navrat took the chair of the general director of the company. However, the patriarch of the Otto dynasty retained considerable power until the 2000s, remaining chairman of the supervisory council. In the hands of Navrat, Otto continued to flourish: he managed to turn it into a more modern, decentralized organization, transferring customer service to the local level. At the same time, Navrat invested in the expansion of the company abroad.

1971: Werner's son Otto Michael comes to the company

Soon, Werner's eldest son Michael began an internship at Otto. In 1971, the 28-year-old heir, who had just received a doctorate in economics, joined the company's executive board of directors, becoming the youngest manager of this level in Germany. With solid, however, experience: behind his shoulders was an extensive practice in a Hamburg bank, working as a financial broker, as well as organizing his own business in the real estate sector. In ten years, Dr. Otto will become chairman of the board of directors and CEO of the company. According to the European CEO magazine, Michael Otto was greatly influenced by the famous book Limits of Growth, published in 1972. It was thanks to her that he seriously thought about the need to introduce solutions related to environmental protection and lean production into the business. Through Michael's efforts, already in 1974 Otto used recycled materials in production, and in 1986 environmental protection was declared one of the company's priority goals.

1974: Competition Purchase

In 1974, Otto bought a competitor in the field of parcel trade 3 Suisses in France, and in 1979 founded the first foreign "daughter" Otto Holland in Dutch Tilburg.

Recalling how difficult it was in a battle with hundreds of competitors in the first years of the company's existence, Otto liked to repeat: "And where are they all now? Either went bankrupt or passed into my property. " It was Gunther Navrat who actively took up the purchase of competitors in the domestic market: due to large acquisitions like Schwab and Heine, the business "gained mass" throughout the 1970s and quickly transformed into the Otto Group holding. This process took place under the steady supervision of the founder of the case. Alexander Otto, Werner's son, who took over the management of the ECE developer in 2000, claims that his father thought about globalization before the term was born: "As soon as mail trade got to its feet in Germany, his father became seriously interested in the United States and often went there to gain experience in larger postal trading companies."

1981: Michael Otto led the company

Having headed the corporation in 1981, Michael Otto continued Navrat's course towards its transformation into a global brand. In the next ten years, Otto expanded to the USA, France, Great Britain, Japan, Austria, Italy, Poland.

1986: Foundation of the company BonPrix

The Otto expansion was not limited to geographical frameworks: the company was actively looking for new buyers in existing markets. Especially for price-sensitive buyers, Michael Otto founded the parcel trading company BonPrix in 1986 - she sold clothes, accessories and textiles for home at reduced prices and specialized catalogs. The initiative was also successful: over twenty and a few years of its existence, BonPrix published about a hundred catalogs in Germany and almost two hundred at the international level. Participating in capital in sportswear and goods companies, as well as expensive premium clothing, Otto sought to expand the range and reach a variety of customer segments.

1987: Otto - No. 1 in the world in parcel trade

In 1987, it became the largest parcel trading company in the world, reaching a sales level of 12.2 billion deutsche marks. And the Otto dynasty has progressed more and more every year on the list of the richest families: Germany in 2012, its fortune, according to various estimates, ranges from nine to twelve billion euros.

Otto Jr. not only succeeded in expanding the company to foreign markets, but, in the wake of his father, he constantly worked to improve the service. In 1986, he introduced 48-hour express customer service, in 1990 - express service for only a day. A year later, Otto goes around the clock: now the company works both on weekends and at night, and this applies not only to the acceptance and processing of orders, but also, for example, to work on buyer complaints. In 1995, the company expanded the hours of delivery of goods: now overtime service with delivery up to nine o'clock in the evening has become available to customers. In 1996, it became possible to receive a package with goods right on the day of the order, as well as on Saturdays.

1990: Opening a business in Russia

Основная статья: Otto Group Russia

1993: Sale of catalogue tours

In 1993, Otto first tried its hand at the tourist market. The group of companies included the operator Otto Freizet and Touristik Group, which sold tickets according to the same catalog scheme.

1995: Start selling online

As for innovative technical solutions, Michael Otto's views were even bolder than that of his father. Already in the early 1980s, the visionary foresaw the power of the Internet and its prospects for parcel trade - and often flew to Silicon Valley to constantly keep abreast of technological innovations. At the same time, Werner Otto, who remained an energetic, athletic and passionate man in retirement (until his death he was actively involved in charity work), admitted in an interview in 2001 that he would probably not have managed an e-commerce-based company. In old age, he did not own a mobile phone and did not use a computer, claiming that he had done without them in the past - which means that he would calmly cope in the future.

But Michael Otto concentrated on high technology long before his German competitors. He lobbied for the Internet trading project for about seventeen years, since the early 1980s. In 1994, Otto launched the first bait, starting to provide its customers with an interactive catalog. The disc with it was attached to the usual catalog, and the CD-ROM format compensated for low speeds in the era of dial-up modems. At the same time, Michael Otto took part in the "Orlando Project" - a test launch by Time Warner of interactive television and home shopping through a high-speed Internet channel for residents of Florida. Despite the fact that the project failed due to technical overlaps, the head of the German company brought out from it valuable experience about the possibility of electronic commerce. The very next year, Otto launched its own online shopping platform Otto.de, which is still functioning. Starting an online business in 1995, the company managed to recoup all the costs of its launch in just three years.

1996: Course on ecology

In the 1990s, Otto focused on three main tasks: becoming more friendly to the environment, more innovative and global. The image of the socially responsible company was supported by the new quality sign "Safe for Skin" that appeared in the catalogs, which accompanied the fabrics, shoes, toys and other goods tested for allergens and harmful inclusions.

In 1996, Otto was the first to sell the famous Rugmark carpets in Germany: children's labor was not used in any way in their manufacture. In western Turkey, the company organized a joint production of organic cotton. So in the asset Otto appeared the brand Pure Wear - clothes based on the "purest fabric." By 2004, ninety per cent of the main catalogue was manufactured using environmentally optimized fabrics and materials. Soon, the company began selling wooden furniture made according to the standards and certificates of the Forest Stewardship Council, an international organization advocating for responsible forest management.

2000: Mobile Phone Sales

One of the tools that opened the Japanese market was trading using mobile phones; this decision, by the way, was born precisely during the annual Otto IT conferences. Having launched such a trade in Japan, the company attracted customers using virtual discount coupons that it sent to their phones. The discount was achieved, among other things, due to savings in printing printed advertising materials, the work of promoters and direct mailing. The success of the campaign was so stunning that Otto made such a practice traditional in his native Germany.

Mobile technology has been in the company's asset for ten years. She first tested trading through WAP portals in February 2000, and in February 2003 she became the first and only retailer in Germany to launch its own short number. Having gathered on the phone a combination 6886 (on phone buttons in Latin layout of the alphabet it corresponds to the letters OTTO), any subscriber can get access to client service of the company by means of SMS messages. Questions can relate to anything: a certificate of goods and their availability, a question about the status of the goods sent, payment information. In 2003 alone, the total amount of goods purchased through mobile phones exceeded one million euros.

2002: Change of name to Otto

In 2002, the company changed its name from Otto Versand to a shorter one - Otto to emphasize its evolution into an international corporation/

2004: No. 2 in the world by online trading

According to Businessweek, Michael Otto managed to avoid collapse during the dot-com crisis thanks to the management style, the best name of which is the German word bescheiden - translated "modest," "simple," "without complaints." Instead of trying to pump money out of the industry, Otto leisurely built a sustainable online sales business model. The "quieter go - then you will" rule really worked: by 2004, Otto had become the world's second online trading company after Amazon.com.

The principle of Otto working online is somewhat different from the system of similar stores Amazon and eBay. Competitors have all the steps to form an order are carried out online: even a fee at checkout is removed from a plastic card or virtual wallets. In Otto, a variety of purchase scenarios are possible, in which several distribution channels are involved. The buyer can select the catalog goods that came to him by mail, then submit the articles in a special form on the site, place an order on the network, receive an invoice by mail and pay it with a bank transfer. This avoids dependence on one single channel of interaction with the buyer - and open access to online shopping even to those consumers who do not have plastic cards.

The Otto.de site is "equipped" with various functions that make the purchase process more exciting: it provides the opportunity to upload your own photo and virtually try on various clothes, as well as select the entire wardrobe, choosing combinations of various items in advance. At the same time, information technology managers work closely with company marketers and constantly exchange experience online: twice a year the company conducts specialized "brainstorms" dedicated to finding new ways to interact with customers using computers and mobile devices.

Even the term "e-commerce" in Otto is understood in its own way, treating it as "Everywhere Commerce." The availability of goods becomes the main priority, and its system of multiple distribution channels interacting with each other provides. This system combines the Internet, mobile trading technologies, printed catalogs, direct sales through the Otto network of its own branded stores and through partner franchises (Zara, Massimo Dutti, SportScheck, Eddie Bauer, Frankonia, Castro, Crate & Barrel and others).

Online trading is usually a supporting channel along with standard, over the counter, and catalog trading: Internet sales appeared in Otto rather as a response to the total modernization of society. However, there are reverse examples. Berlin startup MyToys.de, which quickly became one of Germany's largest online toy sales platforms and moved under the Otto wing in 2001, opened its first stores five years later, and a few years later began publishing catalogs. The synergy of online trade and traditional retail works with cheers: now, barely MyToys.de open a store at a new geographical location, online sales in this region are also increasing.

Through various forms of e-commerce (website sales, mobile phones and television), the corporation earns almost half of its revenue. And some holding companies (for example, Otto and Baur) receive two-thirds of their profits through electronic channels. Otto sees the prospects and invests in them: in September 2011, the company launched a program of targeted funding for training employees in e-commerce courses. Otto fellows graduate from the University of Applied Sciences of Vedel with a bachelor's degree in Web Analytics and Mobile Device Programming.

However, Michael Otto is sure that the triumph of electronic sales will not lead to the death of the traditional print catalog. First, surveys show that it is catalogs that give two-thirds of buyers an initial impetus to make a purchase online. Secondly, even entrenched users of the Network place a larger order, if they also have a catalog at hand. Thirdly, quoting the Otto chapter, "not a single computer or iPad will replace the paper catalog when you relax on the bench, tender in the sunshine in your garden."

2006: Exchange rates for emerging markets

Like the whole of Europe, the company has hopes for growing markets. It is expanding east and appreciates the potential of the BRIC countries, deploying business in China and Brazil. However, its Russian market is especially interested.

2009: Activity in social networks

Social media plays a special role in the buying process - and if we are talking about online stores, which Otto Group has enough, attention to them should be marginal. Otto marketers understand this very well: the company constantly monitors its presence on Facebook, Twitter and YouTube. Her first "tweets" appeared in June 2009; since then, dialogue with the public has been conducted in several microblogs at once, including information on vacancies for Twitter.com/otto_jobs and an assistant for the company's main online store on Twitter.com/otto_de. Otto took the rule to start accounts on Twitter and Facebook for almost every trading organization included in the holding. The company also holds its hand on the pulse of the blogosphere: Two For Fashion, a fashion blog conducted by Tui Ngan-Ha, a twenty-year-old employee, collects one hundred thousand visitors per month.

In addition to the obvious benefits like feedback flow and establishing more personal relationships with customers, Otto improves its skills to adapt with the help of social media. When she announced a competition for the best photo for a Facebook profile in 2011, the results were unexpected: during the vote, users gave sympathy to a student who dressed in women's clothes from Otto catalogs. "Mr. Bridget," as the hero was nicknamed, really became a symbol of the company for two weeks - and thanks to the hype around the non-standard character Otto with 150 thousand fans managed to enter the top ten most popular Facebook pages among German companies.

2010: Purchase of Mirapodo shoe store

Despite the size, the parcel giant retains its maneuverability. Werner Otto's takeover strategy is designed to cover as many market niches as possible. One of the latest acquisitions is the small online shoe store Mirapodo, which began operations in March 2010. He specializes in selling shoes of the middle and highest price segment at quite democratic prices, trading models of past seasons.

Even before the opening, the store distributed vouchers for a discount for new customers using Facebook. The owners believed that initially the demand would not exceed ten pairs of shoes per day, but in the very first day the store's website almost collapsed: the company received over two thousand orders. At the same time, five thousand units of goods were listed in its catalog. Today, about fifty thousand users visit the Mirapodo website every day. Otto Group bought the startup even before it began to make a profit: competition in the industry is so strong that it is better to "eat" the novice player before he poses a threat. Under the leadership of the holding, Mirapodo was able to create a base of loyal buyers and expand the lineup from five to fifteen thousand positions. Designer shoes in her catalog were supplemented with offers for children and athletes; and the spread of commodity prices. It is possible to retain customers due to softer return conditions - up to a hundred days - and a personal assistant who helps to select shoes.

Startups are attractive as new partners for the Otto Group also because big ideas are sometimes born in small companies. The purchase of the same Mirapodo, for example, made it possible to implement the idea of ​ ​ a so-called compass of sizes: a buyer can compare the size of his leg with a typical shoe scanned in three dimensions. For catalogue trade, such a trifle may be critical: choosing the exact size of shoes significantly reduces the number of returns. With the filing of Mirapodo, innovation was introduced by other shoe retailers of the holding.

Notes