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.

Aktivs

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

The company produces over a thousand catalogs annually 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 spread across countries with a total circulation of two hundred million copies.

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

Performance indicators

2020: 6th place in online sales in Europe: 5.3 billion euros

Data for 2020

2019: Otto Group's online revenue was €8.1 billion

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

In 2018, Otto Group's e-commerce sales were €7.7 billion. It has now increased again in its domestic market in Germany, where revenue was around 5.6 billion euros (5.3 billion in 2018).

2011: Sales of €11.4 billion

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

History

1949: Founding 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, it will subsequently enter the Otto Group holding. He immediately clung to the idea of ​ ​ postal trade in shoes and in August 1949 registered the Werner Otto Versandhandel company ("Werner Otto Postal Trade Company") with the Hamburg Ministry of Economy and Transport. The newly minted firm occupied two tiny buildings in a suburb of Hamburg, and initially employed only three people.

There was no question about what exactly to sell: in the end, Otto knew no less about shoes than a gas shoemaker (see his biography). The catalog, made by hand, appeared six months later: Werner himself cut out photos of the boots, neatly pasted them into a brochure and signed the price. He did not shy away from the work: he delivered booklets, accepted orders, and made delivery. One of the first three hundred catalogs with images of 28 pairs of shoes on fourteen pages is still preserved 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 case. However, a year later, the proceeds from sales were enough for the release of the first printed catalog; along with shoes, it offered suitcases, trousers^[1] umbrellas^[1]

1952: Saving profits

Later, the head admitted that during these years the company was saved exclusively by an accounting error. "At first, we had very inexperienced girls working in the accounting department," 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 declare bankruptcy. But the profit in 1952 was so large that it more than blocked two unprofitable years. Sloppy accounting eventually saved us from a rash move. " Be that as it may, the company was clearly on its feet: already five years after opening, it brought in 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 possible to literally reach every buyer: the products of the post-war "economic miracle" became available even to residents of the hinterland, to which traditional retailers have not yet reached due to the transport infrastructure destroyed by the bombing. The mail worked always and everywhere. And even too good: the main problem was, perhaps, to stand out against the background of advertising waste paper that clogged the burghers' mailboxes to the eyeballs.

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

1963: Start accepting orders by phone

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

Few people took mail trading seriously in those years, but in just ten years Werner Otto managed to radically change his idea of ​ ​ this business. The company's performance grew in arithmetic progression. 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 directories of a narrow orientation began. The range of products, initially limited to shoes, expanded to men's, women's and children's clothes, 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: its staff had its own designers of clothing and shoes. This business scheme, by the way, has survived to this day (2012). The company's turnover was rapidly approaching a billion German marks. Otto's customer base spanned all ages and social categories - but the biggest reason for the competition's envy was its loyalty. "Small-town business," as the mail trade was contemptuously called before, gave rise to the largest, aimed at innovation and creativity, a balanced organization, which employed over a thousand people.

1965: Entering the property 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 switched to universal service. In 2004, as part of a program to focus on the main types of 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 retire from business in the parcel trade. In 1966, Gunther Navrat took over as CEO of the company. However, the patriarch of the Otto dynasty retained considerable power until the 2000s, remaining chairman of the supervisory board. In Navrat's hands, Otto continued to blossom: he managed to turn it into a more modern, decentralized organization, moving customer service to the local level. At the same time, Navrat invested in expanding the company abroad.

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

Soon, the eldest son of Werner Michael began to take an internship at Otto. In 1971, the 28-year-old heir, fresh from his PhD in economics, joined the company's executive board, becoming the youngest manager of this level in Germany. With solid, however, experience: behind him was an extensive practice in a Hamburg bank, work as a financial broker, as well as organizing his own business in the real estate sector. In ten years, Dr. Otto will become chairman and CEO of the company. According to the European CEO magazine, the famous book "Limits to Growth," published in 1972, had a huge influence on Michael Otto. It was thanks to her that he seriously thought about the need to introduce solutions related to environmental protection and lean production into 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: Buying up competitors

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

Recalling how difficult it was in the battle with hundreds of competitors in the early years of the company, Otto liked to repeat: "And where are they all now? Either broke or passed into my ownership. " It was Gunter 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 developer ECE in 2000, claims that his father thought about globalization before the term was born: "As soon as mail trade got on its feet in Germany, his father became seriously interested in the United States and often went there to gain experience in larger postal trade companies."

1981: Michael Otto took over 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 into the USA, France, Great Britain, Japan, Austria, Italy, Poland.

1986: BonPrix Founded

The expansion of Otto was not limited to the geo­graficheskimi framework: the company zealously sought new buyers in existing markets. Especially for price-sensitive buyers, Michael Otto founded the BonPrix parcel trading company in 1986 - it sold clothing, accessories and home textiles at discounted prices and specialized catalogs. The initiative was also successful: over the twenty and a half years of its existence, BonPrix published about a hundred catalogs in Germany and almost two hundred at the international level. By participating in capital in sportswear and merchandise companies, as well as expensive premium clothing, Otto sought to expand the range and reach a variety of customer segments.

1987: Otto - World No. 1 in parcel trade

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

Otto Jr. not only succeeded in expanding the company into foreign markets, but also, in his father's wake, constantly worked to improve the service. In 1986, he introduced 48-hour express customer service, in 1990 - express service for only one day. A year later, Otto is switching to round-the-clock mode: 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 customer complaints. In 1995, the company expanded the opening hours of delivery workers: 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 parcel with goods right on the day of 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 vouchers according to the same catalog scheme.

1995: Internet Sales Start

In terms of innovative technical solutions, Michael Otto's views were even bolder than his father's. Already in the early 1980s, the visionary foresaw the power of the Internet and its prospects for parcel trading - and often flew to Silicon Valley to keep abreast of technological innovations. At the same time, Werner Otto, who in retirement remained an energetic, athletic and passionate man (until his death he was actively involved in charity work), admitted in an interview in 2001 that he would perhaps have failed to manage an e-commerce company. In his 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 he would calmly cope in the future.

But Michael Otto concentrated on high technologies long before his German competitors. He lobbied for the Internet commerce 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 a regular directory, and the CD-ROM format compensated for the 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 a home shopping system through a high-speed Internet channel for residents of Florida. Despite the fact that the project failed due to technical overlays, the head of the German company brought out of it the most valuable experience about the possibility of electronic commerce. The very next year, Otto launched its own Otto.de online shopping platform, which is still operating. Having started an online business in 1995, the company managed to recoup all the costs of launching it in just three years.

1996: Course on Ecology

In the 1990s, Otto focused on three main challenges: becoming more environmentally friendly, more innovative, and more global. The image of a socially responsible company was supported by the new quality mark "Skin Safe" that appeared in the catalogs, which accompanied 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: child 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, already ninety percent of the total assortment of the main catalog was made 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 responsible forest management.

2000: Mobile Phone Sales

One of the tools that opened up the Japanese market was mobile phone trading; this decision, by the way, was born during the annual Otto IT conferences. By launching such a trade in Japan, the company attracted buyers using virtual discount coupons that it sent to their phones. The discount was also achieved due to savings in printing printing advertising materials, the work of promoters and direct mailing. The success of the campaign was so overwhelming that Otto's similar practice made it traditional in his native Germany as well.

Mobile technologies have been in the company's assets for ten years. For the first time, it tried trading through WAP portals in February 2000, and in February 2003 it became the first and only retailer in Germany to launch its own short number. By typing the 6886 combination on the phone (on the phone buttons in the Latin layout of the alphabet, it corresponds to the letters OTTO), any subscriber can access the company's client service using SMS messages. Questions can concern anything: a certificate of goods and their availability, a question about the status of the sent goods, payment information. In 2003 alone, the total amount of goods purchased through mobile phones exceeded a million euros.

2002: Name change 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: World No. 2 for 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 as "modest," "simple," "no complaints." Instead of trying to pump money out of the industry, Otto was leisurely building a sustainable online sales business model. The rule "you go quieter - then you will" really worked: by 2004, Otto became the world's second online trading company after Amazon.com.

Otto's online operation is somewhat different from that of similar Amazon and eBay stores. Competitors take all steps to form an order on the network: even the fee is removed from a plastic card or virtual wallets when issued. In Otto, a variety of purchase scenarios are possible, in which several distribution channels are used. The buyer can choose the goods according to the catalog that came to him by mail, then enter the articles in a special form on the website, place an order online, receive an invoice by mail and pay for it using a bank transfer. This avoids dependence on a single channel of interaction with the buyer - and opens access to online shopping even for those consumers who do not have plastic cards.

The site Otto.de "equipped" with various functions that make the purchase process more exciting: it provides the ability 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 the company's marketers and constantly exchange experience online: twice a year, the company conducts specialized brainstorming sessions 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, interpreting it as "everywhere commerce" (Everywhere Commerce). The availability of goods becomes a top priority, and its system of multiple distribution channels that interact with each other provides it. This system combines the Internet, mobile trading technologies, printed catalogs, direct sales through Otto's network of own branded stores and through partner franchises (Zara, Massimo Dutti, SportScheck, Eddie Bauer, Frankonia, Castro, Crate & Barrel and others).

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

With the help of various types of e-commerce (sales through the website, 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 in the areas of "Web Analytics" and "Programming Mobile Devices."

However, Michael Otto is sure that the triumph of electronic sales will not at all lead to the death of the traditional printed catalog. First, surveys show that it is catalogs that give two-thirds of buyers an initial impetus to make a purchase online. Secondly, even hardened netizens place a larger order if they also have a catalog at hand. Third, quoting the Otto chapter, "no computer or iPad will replace a paper catalog when you rest on a bench, soaking up the sun in your garden."

2006: Emerging Markets Course

Like all of Europe, the company is pinning its hopes on growing markets. It is expanding to the east and appreciates the potential of the BRIC countries, deploying business in China and Brazil. However, it is especially interested in its Russian market.

2009: Social media activity

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

In addition to obvious benefits such as a stream of feedback and establishing more personal relationships with customers, Otto is improving its adaptation skills 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 voting, users gave sympathy to a student who changed into 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 150,000 fans, it was possible to enter the top ten most popular Facebook pages among German companies.

2010: Buying a Mirapodo shoe shop

Despite the size, the parcel giant retains its maneuverability. Werner Otto's company is developing a takeover strategy in such a way as 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 in the middle and top price segments at quite democratic prices, trading models of past seasons.

Even before opening, the store distributed discount vouchers to new shoppers 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, a total of five thousand units of goods were listed in her catalog. Today, about fifty thousand users visit the Mirapodo website every day. Otto Group bought out the start-up before it even began to turn a profit: competition in the industry is so strong that it is better to "eat" a 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. The designer shoes in her catalog were supplemented with offers for children and athletes; increased and the spread of prices for goods. It is possible to keep buyers due to milder return conditions - up to a hundred days - and a personal assistant who helps to pick up shoes.

Startups are attractive as new partners for the Otto Group also because big ideas are sometimes born in small companies. Buying the same Mirapodo, for example, made it possible to implement the idea of ​ ​ a so-called size compass: a buyer can compare the size of his leg with a typical boot scanned in three dimensions. For catalog trading, such a trifle may be critical: the selection of 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