Otto Group: Mail order firm posts document losses – WELT | EUROtoday

VLots of white, a excessive gentle shaft, fashionable open areas: In Otto's new headquarters, the transformation of the catalog mail order firm into a web-based market appears to have been an ideal success. At least architecturally, as a result of the not too long ago opened workplace constructing makes use of the structural shell of a redundant logistics constructing from the Nineteen Sixties.

But the financial actuality is much less rosy, because the stability sheet for the previous monetary 12 months reveals. The US firm Amazon is more and more outpacing its German competitor – despite the fact that Otto isn’t the one one making an attempt to catch up.

Because it isn’t simply the downturn within the on-line market that has brought on the Otto Group to endure a document loss in 2023/24: With gross sales of just below 15 billion euros, it ended up with a lack of 426 million euros. Sales fell by one billion euros, whereas the loss rose barely.

additionally learn

This is principally as a result of Amazon – though it has lengthy been the market chief – continues to achieve market share. According to the retail affiliation, the US firm managed a powerful 60 % of German on-line enterprise in 2023. In the earlier 12 months, it was 4 share factors much less. Amazon merely lets the assaults of its German rivals roll off its again.

The figures show the success of the Americans' technique, which Otto boss Alexander Birken isn’t the one one who needs to repeat: Amazon is rising because of exterior retailers who promote on the web site. In this so-called market enterprise, Amazon receives a portion of the gross sales and promoting cash. This will increase the selection for patrons past the products bought by Amazon itself – and Amazon makes some huge cash with little threat to itself.

Otto.de copies Amazon market

After a protracted interval of preliminary difficulties, Otto.de is now pursuing this precept on a big scale. Otto.de has constructed up a market quantity of two billion euros in two years. “There are not many providers worldwide who can do that,” mentioned Birken, praising his staff – except for aggressive Chinese suppliers corresponding to Temu. The variety of articles on Otto.de has elevated ninefold to 18 million because of this.

6,500 exterior retailers use the platform. These are principally suppliers who already promote on Amazon and likewise listing their items on Otto.de.

But there’s a draw back: Unlike Amazon, the expansion of {the marketplace} at Otto.de is cannibalizing the corporate's personal conventional enterprise. The turnover that the Otto Group receives from the Otto.de and About You platforms has due to this fact fallen by 4.7 % regardless of the brand new market.

It's totally different at Amazon: There, the corporate's personal buying and selling quantity in Germany remained steady final 12 months, whereas progress from {the marketplace} enterprise was added to that. So Amazon is rising quickly general, whereas Otto.de is shrinking. This can be bitter as a result of Otto was thought-about the biggest mail order firm on the planet earlier than the Internet.

In 2023, Amazon's gross sales – together with IT companies – in Germany alone amounted to 37.6 billion {dollars}, nearly six occasions as excessive as Otto's gross sales in its house nation. Amazon has thus already made up for the weak point after the beginning of the Ukraine warfare final 12 months. Amazon's market enterprise is now 4 occasions as giant as all different German marketplaces mixed.

Several new gamers within the market enterprise

Amazon's success is all of the extra exceptional as a result of different main gamers apart from Otto have entered {the marketplace} enterprise. The Schwarz Group, for instance, is increasing its enterprise with Kaufland.de, Ceconomy has opened Mediamarkt.de to 3rd events, and a number of other different suppliers are doing the identical.

They hope that they’ll win over Amazon sellers with barely decrease charges. But in the end, what counts is what number of buyer contacts a platform can generate – and that’s Amazon's nice power.

additionally learn

The different suppliers are searching for differentiating options: Otto.de, for instance, needs to persuade finish prospects with sustainability and its Hanseatic origins, Mediamarkt with its product vary experience, Kaufland.de with its hyperlinks to division retailer branches. Nevertheless, at Kaufland's father or mother firm Schwarz, for instance, on-line gross sales fell by 9.4 % in 2023 to the 2021 degree, i.e. to 1.7 billion euros.

The scenario of the business as a complete is controversial. According to the business affiliation BEVH, gross sales in German on-line retail fell by 11.1 % in 2023. However, the affiliation is citing a client survey. The commerce affiliation HDE, citing the IFH Institute, comes up with totally different figures: It stories a slight on-line enhance of 1 % to 85.4 billion euros for 2023 – pushed by Amazon.

Austerity measures on the Otto Group

One factor is evident: The solely motive the Otto Group's losses haven’t elevated even additional is as a result of it’s making main financial savings. A hiring freeze has been in place for a while now in giant elements of the group. Within a 12 months, round 2,500 folks have left the group, which now has just below 38,500 workers.

Chief Financial Officer Petra Scharner-Wolff, who’s quickly to switch CEO Alexander Birken, has additionally lower promoting spending and buried the toy chain MyToys. This is outwardly not going with no hitch: the supervisor answerable for establishing the Otto market, Bodo Kipper, has left Otto.de on account of “different opinions about the strategic direction”.

additionally learn

The downturn has left a wide range of marks on the stability sheet: the lack of the parcel service Hermes in Germany, through which Otto nonetheless has a stake after a partial sale, has continued to rise. At the listed trend retailer About You, unscheduled write-downs on the worth of the model had been crucial.

Investments in start-ups are additionally value much less. And within the USA, the true property droop is placing stress on the group's furnishings shops there. The austerity measures imply that the group is at the very least making a small working revenue (EBIT) of 11 million euros. However, this determine nearly single-handedly saved the monetary division, which earned 420 million euros in working income: the Hamburg-based firm has been incomes some huge cash for years with the debt assortment service supplier EOS, a big a part of which can be commonly misplaced in on-line enterprise. The conventional retail codecs corresponding to Bonprix are additionally operationally worthwhile.

Loans a significant burden for Otto Group

Loans proceed to be a major burden for the group: With the rate of interest turnaround, financing prices are rising. Net money owed quantity to 2.7 billion euros – together with bonds which have additionally been subscribed to by small traders. This has penalties: the shareholders, i.e. the Otto household and their partly charitable foundations, acquired no distribution in 2023. In the earlier 12 months, 100 million euros flowed in.

Long-standing Chairman of the Supervisory Board Michael Otto not too long ago introduced that he can be passing the baton to his son Benjamin on the finish of the 12 months. Birken, the present CEO, might be his supervisor.

The Otto Group is prone to stay nicely off its unique purpose of reaching gross sales of 17 billion euros by 2020 within the present monetary 12 months. Although he hopes that {the marketplace} might be a progress driver, securing profitability and liquidity will even be the first purpose in 2024/25. This ought to assist scale back debt. The gross sales goal is due to this fact now modest. Birken mentioned: “We are fighting to achieve sales stagnation this year.”