OTTO wächst fünftes Jahr in Folge profitabel

With an investment volume of around 60 million euros in its technology platform and assortment development as well as in its brand and employer image, in the financial year now closed OTTO laid the basis for continued positive business development. The Hamburg-based company reported profitable growth for the fifth successive year. “In the last five years we have raised revenue by around half a billion euros, while remaining highly profitable. This was possible because we pushed our business model transformation to become an online retailer early and hard. In the last financial year we were able to raise our overall revenue once again by around three per cent, and achieve a three to five per cent profit margin”, explains Alexander Birken, Member of the Executive Board, Multichannel Distance Selling Otto Group, Spokesman OTTO.

Not even OTTO was immune to the extremely weak Fashion market development in the overall German textile market in the 2014/15 financial year. By contrast, the Durable Goods business area saw an extremely positive development. OTTO not only successfully and profitably raised revenue in the Multimedia and Household Appliances segments but also tapped market potential particularly in the Furniture area. Besides an expansion of the premium segment, major contributors to this performance were the specialist online shops. These present sub-assortments in the Consumer Electronics as well as the Living and Furnishings segments in a clearly differentiated way, complement this with specific service and customer advice offerings and thus make the purchasing decision easy for Internet customers. “We set ourselves the explicit target of expanding our leading position in German online furniture sales and to generate additional triple-digit million revenues by 2016. Our new offer concept has brought us a clear step closer to this goal”, says Birken.

Besides the infrastructure expansion of the specialist online shops, the technological backbone of the otto.de webshop received a double-digit million investment in development last year. Responsive web-design technology enables OTTO to offer its customers an even more convenient shopping experience. This web-design solution recognises the user’s end-device and its screen resolution, and adjusts the webpage display accordingly. The result is a perfectly displayed webshop, including all navigation elements, texts and buttons. This technology has been implemented since the beginning of the year at otto.de for smartphones, and is planned for tablets in April this year. “This is an important step in the further digitalization of our business model,” explains Birken, “as last year up to 40 per cent of visitors came to otto.de via mobile end-devices such as smartphones or tablets. The revenue share generated via these devices was around 25 per cent during the Christmas business period – and this indicates that the long-awaited market maturity of mobile shopping is now becoming a reality.”

Today OTTO already generates over 85 per cent of its overall revenue via the Internet. To keep pace with the march of digitalization and anticipate the wishes of tomorrow’s customers, OTTO is once again raising its investment in assortment, technology and market development, earmarking a sum in the triple-digit millions for the coming year. “OTTO’s extremely profitable development puts us in the comfortable position of being able to make these high investments. In this we are sticking to our long-term goal of achieving average annual revenue growth of around five per cent while achieving profitability of between three to five per cent, and further strengthening our position in German online retail”, summarises Birken.

The investments will flow primarily into promising, future-orientated business areas such as online performance marketing, the further development of the webshop, adding algorithm and data-driven information platforms, and the further reengineering of the IT environment. Further funds will be used for the expansion of the assortments as well as for a more intensive customer dialogue via new blog and chat formats. “We’re not only investing in technology, structures and processes, though, but above all in people and skills”, says Birken. “In the coming year alone we will be creating a further 250 to 300 jobs. Here we will be concentrating above all on the e-commerce and technology areas. We are looking for very highly trained specialists to further accelerate the digitalization of OTTO.”