Toy market news

Otto Group with convincing growth in e-commerce

Initial forecasts indicate that the Otto Group will close the 2020/21 financial year, ending 28 February 2021, with online revenues of about 10 billion euros worldwide, compared with around 8.1 billion euros in 2019/20. In German e-commerce, the retail and services group is expected to generate revenues of around 6.9 billion euros, up on the 5.7 billion euros in the same period last year.

For the current financial year, the Hamburg-based enterprise is forecasting a year-on-year increase in global e-commerce revenue of around 23 percent* (Germany: over 22 percent). The Otto Group sees the rigorous digitisation of business models in its own Group companies and the corresponding sales channels, as well as changes in consumer behaviour due to the corona pandemic as the main drivers of this development.

Sebastian Klauke, Executive Board Member responsible for e-commerce, technology, business intelligence and corporate ventures: “We have very rigorously and successfully pushed ahead with the digital transformation of the Otto Group in recent years – at all levels and across all sales channels. In doing so, we have laid the foundation for these really gratifying figures in e-commerce.“

This is evident not least at OTTO, which has already been able to win over 1,000 new partner companies in the course of implementing its new platform model in the current financial year alone. Over the whole of 2020, OTTO has chalked up almost two million additional active customers. Overall, the platform now reaches around 9.4 million active customers – an increase of almost 30 percent on the previous year.

Another reason for the growth in sales is, of course, the changed purchasing behaviour of consumers in the wake of the corona pandemic. Furniture and home accessories as well as technology and multimedia continue to be in high demand. Growth rates in sales of so-called wearables, for example smartwatches, are in some cases topping 100 percent. After challenging months and declining sales in the first half of the financial year, the textile trade has been increasingly upbeat since early autumn.

As a consequence, the Group is benefiting from its broad range of products and an outstanding logistics infrastructure, as has been demonstrated in recent months. The Group's logistics provider, Hermes Germany for example, delivered a record 126 million consignments in the 2020 Christmas period (October to December) alone – up around 25 percent on the same period last year. Over 99 percent of the parcels and packages reached their customers in time for the festive season – as standard via contactless and risk-free delivery, which Hermes was able to implement within just 48 hours.

Sebastian Klauke: “Online retailing is seen as a particularly safe form of shopping these days. Trust as a core currency is experiencing a real renaissance, now also in internet sales. This is a key success factor for us and at the same time helps us to more than compensate for the decline in stationary retail sales due to the pandemic.”

This applies not least to Group companies with a high proportion of stationary retail sales such as Manufactum and Crate and Barrel, which have been outstanding in realising an enormous shift towards online sales, significantly increasing e-commerce sales by addressing their customers in a highly responsive, adapted approach.

Remote work as standard and the largest IT load test

The successes in e-commerce are remarkable not least because the corona pandemic has made it imperative to enable a large number of staff across the entire Group to switch to working remotely. Now, the vast majority of the workforce in administration – normally around 90, sometimes up to 100, percent – is working from home. In total, well over 20,000 of the more than 50,000 Group employees worldwide are working online. In this respect, the Otto Group is benefiting from the fact that teams were equipped with mobile devices years ago, at great expense, and from the widespread introduction of Microsoft 365.

The fact that a corporate enterprise the size of the Otto Group has been able to maintain performance at a very high level for just under a year, even in remote mode, is also due to the fact that the Otto Group started the cloud transformation of its IT systems early, thus creating the conditions to facilitate mobile working. In the first acute period alone (February through April 2020), for example, the number of virtual meetings across the Group swelled by some 1,400 percent.

Alexander Peters, Group Vice President Otto Group IT: “Moving a decentralized group of companies to the virtual world so comprehensively and promptly was the biggest load test our teams, applications and systems had ever had to withstand to that point. I am extremely proud that we were able to rise to the enormous technological challenges in a joint effort and make our contribution to business performance.”

The Otto Group is planning further significant investments in its own technology for the coming financial year. In total, a three-digit million sum has been earmarked to drive digitisation forward.

The Otto Group will announce its overall result for the Group financial year 2020/21 at its annual press conference in May.

*On a comparable basis (mainly adjusted for the effects of the sale of Sportscheck and Otto Japan)