Otto aims to expand its marketplace offering within the EU. The German distance-selling icon announced this alongside its annual financial results. In the fiscal year 2023/2024, Otto’s revenue decreased by 8 percent to 4.2 billion euros. 

This performance was “still well above market comparison,” Otto says, referring to figures from the Bundesverband E-Commerce und Versandhandel Deutschland (bevh), which noted an 11.8 percent decline and described 2023 as a “low point” for e-commerce in Germany.

In its press release, Otto highlights the positive development of Gross Merchandising Value (GMV), which increased by 2 percent to 6.5 billion euros. “The slight increase in Otto’s platform sales, despite the ongoing crisis atmosphere in retail, makes us cautiously optimistic,” says CEO Marc Opelt. He previously referred to the platform model as the “key growth engine” of the online department store.

Otto bets its expansion on ‘marketplace partner alliances’ 

Otto expanded the number of marketplace partners by 33% to over 6,500 during 2023. Together, they accounted for one-third of the revenue on the shopping platform. Despite the long and growing distance in terms of revenue on Amazon, Otto claims it is “very well positioned” with German marketplace sellers. “Now we are preparing to open it up to European marketplace partners.” 

Initially, Otto will connect warehouses of German marketplace sellers in other European countries to its platform. Starting next year, marketplace participants from other European Union member states can also offer their products on Otto’s platform. Currently, a German VAT number is required for this.

How will sellers be selected? 

Opelt indicates that Otto has deliberately chosen the European perspective: “We rely on products that meet the highest quality and sustainability standards. Therefore, we carefully select who may sell their goods on our marketplace – and who may not. In the future, cheaply produced disposable items will also not play a role in Otto’s business model.”

‘We carefully select who can sell on Otto, and who cannot.’

From summer onwards, Otto will open its marketplace to additional product categories, including dietary supplements and energy technology.

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The online sales of Otto, one of the world’s largest online sellers, witnessed an increase during the previous financial year of up to

Most of Otto Group’s revenue is still generated from its active brands in Germany. The last annual report shows that the group’s online revenue in its home market has risen to 5.3 billion euros. This is an increase of 5.2%.

Hot summer

The company is expecting yet another increase in online revenue for the upcoming year, even though the growth of this year has not reached its expectancy. According to Otto: “The unusually long and hot summer in Europe, which affected business in general, impacted the Otto Group’s textile and furniture revenues, and consequently the financial performance as a whole.” The withdrawal of certain brands that Otto owns has also negatively influenced revenue growth.

Expansion

Just like the past twelve months, the online retailer is planning on investing a lot into the expansion of its platform. In early days, Otto started as a mail order company. These days, it has grown into an online retailer that allows external vendors to sell on its platform, too. Customers can expect to access products from almost 3,000 new partners by the year 2020.

The platform is currently present in more than 30 countries, throughout North and South America, Europe and Asia. The company has approximately 52,000 employees and owns multiple service providers and retailers.

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A large number of sellers decided to join the online marketplace platform Otto this year. It now has approximately 7 million merchants selling their products via the website.

Today, Otto announced that during the last financial year (2018), they have achieved a higher growth rate than usual. According to Otto, the strong investment into the development of their platform has increased its revenue to 3.2 billion euros ($3.57)  in 2018, which is an 8.2% increase.

Alexander Birken, CEO of Otto says: “The new financial year has started in line with our expectations. We are planning on higher revenue growth than last year and a slight improvement in our operating results. Within this, we will be continuing our future-orientated investment programme and continuing to drive the digitalisation of our business models on all levels. We are confident that thanks to our strong value orientation, the Otto Group represents a genuine European alternative in global online commerce – and that our customers, employees and business partners will continue to reward this.”

Ecosystem

This year, the company is laying its focus on creating an ‘ecosystem to external retailers and brands’ of their platform. They will achieve this by proving to be a fair, attractive and personal alternative to other platforms. Home and living products will be the focal point.

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Otto made the statement in an interview with Business Insider. 76-year-old Michael Otto transformed the mail-order business of his father into a full e-commerce company. A successful e-commerce company, you may add, as it achieved total revenue of 13.7 billion euros last year. The Otto Group nowadays consists not only of Otto.de, but also popular online retailers such as About You, Limango, Manufactum, Sport Scheck and delivery service Hermes.

Transformation to an e-commerce company

In 1995, the German e-commerce giant started offering its entire assortment online. At that time, only 250,000 people in Germany had access to the internet. "It gave us plenty of time to develop into a digital enterprise and that was our advantage. Many competitors in Germany, who think that in two or three years you can turn a conventional company into a digital enterprise, have disappeared from the market.”

The difference between Otto and Amazon

The former CEO finds Amazon the perfect department store: "If you’re looking for something, you can usually find it on Amazon. That is what Amazon does perfectly." This has proven to be a good business model for Amazon, but Otto does like to be different. They strive to be more inspirational, fashionable and service-oriented.

Examples of the service-oriented approach are its customer service and its delivery service, Hermes. Customers can call the customer service on topics they simply can’t find an answer to online. “We have the advantage of having Hermes, our delivery service. The advantage of having Hermes as a delivery service for furniture and large appliances shows in the fact that customers can choose a two-hour delivery window. As well as this, Hermes take back old items as well as all the packaging.”

Company values

The former CEO says the following about the company's values: "Our values are another of our strengths. We include other retailers, brands and producers on our platform, we set criteria for them. We won’t accept Chinese companies who don’t pay VAT and we won’t allow cheap copies on our platform. I think in Europe, our platform, overall, is the only alternative to Amazon.”

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In general, there are three companies in Germany that realized an online turnover of more than one billion euro. Besides Amazon and OTTO, Zalando has reached this milestone as well.

It must be noted that the researches have taken turnover gained from services into the numbers as well. This means that, besides the sales of products, the figures of Amazon also include turnover from services like Amazon Prime, audible.de and more. Also, the turnover realized in the Dutch market – more than 100 million euro – is taken into account. When we take these turnover figures into account, the total turnover of Amazon reaches close to 15 billion euro.

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Research by the EHI Retail Institute and Statista shows that Amazon has a real dominant position in the market, being responsible for 30 percent of the total German e-commerce market in physical products. A noticeable fact is that the entire top-3 have a common fact: all three of them are, besides a web shop, a shopping platform as well, where third party sellers are able to sell their goods in exchange for a commission.

Together, Amazon, OTTO and Zalando account for a turnover of 12 billion euro, which is 44% of the total value of the entire Top 100 altogether.

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