In the next few years, German internet giant Otto will invest 300 million euro in a mobile platform and a new fashion web shop for the fashionable young people, in a bid to keep up with the growth rate of its competitors Amazon and Zalando.
German e-commerce grows faster than Otto
Otto was founded in 1949 as a mail order company and with some 100 e-shops in 20 countries, it is Europe’s second largest e-commerce party. It managed a 400 million euro turnover increase in its broken fiscal year 2013-2014 (ending 28 February), to 6 billion euro, a 7.6 % increase.
It is a decent performance, but it is below the German e-commerce market as a whole (the entire market grew 12 % to 33 billion euro) and it is well below its competitors, Amazon and Zalando. Amazon Germany has managed a 21 % turnover increase, to 10.5 billion dollars (some 7.5 billion euro), while Zalando did even better with a 52 % turnover increase, to 1.76 billion euro.
Focus on younger and mobile audience
Otto aims to get an 8 billion euro turnover by 2015, while it hopes to get a 50 % m-tail share by 2016. Currently, every other German has a smartphone and one out of 5 uses a tablet and to achieve its double goal, Otto will invest some 300 million euro in new website software and technology for its mobile payment subsidiary, Yapital.
Vice chairman of the board, Rainer Hillebrand, wants to create a new online environment for the young, fashionable lady. That way, Otto hopes to reach people in their twenties, those people who are now visiting Zalando or British Asos in huge numbers, while Otto now mainly attracts an slightly older audience.