How the mail order business should reinvent itself
From a cult catalog to a shopping app with an integrated online marketplace – Otto has successfully mastered digital change. But online retail is facing growing competition from China.
Anyone who thinks of classic mail order when they hear the name Otto is definitely wrong. Traditional mail order has long been a thing of the past. Although the name Otto may evoke old clichés, Germany’s largest online shop is now as modern as a technology company. The Otto Group has developed into a global corporation with 50,000 employees. In Germany, the mail order companies Baur, Heine, About You, Bon Prix and the retailer Manufactum are part of the company, which is now celebrating its 75th birthday. Financial and service services are now also part of the portfolio.
Mail order: The Otto catalog era ended in 2018
Marc Opelt, chairman of the divisional board at Otto, says: “75 years is a proud number, and yet Otto has never been as young as it is today. I don’t know of any German retail company that has achieved such an impressive transformation.” Otto has continually developed and reinvented itself: from a catalog mail order company to an online shop and finally to a platform.
Otto’s cult catalog, which contained up to 1,000 pages and 60,000 items, was still in print until 2018. However, today mail order has become e-commerce, which is completely driven by marketing. Christoph Wenk-Fischer, Federal Association of E-Commerce and Mail Order Germany, explains:
Artificial intelligence is changing online trading
Automated display advertising reaches customers more and more precisely and on all social media platforms, including Otto. High-tech marketing and artificial intelligence have long been an integral part of the online retailer’s toolbox. This ushered in the era of internet trading in 1995 and was a pioneer in the industry at the time.
But the industry is currently going through difficult times. The boom caused by the corona pandemic was followed by a slump, and the Otto Group has suffered losses in the last two years.
Nevertheless, Otto sees itself well positioned for the future. The core brand Otto.de is to become a platform on which external retailers are also represented in the future. However, strict standards and rules apply that are intended to position the group as a sustainable alternative to Amazon. Only providers who meet certain requirements and have a presence in Europe are approved.
Increasing competition from Chinese companies
In addition to Amazon, Chinese competitors such as Temu and Shein are now making life difficult for European online retailers and are steadily gaining market share. European standards often seem to be irrelevant to their Asian rivals – safety regulations and sustainability hardly play a role there. Otto, on the other hand, anchored environmental protection as a corporate goal as early as 1986, separated garbage, banned fur and harmful paints from the product range.
You can read about the influence TikTok has on the mail order business and what role sustainability plays in the original ZDF article.