Growth Matters: Germany's Otto Group Is Building E-Commerce Sites That Click

Most American shoppers have likely never heard of Otto Group (though you probably have heard of one of its U.S. properties). But if you live in Germany, you certainly have.

Otto is a major German e-commerce company with 100 online shops -- and it's growing rapidly. Its network includes general platforms such as www.Otto.de and niche outlets such as the lingerie shop Lascana, the home furnishing store YourHome, and Schlafwelt, which sells mattresses and bedding. It operates in 27 countries and has run a cell-phone-based commerce servicefor a decade.

"The Otto Group saw e-commerce as an opportunity early on and recognized Internet users as a target group with growth potential," says Thomas Voigt, vice president for corporate communications. "We started our e-commerce operations in 1995, and by January 2010 we generated more than 60% of our turnover online -- more than any other German fashion industry competitor." Voigt adds that Otto's e-commerce revenue was up 24% in 2009 from 2008.

Otto Group see its target market as large and growing. Says Voigt: "According to the latest figures by the Bundesverband des Deutschen Versandhandels [BVH, an association of German mail-order companies], the trend is towards online shopping. In 2008, online mail order was on a par with written orders or over-the-phone ordering with 46% each. In 2009 Internet orders reached 53%." He says the online trend "is rising."

The Next Big Thing

In addition to Germany, Otto Group has commercial websites in France, Japan, and the U.S. -- where it owns 96% of Crate & Barrel, which it bought in 1998. Voight says one of its most interesting growth markets currently is Russia.

Otto Group is also a leader in German mobile commerce. As Voigt explains: "Mobile commerce is increasingly gaining in significance and will be the most popular form of online shopping in the near future. Since 2000, when the first WAP-enabled mobile phones were introduced in Germany, Otto has had a mobile shop." He says text-messaging is particularly useful for shopping. For instance, customers can get notified when their delivery has arrived. "Questions about the products, their availability or delivery status can also be asked and answered by SMS," says Voigt.

Otto Group has come a long way since it went online in 1995. And it shows no sign of stopping.