Otto Group Explained

Otto GmbH & Co KG
Type:Private
Genre:Mail order
Foundation:17 August 1949
Founder:Werner Otto
Location City:Hamburg
Location Country:Germany
Area Served:Europe, United States of America, Canada, Asia
Industry:retail, e-commerce
Revenue:€16.2 billion
Revenue Year:2023
Owner:Michael Otto Foundation
Num Employees:41,186
Num Employees Year:2023
Subsid:Crate & Barrel, Bonprix, About You

The Otto Group (Otto (GmbH & Co KG)) is a German retail company based in Hamburg that operates companies worldwide in the retail, e-commerce, financing, logistics and mail order sectors. In 2023, the Group generated sales of €16.2 billion and had around 41,186 employees.

History

In August 1949, Werner Otto founded the company Werner Otto Versandhandel (Otto Versand) in Hamburg.[1] In 1950, the first catalogue with a print run of 300 copies was published, presenting 28 pairs of shoes on 14 hand-bound pages.[2] [3] The following year, the first printed catalogue comprised 28 pages and offered an extended product range, which subsequently further diversified in the 1950s and included, among others, porcelain, bicycles, and electrical appliances.[4] After further expansion, Otto Versand moved into a 205,000-square meter building in 1960. The number of employees increased to 2,000.[5]

In 1969, the Hanseatic Bank was founded, through which customers could finance their orders. At the same time, the Werner Otto Foundation was established in Hamburg to promote medical research. When postal strikes and higher rates posed a threat to operations in 1972, the delivery service Hermes Versand was established. In 1980, Otto Reisen GmbH was founded, marking the company's entry into the tourism industry.[6]

In 1981, Michael Otto, son of the founder, took over the company.[7] Throughout the following years, the Otto Group continued its expansion into Spain, Italy, Great Britain and other markets. By 1987, the Otto Group was considered the leading mail order company worldwide. After the fall of the Berlin Wall in 1989, sales also rose in Eastern Europe.

The 24-hour express service was introduced in 1990[8] and Otto Group launched an online shopping website in 1995. The catalogue, previously only available as a printed version, was published digitally on the internet for the first time in 1997.

Otto Group entered the US market in 1998 by acquiring a stake in the Chicago-based furniture store Crate & Barrel.

The two Austrian brands of the Otto Group, Universal and Otto, were bundled into Unito Versand & Dienstleistungen in 2003, and the mail order business in Germany was renamed Otto GmbH & Co KG. In 2005, the Otto Group sold 75% of the shares in Hanseatic Bank to Société Générale.

In 2009, the Otto Group secured the rights to the Quelle brand and numerous retail brands such as Privileg in a bidding process. Later, in 2012, the Neckermann brand was acquired.[9] In 2014 the online fashion retailer About You was founded.[10]

In the 2015/2016 financial year, over 90% of mail order sales were generated online, making the Otto Group the second-largest German online retailer behind Amazon, according to a study by the EHI Retail Institute.[11]

The last printed edition of the Otto main catalogue was published in December 2018, as around 95% of all orders were received digitally by this point.

In 2023, the Otto Group entered into cooperations with Covariant and Boston Dynamics.[12] [13] [14]

Corporate affairs

The key trends of the Otto Group are (as at the financial year ending February 28):[15]

YearRevenue (€ bn)Net income (€ m)
201712.541
201813.7516
201913.6177
202014.3214
202115.6971
202216.11,814
202316.2–413

Corporate structure

The shares in the Group of Michael Otto and his son, Benjamin Otto, have been combined in a foundation since 2016.[16]

The Group operates over 100 companies internationally, primarily in Germany, Europe, and the United States. The activities of the Otto Group's business include e-commerce, over-the-counter retail, and catalogue sales channels. In the 2023 financial year, the Otto Group generated revenue of €16.2 billion, of which around €12 billion was generated online, making the Otto Group one of the largest online retailers in the world.[17] The following is an extract of some subsidiaries:

Platforms, brands, and retailers

Services

Sustainability

Activities concerning sustainability are the responsibility of the executive board. These activities relate to both ecological and economic sustainability, which were anchored in the Otto Group's corporate objectives in 1986. The Otto Group pursues a partnership with Save the Children, among others.[18]

In 2005, the Aid by Trade Foundation was created, which originated the initiative Cotton made in Africa. The cotton sourced from growers of the Cotton made in Africa initiative is used by the Otto Group and other textile companies such as ASOS and S.Oliver.[19]

Criticism

In 2016, the UK branch of Hermes was criticized by The Guardian for paying its suppliers less than the minimum wage. Hermes couriers were self-employed and were paid based on the parcels delivered.[20] Hermes was again criticized by a major newspaper in 2021, when a The Times article published allegations about the mishandling of packages and bad customer service.[21]

Literature

Notes and References

  1. Book: Brock, Christian . Streubig . Andreas . Kenning . Peter . Kirchgeorg . Manfred . 2014 . Nachhaltigkeitsmanagement am Beispiel der Otto Group – Herausforderungen, Strategie und Umsetzung . Sustainable Marketing Management . de . Wiesbaden . Springer Fachmedien Wiesbaden . 978-3-658-02436-9 . 339–357 . .
  2. Web site: Tanner . Adam . 5 March 2014 . Amazon's War On The House Of Otto, Germany's $18 Billion Family . 21 January 2024 . . en.
  3. News: 9 July 2018 . Otto-Katalog wird nach 68 Jahren eingestellt . 21 January 2024 . Focus Online . de.
  4. Web site: Zeittafel . 21 January 2024 . Werner Otto Info . de.
  5. "Riesiger Richtkranz". Hamburger Abendblatt (in German). 17 December 1955.
  6. News: 25 December 1994 . Mit Otto ans Meer . 22 January 2024 . . de . 2195-1349.
  7. News: Landler . Mark . 11 September 2004 . For Spiegel Investor, a Hard Lesson in Securities Law . 21 January 2024 . The New York Times.
  8. Book: Joseph, Ugesh A. . The 'Made in Germany' Champion Brands . 9 March 2016 . Routledge . 978-1-317-02503-0 . 35–37 . en .
  9. "Otto übernimmt Quelle-Markenrechte". Deutscher Fachverlag GmbH (in German). 5 November 2009.
  10. Web site: Hofmann . Alex . 25 May 2023 . About You hat bereits mehr Kunden als Otto.de – steigerte aber den Verlust um 100 Millionen Euro . 24 January 2024 . Business Insider . de-DE.
  11. Web site: 20 September 2016 . Die 10 größten Online-Shops . 21 January 2024 . W&V . de.
  12. Web site: Kort . Katharina . 12 September 2009 . Otto-Group setzt auf Roboter von Boston Dynamics . 24 January 2024 . . de.
  13. Web site: Kolf . Florian . Alvares de Souza Soares . Philipp . 9 May 2023 . Handelsblatt . 24 January 2024 . . de.
  14. Web site: Evans . Scarlett . 11 September 2023 . Boston Dynamics Robots to Increase Efficiencies at Otto Group Facilities . 24 January 2024 . IOT World Today.
  15. Web site: Annual Reports . 2024-03-30 . www.ottogroup.com . en.
  16. Web site: 1 April 2015 . Michael Otto gibt Beteiligung in Stiftung . 24 January 2024 . Handelsblatt.
  17. Web site: Otto Group Annual Report . 21 January 2024 . Otto Group.
  18. Web site: Probe . Anja . 9 June 2022 . Hamburger bauen Partnerschaft mit Save the Children aus: Otto Group kämpft verstärkt gegen Kinderarbeit . 21 January 2024 . TextilWirtschaft . de.
  19. Web site: Schaer . Cathrin . 27 March 2019 . German Retail Giant Plans World-First With Sustainability Bond Issue . 21 January 2024 . . en-US.
  20. News: Booth . Robert . Osborne . Hilary . Evans . Tara . 18 July 2016 . Revealed: delivery giant Hermes pays some couriers less than living wage . 22 January 2024 . . en-GB . 0261-3077.
  21. News: Bentley . Paul Morgan . 17 December 2021 . Hermes: Our undercover reporter sees couriers manhandle parcels and customers mocked . 22 January 2024 . . en . 0140-0460.