Hair clippers "a hit": Corona crisis brings Otto dream growth

Wednesday January 27, 2021

Hair clippers "a hit"
Corona crisis brings Otto dream growth

The German mail order company Otto Group is one of the big beneficiaries of the Corona crisis – and does not have to hide behind US rivals Amazon and Ebay when it comes to growth in online retail. The Group's own parcel service can also benefit from the order boom.

The corona crisis has brought the Hamburg-based Otto Group almost magical growth in online retail. Compared to the 2019/20 financial year, sales in this financial year are expected to increase by around 23 percent to almost ten billion euros, the retail and service group announced on the basis of initial forecasts. In the German online trade alone, Otto will probably turn over around 6.9 billion euros by the official end of the financial year on February 28 – after 5.7 billion euros in the same period last year.

The Otto Group thus clearly exceeds the average increase in sales of all e-commerce retailers determined by the Federal Association of E-Commerce and Mail Order Germany (bevh) with 14.6 percent. The group is thus in the league of Amazon and Ebay, which were also able to increase their sales by more than 20 percent – and thus secured almost half of the entire online business in 2020.

The Otto Group Board Member for E-Commerce, Sebastian Klauke, spoke of "really good numbers". The pandemic has accelerated the change of customers to the online area. On the other hand, Otto has been driving digital transformation for years. And "in the 2021/22 financial year we will again invest a significant three-digit million amount in technology and thus in the further digitization of our various business models," announced Klauke.

Furniture particularly in demand

The single company Otto alone was able to win over 1,000 new partner companies with its new platform model in the current financial year. At the same time, the number of active customers at otto.de rose by almost 30 percent to around 9.4 million. Furniture and home accessories as well as technology and multimedia are particularly in demand. And hair clippers are also a hit because hairdressers are closed due to corona, as Klauke said.

Klauke assumes that it will be able to retain most of the customers – and thus corresponds to the assessments of the Federal Association of E-Commerce. In his study "Interactive Retail in Germany" from January to December 2020, he surveyed around 40,000 private individuals. And then 75 percent want to buy as much or even more online in the future.

Like all other companies, the Otto Group suffered losses in stationary retail because of the Corona closings. However, in many places it was possible to compensate or even overcompensate for the lost sales online, said Klauke, referring to Manufactum and Crate and Barrel in the USA.

Your own parcel service provider benefits

The high increases in sales in online retail also had a direct impact on the capacity utilization of the Group's own parcel service provider Hermes Germany. It delivered 126 million shipments from October to December in the 2020 Christmas business alone. "That is an absolute record amount and an increase of 25 percent compared to the previous year," said Klauke. The Otto Group plans to publish the overall results for the 2020/21 financial year in May.

In addition to online trading, the group with its 50,000 employees also does business in the areas of logistics and distribution, financial services, software solutions and numerous stationary retail stores. The Group's turnover in the 2019/20 financial year was around 14.3 billion euros.