Sales and Distribution Case Study

The Otto Group: Germany's Leading Private Retailer's Multi-channel Sales Strategy

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Abstract:
In 1949, Werner Otto founded Otto Versand as a mail-order shoe company in Germany. Through alliances, joint ventures and acquisitions, the company diversified into textile, furniture, logistics and hardware sectors eventually. The Otto Group became a mail-order behemoth in Germany, specialsing in catalogue retailing. In 1981, Michael Otto, son of the founder, became the CEO of the Group. Michael Otto strengthened the competitive position of the Group by introducing a multi-channel sales strategy in the mid-1990s. The new strategy included selling via three prime routes: e-commerce, catalogue and over-the-counter. Under e-commerce, Otto also provided t-commerce (through television) and m-commerce (through mobile) services. Under his leadership, Otto became the largest international mail-order and catalogue retail company and the second largest online retailer after Amazon.

Pedagogical Objectives:

• To discuss the growth of the Otto Group over the years
• To discuss the multi-channel sales strategy introduced by Michael Otto and identify the underlying reasons for its success
• To discuss the sustainability of the advantage that the Otto Group has over its competitors in the light of growing competition and a difficult business environment.

Keywords : The Otto Group; Multi-channel sales strategy; E-retailing; Catalogue retailing; Over-the-counter retailing; Michael Otto; Mail-order; Expansion strategy; Competitive strategy; Business environment; Growth Strategies Case Study; M-commerce and T-commerce; Introscope solution; Microsoft Windows XP Media Center Edition 2005; German consumer behaviour; Amazon and eBay

Contents:

• The Otto Group of Germany
• Multi-channel Sales Strategy of the Otto Group
• Future Challenges