For the second year in a row, the Hamburg-based group has presented poor annual figures. After a decline of 12 percent in the previous year, sales shrank by 9 percent in the 2023/24 financial year. The slump hit Otto.de’s retail business particularly hard. In contrast, all marketplace key figures grew strongly in both years, with marketplace GMV now estimated at over 2 billion euros and 6,500 retailers currently using the platform. It is therefore fair to say that the only thing that is going well at Otto is the marketplace. And yet the head of the marketplace, of all people, left the company at the end of February. What does this mean for the platform?
The Head of Marketplace has left Otto not on good terms
Bodo Kipper, Head of Retail and Marketplace, actually did a lot of things right: the ex-Amazonian was brought to Hamburg in 2020 to drive the company’s own marketplace forward – and he delivered. The marketplace has seen double-digit growth in each of the last two financial years. And the automatic connection has seen the number of sellers skyrocket to 6,500 within a short space of time. The product range grow significantly as well. The marketplace GMV is now over 2 billion euros. And even if there are still some issues, onboarding is complicated, returns rates are above average in all categories and the retail media program is underdeveloped – many retailers view the Otto Group platform with benevolence and wish it a strong future. Actually.
Now Bodo Kipper has left the Otto Group at the end of February, and apparently not on good terms, but due to “different perspectives on the strategic direction” of Otto.de. His duties will be taken over temporarily by the other members of the Executive Board.
OTTO Group: Can a marketplace do too well?
In view of this Otto quake, it is hard to avoid looking for the reasons in the different development of the marketplace and retail business. While the marketplace has been growing continuously at double-digit rates for three years, the retail business is experiencing difficult times: For the second time in a row, the Otto Group’s sales declined significantly. Otto.de shrank by 12 percent in 2022/23 and by 9 percent in 2023/24. If you deduct the approximately 2 billion marketplace GMV and its double-digit growth from these figures, it quickly becomes clear that Otto.de’s own business is doing badly – or that of the marketplace retailers is doing too well.
“This development is definitely a challenge for our own retail business, which has to prove itself on a daily basis,” admitted Otto spokeswoman Annika Remberg when asked. “Accordingly, we are taking the initiative. We are focusing on flexibility in our product selection and are constantly fine-tuning categories. We are pursuing a clear strategy with our own retail business and are managing the development of the marketplace in such a way that the retailer and marketplace offerings dovetail in the best possible way.”
How does this affect the platform in concrete terms?
Last year, Otto significantly increased the fees for sales in some categories. So they are now in line with the market standard compared to Amazon (around 15 percent for household electronics). But the fee increase was not communicated in advance or particularly clearly, but was hidden in the new terms and conditions – although the fees in some categories were more than doubled. “This has annoyed many retailers and stifled the marketplace business in some areas,” criticizes Andreas Müller, President of the bvoh. He is himself a retailer on the Otto marketplace from the very beginning. “After all, in addition to the marketplace fees, Otto also has an above-average returns rate with chargeable returns for the retailer. This makes the marketplace more expensive for retailers at the end of the day than other platforms – and makes it less attractive.”
It is striking that the fee increases primarily affect categories in which Otto is traditionally strong. Spokeswoman Remberg also confirms this: while Otto has more than doubled its retailer fees in the white goods category – which has always been a core area of its own business. The focus of the retail business in the Garden & DIY segment, on the other hand, has been dissolved. “As a retailer, we continue to offer items from this range, but leave the focus on breadth and depth to our marketplace partners.” At the same time, the expansion of the marketplace continues, with new marketplace categories in which Otto’s own business holds no shares being added almost every month. From April, for example, the first 7 percent category will be opened to marketplace partners with food supplements.
Strategy or punishment for retailers?
“At the beginning, the focus was primarily on rapidly building up the marketplace and expanding the variety of products for our customers. Now, four years after the start of automated onboarding and with more than 6,500 partners already on the marketplace, we are making adjustments,” says Remberg. “To do this, we are constantly analyzing our strengths and challenges in our own retail business and thinking very carefully about how we can shape our product ranges going forward.”
Market observer (and well-known industry critic of Otto) Jochen Krisch puts it differently: he sees Otto’s focus clearly on the retail business – and the fee increases as a receipt for the miserable figures. “Otto.de’s retail sales simply collapsed too quickly. This is likely to have put a dent in Otto’s results,” says the expert. “In my view, this is punishment for the marketplace retailers. Apparently, the impression on the retail side was that the marketplace retailers were getting off too lightly. Not really conducive to building up a marketplace business, but understandable (from Otto’s point of view). It is likely to scare off many a marketplace retailer.” Otto, for its part, is making every effort to ensure that the contradictory reports from within the company and the departure of Bodo Kipper are understood as part of a long-term corporate and platform strategy. “Our overarching strategy will not change,” says Remberg. “What we have to keep readjusting is the path to the goal. That’s why we are looking at questions such as, how do we design certain product ranges? Which price segments do we want and need to offer in our own retail business for each product range? Which services differentiate our own retail business from partner offers (e.g. installation and connection service)?”
OTTO Group: further management changes planned for 2025 and 2026
Whether the change in leadership at Otto announced today – Michael Otto will hand over Group management to his son Benjamin Otto in 2026 and CEO Alexander Birken will hand over his position to Petra Scharner-Wolff in 2025 – fits more into the “long-term business strategy” or “open panic in Hamburg” narrative in view of the facts is up to the observer. Personally, I tend to see the personnel changes as long overdue – or alternatively as a new edition of the principle “If everything goes wrong, appoint a woman to the top”.
What is clear, however, is that the German e-commerce landscape can only benefit from a strong local marketplace player. This explains the high level of interest shown by retailers, brands and service providers in Otto Market – and the uncertainty caused by the current upheavals.
It remains to be seen who will come out on top in the next round of the battle between the marketplace and the Otto Group’s retail business. The press release on the results for the 2023/24 financial year, which mentions logistics, AI and live shopping as areas of investment, is largely silent on the marketplace.
Conclusion
The current situation at the Otto Group shows a clear tension between the declining retail business and the rapidly growing marketplace. Despite the success of the marketplace, which has recorded double-digit growth and achieved a GMV of over 2 billion euros, the traditional retail business is suffering from declining sales. The departure of marketplace boss Bodo Kipper suggests different views on the strategic direction. The increase in merchant fees could be aimed at strengthening the trading business, but carries the risk of impairing the marketplace’s competitiveness and annoying merchants.