We are shaping the digital future – the transformation at OTTO

September 1995. A crackling, squeaking sound can be heard. For almost 20 seconds, it makes a distinctive buzzing and beeping noise. The screeching coming from the modem is the soundtrack to how the Internet sounded in the early days. In low resolution and in red on a grey background, the OTTO logo slowly emerges on the screen. The site, which forms slowly on the screen, is one of the first German shopping platforms on the Internet. For OTTO it is a huge step forward on the journey toward the digital future. Two decades later and otto.de is the largest German online shop for fashion and lifestyle (B2C). It accounts for 90 per cent of the company’s overall revenues. This makes OTTO the only ‘big book’ mail-order company to have successfully made the leap into the digital age. But how is OTTO coping with the challenges of this transformation? What is the online retailer’s formula for success? And how are the company and its employees adjusting to the constant change process?

 
Alexander Birken

Alexander Birken

Member of the Executive Board, Multichannel Distance Selling Otto Group, Spokesman OTTO
 

E-commerce is the greatest opportunity we have ever been given.

 

“E-commerce is the biggest opportunity we have ever been given”, says Alexander Birken, Member of the Executive Board, Multichannel Distance Selling Otto Group, Spokesman OTTO. Two decades ago OTTO recognised this opportunity and launched itself on a voyage of discovery as an online retail pioneer. “With courage, flexibility and our own technical expertise, we succeeded in growing into one of Germany’s leading online retailers and developing an outstanding starting position for the future.”

Technical expertise at OTTO: success factor and creative playground

The questions of the past have long since been answered. Among them, topics such as the famous OTTO catalogue are not a big issue any longer. It slots into a range of marketing activities which OTTO uses to appeal to and inspire its customers.

Katalog Internetzoom

OTTO’s future is digital. It is precisely for this reason that the online retailer is pushing the expansion of its internal IT organisation and on 1 August 2015 welcomed its own Member of the OTTO Management Board for Technology (CIO), Dr Michael Müller-Wünsch. He has set himself the goal of integrating IT even more closely into daily business at OTTO. “Today, IT no longer functions as a silo, or as an engine-room in the background. IT must be ever-present and play an integral role. Changes in consumer behaviour are always technology-driven, which is why we investigate the latest technological opportunities at an early stage and evaluate their potential and benefit for the customer.”

 
Dr. Michael Müller-Wünsch

Dr. Michael Müller-Wünsch

Member of the OTTO Management Board for Technology (CIO)
 

The more creatively we approach technology, the more successful we become.

 

As part of our digitalisation and transformation, the topic of technology has continually grown in importance at OTTO over recent years. Today, the online retailer relies on its own in-house technical expertise. The company’s own developments in the areas of e-commerce, business intelligence and online marketing can be tailored completely to its needs, maximising flexibility and allowing for ongoing agile development. A key testament to OTTO’s technical expertise is the self-developed online shop which was launched in November 2013 under the project name Lhotse. This has allowed otto.de to respond independently and quickly to customer demands and adapt to keep pace with the dynamism of the market. OTTO recently introduced responsive design, which now permits one standard site to be viewed on any device – with the site adapting itself automatically to best suit the particular screen size, whether on a PC, tablet or smartphone.

 

Knowing what will be bought tomorrow – Predictive Analytics makes it possible

There are over two million articles for customers to choose from on otto.de, and the range is constantly changing. This gives rise to the need to always make decisions under incredible time pressure. OTTO recognised early on that standard forecasting methods such as the rule of three or traditional statistics no longer satisfy the growing complexity of the business model, so it relies on the help of self-learning algorithms, in article sales forecasts for instance. The enormous potential of this technology was also recognised in July 2014 by the jury of the Deutsche Innovationspreis (German award for innovation). This won OTTO an award in the ‘Large Companies’ category for its integration and use of predictive analytics software. Using the solution developed by Group shareholding Blue Yonder, the Hamburg-based online retailer can forecast the purchasing behaviour of its customers with ever-increasing accuracy. For instance it can predict up to ten weeks in advance, and with a probability accuracy of 90 per cent, how often a certain dress will be ordered in a specific calendar week. “Here too, technology opens up completely new ways of thinking and working for us. Predictive analytics allows us to reduce residual stock levels and, at the same time, increase our deliverability rate. As a result, besides improved operational results this also brings us greater customer satisfaction rates. Last but not least, more accurate merchandising also makes an important contribution to ensuring efficient use of resources”, says Dr Michael Heller, Member of the OTTO Management Board, Categories.

 
Dr. Michael Heller

Dr. Michael Heller

Member of the OTTO Management Board for Categories
 

Technologies open up completely new ways of thinking and working for us. OTTO knows what will be bought tomorrow.

 

The Hanseatic approach to disruption

Marc Opelt, Member of the OTTO Management Board, Marketing & Sales explains that the transformation process at OTTO has been handled in an entirely unique way. “We recognised early on that the digital transformation does not always mean that we need to do away with the old business model. The traditional way of doing business has financed the transformation at OTTO over the years. This approach is less headline-grabbing than radical growth stories, but it is evidently also more successful. We call it the Hanseatic approach to disruption.” The underlying challenges of the transformation still exist, however. This includes the task of winning employees around to the idea that the transformation process is never completed.

 
Marc Opelt

Marc Opelt

Member of the OTTO Management Board for Marketing & Sales
 

In general, people are not huge fans of change, so it is even more important that we see change as a challenge we can all rise to.

 

The OTTO Vision: we are shaping the digital future

To make maximum use of the opportunities presented by the transformation, the online retailer has developed a clear online strategy and an overarching framework. All 4,350 OTTO staff jointly searched for a unifying guiding principle. In a participative process, each opinion was taken onboard, each vote was counted and a unifying guiding principle was formed from the results. The outcome is the OTTO Vision.

 
Katy Roewer

Katy Roewer

Member of the OTTO Management Board for Service
 

Our Vision, with the guiding principle ‘We are shaping the digital future’ is designed to boost the cultural change at OTTO. It is now in our hands to bring this Vision to life.

 

These new values now also need to be shared with potential applicants. As an e-commerce business, OTTO is looking for a growing number of up-and-comers who live their lives immersed in new technology and who are digital natives. Launched by OTTO in July 2015, ROT4 is a new employer campaign aimed at those who are passionate about working on the future of online shopping. “We deliberately want to appear different to how people expect OTTO to be, and are bold in the way we communicate about our e-commerce and IT expertise”, says Katy Roewer. “With ROT4, we are showing potential applicants what’s in store for them: teams and colleagues who are together shaping the future of e-commerce.”

ROT4 Kampagnenbildzoom
 

The unmistakeable screeching of the modem back in 1995 has fallen silent today. The Internet has stopped screeching and has grown up. OTTO has grown with the Internet and changed itself successfully into an e-commerce business. The digital transformation? At OTTO it is seen as an opportunity, and is adopted proactively – for the next steps in the journey toward the digital future.

20 years of otto.de – a journey through time covering the history of the Internet, looking at the major Web phenomena and technological highlights of the past 20 years.zoom
20 years of otto.de – a journey through time covering the history of the Internet, looking at the major Web phenomena and technological highlights of the past 20 years.

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Contact

Frank Surholt
Corporate PR
Phone +49 (0)40 64 61 8065
Fax +49 (0)40 64 64 8065
 
 

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