Dr. Caspar loves shoes

Its colours are chestnut and claret. The eyelets to hold its laces are square. And its white sole shows a music cassette exploded into its individual parts. Really, this striking old-school sports shoe deserves to be on display and given pride of place in the office of Dr. Stephanie Caspar, managing director of the online shoe shop Mirapodo. After all, it is the most famous item sold in the company’s brief history to date – during a photo shoot, it was worn by the Brazilian model Jesus Luz, famous for being pop star Madonna’s lover. Only Caspar doesn’t have an office of her own.

It’s a matter of principle for the 37-year-old, who in 2000 wrote her doctoral thesis on “The Internet as distribution channel” and owns 70 pairs of shoes herself. She uses varying desks in the Mirapodo loft in Berlin’s Prenzlauer Berg district. “I like to be at the heart of the action,” she says. “Sometimes in marketing, sometimes in purchasing. And always close to the service team. I also answer customer e-mails daily, so I can a get a feeling for what they want exactly.”

It’s hardly news that e-commerce has changed the flow of revenues and the way goods are handled. According to the German E-Commerce and Distance Selling Trade Association, multichannel retailers increased their online revenues by 14.7 percent in 2010. The company OTTO alone saw a nearly 30-percent leap in online sales last year, while Baur now generates roughly two-thirds of its total revenue with e-commerce Online sales across the Otto Group increased by around 25 percent to nearly five billion euros. The online business had first surpassed the catalogue business a year earlier.

Just how much e-commerce is changing business and the retail trade is apparent from the speed at which superior business models prevail at the expense of others. One example is the market for smartphones, where Nokia is under severe pressure from Apple and Google. And in social networks, Facebook has suddenly left Myspace and the German VZ networks in the dust.

Active in e-commerce for over a quarter-century

The Otto Group saw the digital developments coming early on – the company has been active in e-commerce for over a quarter-century. In recent years its activities have focused on social media like Facebook and Twitter, and on apps for smartphones and tablets.

The people in charge of innovation know exactly what they want – but are also willing to keep an open mind and try out new things. “We’re muddling our way up,” is how Dr. Rainer Hillebrand, Vice Chairman of the Otto Group Executive Board and Member of the OTTO Executive Board, Marketing, Sales, and E-Commerce, puts it slightly tongue-in-cheek. “With a customer base the size of ours, the path to online retailing is an evolutionary process. Many of the companies who attempted a radical e-commerce ‘revolution’ failed miserably. Our great strength is that we are willing to think in new ways, but always keeping our customers on board. This includes a readiness to experiment and allow for mistakes.” The company has been spared serious mishap, as the sales figures show.

Which doesn’t, however, eliminate the need for adjusting business models from time to time. discount24.de for instance, a discount online retailer wholly-owned by the Otto Group, underwent a strategic realignment – its own sales failed to yield the expected returns. The realignment was a success: today the e-commerce portal uses its well-established brand to partner with numerous online retailers, and offers customers a larger selection as well as independent purchasing advice.

Online retail relies on finely tuned and differentiated sales approaches – the Group now operates more than 50 different online shops. Developed from the core business, but now operating independently, they are part of a comprehensive multi-brand strategy. The spectrum is broad: from DIY products to office supplies, from elegant women’s fashions to sustainable products, home furnishings and entertainment electronics. This variety reflects changed consumer habits as well as a changing competitive environment.

Mirapodo’s development is an example of a different approach. Its company offices contain a massage table and foosball table, the workstations of its 50 employees have been draped in fishermen’s nets on occasion, and every once in a while you’ll find Caspar’s 4-year-old daughter running around the place – all of which would seem to indicate that this is a typical start-up. And yet the company, whose name was inspired by the Spanish for millipede, “miriápodo”, is a subsidiary of the Otto Group company Baur. “Many start-ups keep a low profile for a long time,” says Caspar. “We took a different approach: when we entered the market in March 2010, we were immediately able to ship 5,000 different pairs of shoes. Our learning curve was accordingly steep, but then again we always grow with our challenges and are capable of much more than we would think.”

50,000 shoe-loving shop visitors a day

The first stress test of its IT systems was akin to diving into the deep end. Shortly before entering the market, Mirapodo offered discount vouchers to new customers on Facebook. As a result of this promotion, suddenly there were more than 2,000 orders a day being received, instead of the usual trickle of about ten. Of course they could have used technology to simulate the business flows, but the customers’ direct feedback has paid off. “This spring we’ve noted that we have already built a large base of regular customers,” Caspar is happy to report.

The Mirapodo website gets 50,000 visitors a day, and their number is growing. The vendor attracts customers with a selection of around 15,000 different models that run the gamut from work to designer, from seniors’ to children’s shoes – in combination with 24-hour delivery, free shipping (including on returns), a 100-day period for free returns, and personal consultation. Like many other Otto Group online shops, the company also has a Facebook page, a Twitter account and a staff blog.

The market is fiercely competitive. “The Otto Group people realised early on that all of its strengths notwithstanding, their core business was at risk if a new niche supplier homes in on a particular category and does everything absolutely perfectly for that category,” says Caspar. “The key idea behind Mirapodo and similar shops is that we prefer to cannibalise ourselves before someone else does it – which, of course, does not exempt us from a keenly competitive environment.”
Innovations like the size compass developed by Mirapodo benefit the entire group. Mirapodo customers can use it to compare their own foot measurements with scans of shoe interiors. Since this greatly reduces the incidence of tedious returns, the concept will now be adopted by other shoe vendors in the Otto Group as well.

Beyond innovation, Mirapodo also lives by the other values encapsulated in the “The Power of Responsibility” mission. In terms of economic viability, the aim is for Mirapodo to become profitable within a few years, and establish itself as one of the most successful online shoe retailers in Europe. Diversity is reflected in the breadth of its range and on the management floor, where three of the eight company’s executives are women. And Mirapodo also actively practices sustainable business: customers will soon be asked via the social media whether they would accept used shipping boxes to reduce packaging waste.

Facebook and Twitter provide ways to approach young, Internet-savvy customers. But this also means that every company has to enter into a dialogue with end users that is authentic, direct, spontaneous and between equals, as customers can use a feedback channel to communicate at all times. The fact that distance sellers can use this to reduce their distance to the customer is both an opportunity and a challenge: word-of-mouth recommendations and excellent service can turn customers into ambassadors. By the same token, however, they have to accept a certain “pleasurable loss of control,” says Hillebrand.

For instance, in the online voting for a model contest run by OTTO on Facebook, a male student wearing women’s clothing, a gaudy wig and a thick layer of lipstick emerged as the winner. OTTO responded with aplomb and humour, and quickly gained the respect of the whole industry – as well as 140,000 new fans on Facebook.

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