18.02.2015 | Hamburg
In the coming financial year 2015/2016, the Otto Group plans a high double-digit million investment in the venture capital business. With this move, the international retail and services group will build on its position as one of the largest and most successful venture capital providers in Germany.
“With our venture activities we are pursuing our ambitious goal of discovering promising digital business models in Europe, the US and Asia in their early phases and to benefit from them in the Otto Group’s retail and service businesses as well”, explained Dr Rainer Hillebrand, Deputy Chairman of the Executive Board, the Group’s strategy at a recent press conference. Focus of the start-ups is to be primarily on business models in the areas of e-commerce, mobile and software, Hillebrand continued. To date, the Otto Group has invested an amount in the mid-triple-digit millions in over 100 shareholdings of more than 10 countries.
Since 2008 the Otto Group has been active in the venture capital business with e.ventures, which invests successfully in digital business models in the early and later-stage phases. “As venture capitalists, we are successful in financing global start-ups with high disruptive potential, most recently in the traditional service industries, the financial sector and in the market for networked appliances”, says Andreas Haug, partner at e.ventures. Since 2012, the Otto Group has also participated in Project A Ventures, the operational early-phase investor and company builder, as founding partner and investor. “We are very happy with our performance. With regard to our annual return we are among the best-developing funds in Europe, a fact that has been confirmed by experts and institutional investors. In addition, we are seeing a significant number of very well-positioned and high-potential companies in our portfolio, which will continue to drive return on investment in the future”, says Dr Florian Heinemann, co-founder and CEO at Project A Ventures.
Some of e.ventures’ successful involvements are the auctionata platform (www.auctionata.de), Azimo (www.azimo.com) and farfetch (www.farfetch.de), a portal for luxury goods, among many others. The Project A portfolio includes companies such as Spryker (www.spryker.de), nu3 (www.nu3.de), World Remit (www.worldremit.com) and Tictail (www.tictail.com).
This combination of venture capital financing is unique in the German market and a significant component of the Group’s e-commerce strategy. “Overall, we are very well positioned to face future challenges in the coming years with our e-commerce strategy, which is based on the four pillars of Transforming, Participating, Creating and Venturing”, said Dr Rainer Hillebrand in explaining the Group's e-commerce strategy.
As a pioneer in Multichannel Retail (mail order, over-the-counter and online retail), the Otto Group has driven digital transformation step by step in its approximately 123 companies over the last few years. The best example of this is the core-company OTTO itself. With the adjustments carried out in its retail-related services, for example in sourcing, logistics, Web-enabling and data analysis as well as payments to cope with the challenges of the digital age, the retail group also participates in global e-commerce as a service provider, in line with its second pillar. Blue Yonder, for example, has been well received in the market, as has the payment system Yapital. With the ‘Collins’ business model launched in 2014, the company has successfully expanded into founding online pure plays, which corresponds to the third pillar of its e-commerce strategy, the ‘Create’ mandate.
A three-year plan to the end of the 2015/2016 financial year budgets investments of around 300 million euros in total towards the implementation of the e-commerce strategy in the core business.
According to preliminary estimates for its retail and service business, the Otto Group expects online sales amounting to around 6.3 billion euros (a plus of around 2.5 per cent) for the current 2014/15 financial year (28 February), thereby confirming its leading position as second-largest online retailer to end-consumers worldwide. In Germany, where it has more than 100 online shops and an online turnover forecast of around 4.1 billion euros (a plus of around 3 per cent), the Otto Group is market-leader in online retail for fashion and furniture. While online sales of furniture, home accessories and electronics grew strongly, the Otto Group could not escape the weak overall market in Germany for textiles, nor the declines in international markets such as Russia and France.
Nevertheless, the outlook for the coming business year is positive. “In the core business, as in the area of Corporate Venturing, we will continue to bundle our strengths in the coming years. It is our goal to continue to secure our power of innovation through continuous access to new ideas, promising business models and qualified, entrepreneurially-minded talent from the business and technology sectors, and to hold our ground against the competition with successful digital business models”, explains Dr Rainer Hillebrand.