With the opening of its website to third parties in 2020, Otto hoped to regain market share in the online retail market. In the initial years, the company enjoyed the benefits of the platform model, but now it has hit a snag. Fee increases, disputes with selling partners, and internal changes have led to a crisis.
This conclusion is drawn by Handelsblatt about the iconic shipping company from Germany. The business newspaper writes: “Germany’s second-largest online marketplace is in deep crisis. As a result, Otto.de is losing hundreds of external retailers who sell via the Hamburg-based company’s platform.”
Otto’s marketplace
Local hero Otto, which grew as a mail-order company with physical catalogs, decided at the beginning of this decade to open its doors to external retailers and brands, following market leader Amazon. Less than a year ago, CEO Marc Opelt referred to the platform model as the “key growth engine” of the online department store, accounting for about one-third of income.
The platform model was Otto’s ‘key growth engine’.
Last spring, Otto announced preparations to open its online marketplace to partners in Europe. During this time, Bodo Kipper, who was responsible for the marketplace, left Otto due to differences in strategic direction, as the company acknowledged.
Seller fees
Not long after, Otto announced a drastic increase in its selling fees, raising the basic fee from 39.90 euros to 99.90 euros per month. According to Otto, this was necessary due to the fact that many partner sellers had added low-quality products to the marketplace in the past. Additionally, Otto increased commissions for certain product categories.
Deleted accounts
According to Handelsblatt, the fee increases have contributed to merchants turning their backs on Otto. The business newspaper counted 1,178 deleted seller accounts in the past five months.
Handelsblatt counted 1,178 deleted seller accounts.
Otto has confirmed that merchants have left but denies that it is as many as reported. The company states that about five hundred sellers left the platform after the fee change this spring.
