Internet Retailer reports on the growing success of Germany’s Otto Group, the world’s second largest multichannel retailer. Traditionally a mail-order retailer, the Internet “saved our business” according to Thilo Bendler, vice president of Otto. The multichannel retailer now benefits from dynamic pricing to maximise revenues and profit margins.
Germany-based Otto Group manages a portfolio of 120 companies and brands, including 60 online retailers and fulfillment company Hermes. Traditionally the world’s largest mail-order company, eCommerce has become core to the group’s strategy, with revenues from online accounting for more than 6 billion euros in its fiscal year ending February 28, up 7.6% from a year earlier.
According to Thilo Bendler, Vice President of Otto Group, “The Internet saved our business. Who wants a catalog with 1,500 pages?” Bendler believes that Otto’s story is proof that it’s possible to change a retail business model as ‘we understood that if we didn’t, we would go bankrupt.’
The move from catalogue to eCommerce has meant that Otto remains relevant to today’s digital savvy shopper – and has also enabled the retailer to change product assortment and pricing much more easily and quickly. “Customers don’t expect prices to be the same for weeks on end. They understand it is a supply and demand rule.”
Otto Group works with Profitero partner Blue Yonder to optimise prices daily, and sometimes more frequently. In a dynamic pricing pilot, Otto was shown to have increased optimised sales by 9%, turnover by more than 6% and profit by 5%. As a result, optimised pricing has now been rolled out across the entire product range.
As more and more retailers realise the benefits of dynamic pricing to maximise profit margins and revenue, we’re likely to see many more retailers experiment and include dynamic pricing in their strategy in 2014.
To find out more about how Profitero and Blue Yonder can deliver the most accurate pricing insights to deliver more effective decision making and maximise profits, email us at firstname.lastname@example.org or visit www.profitero.com.
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Our pricing data can be seamlessly integrated into price optimization solutions such as Blue Yonder, Revionics and IBM DemandTec, to deliver more accurate and effective price optimization. Profitero is also the preferred supplier of online competitor pricing data to Nielsen’s retail customers across more than 100 countries.