Otto Catalog: I’m off then

The last of its kind: the printing presses at Prinovis in Nuremberg slipped into gear once again on November 22, 2018 to complete the bulk order from Hamburg. The last ever print version of the Otto Main Catalog, with a circulation of millions, showcases an extract of Otto’s vast range of consumer products on 656 pages.

All those people, who consistently enjoy having a pop at publishers because the circulations of their newspapers and magazines are heading south and who have always claimed that the “trad print media” have served their time anyhow, had a field day. 68 years after the company was established, Otto recently mailed its last main catalog. But it wasn’t put out of its misery by digitally smitten believers in progress, but was “done away with by customers themselves”, says Otto CEO Marc Opelt.

It may well be the case that 95% of Otto customers nowadays order goods online, instead of placing orders by order form, fax or telephone – yet Otto managers kept on stating right up to the last moment that the catalog was an important marketing tool, because customers gained inspiration by leafing through the catalog and then ordered the products they wanted on the Internet. And that has now changed all of a sudden? No, it hasn’t. That’s because other online retailers send out catalogs, get their customers in a buying mood in a relaxed environment (e.g. after work at home on the sofa), so that they order per click. They all increase their online sales with the aid of print products. Yet these aren’t weighty catalogs, they are publications tailored to their target audiences. That’s because those 1000-page tomes, which for decades functioned as the mail order companies’ shop windows and buying guides at the same time, have served their time.

Otto showcases around three million products online at its websites – so a catalog with just a few thousand can only be regarded as an extract from the mail order company’s diverse range of consumer products. And Otto continues to promote this select extract, which is matched to the preferences of each customer, using printed special catalogs, which tend to be thin booklets compared to the battleship that was the main catalog. But print is an integral part of the Group’s communication arsenal – but nowadays it comes in a smarter guise.

After all, web analysis nowadays provides accurate information about the preferences of each individual customer. So, it is surprising that the majority of orders (nearly 70%) are placed with Otto by cellphone. Remarkable, don’t you think? You usually think of the typical Otto customer as a “mom”, who leafs through the catalog of an evening surrounded by her family. How does that dovetail with online? On the one hand, with the fact that the Otto Group’s customers are getting younger on the whole – and on the other with the acceptance of cellphones and apps in all sections of the population. And the fact that the PC is no longer the communication channel of choice is actually much more striking than the fact that customers no longer enjoy wading through written ordering processes.

The disruptor mail order business has undergone an overhaul

But it happens to be in the nature of any innovation that it is replaced at some point by a better one. Back in its day the Otto catalog was also a disruptor. What started out in 1950 as a handbound publication with pasted-in photos was distance selling in its purest form and an attack on the bricks-and-mortar shoe trade. Founder Werner Otto scaled his business model long before Internet start-ups discovered this buzzword, made do without a network of outlets and nevertheless reached out to even the tiniest of villages. In its heyday the Otto catalog was more than 1000 pages thick and had a circulation of ten million copies.

The catalog thus evolved to become an institution. That’s why I am also a bit sad. That’s because a small piece of one’s childhood – that dreaming of things that you would like to have and perhaps that first spending spree too – is bowing out somehow. What Otto brought to German households twice a year always exuded the spirit of the age. The catalogs not only reflected trends but also set them – that was how chic, modern men and women should be dressed.

But Otto would have been crazy to ignore the Internet just because it cherishes its own tradition. otto.de has been online since the mid-1990s. In parallel the product range came by catalog twice a year postage paid, although (even back then) sophisticated product presentation and buying behavior analyses enabled Otto’s online business to be boosted with the aid of the printed catalog. And in the last few years the catalog professionals have managed to blend the rather rigid products listings with storytelling content to form a magalog – a mixture of magazine and catalog.

“In my opinion parting with the main catalog is ultimately a logical step to take. That’s because what characterizes print these days is not mass-produced gravure print, but smart use of IT and print.” – Bernd Zipper

Discontinuing the main catalog: certainly not flawed thinking

However, customers’ changed buying behaviors have not gone unnoticed by Otto. Only by doing so did the mail order business manage to make the leap into the Internet age, while its former competitors Quelle and Neckermann failed. Nowadays Otto generates sales of around 3.0 bn. Euros in Germany, while the Group’s global eCommerce sales account for around 7.9 bn. Euros of its total sales of more than 13.6 bn. Euros. Although that makes the Otto Group one of the eCommerce big boys, but compared to its rival Amazon, its sales tend to be rather insignificant. In 2017 Amazon generated sales in excess of 16 bn. USD just in Germany alone and almost 180 bn. USD worldwide.

Otto’s management therefore can’t be accused of flawed thinking in discontinuing the semi-annual catalog. That’s because the core Otto brand only accounts for some 20% of group sales. Some of the companies now owned by the Otto Group may come as a surprise to some people – it owns and operates around 100 online stores, including Manufactum, Baur Schwab, Heine, Lascana, Witt, Bonprix, MyToys etc. The Group also provides financial services as well as owning the Hermes parcel service. Incidentally one of its major clients is Amazon. Otto therefore also benefits when customers buy from the competition. It will therefore be fascinating to see how Otto harnesses digital print for its special catalogs, mailshots and multichannel campaigns. That’s because the logical consequence of that decision can only be an individualization of its customer approach.

My take: I admit it – I have actually been expecting this for years. The big, multimillion-circulation Otto catalog was sent out to customers for the last time on December 4, 2018. The end of an era, but no print disaster. To enable it to hold its own against online colossus Amazon, Otto has given the Group and its online marketing platforms a radical shake-up in the last few years. This mail order business has long since evolved into one of Germany’s leading online retailers and can definitely be regarded as a grandee of the industry compared to many a trendy start-up. But Otto has done quite a lot right – especially with its “we are where our customers are” strategy. Web analysis and big data nowadays provide you with accurate information about customer preferences. On that note, why not check out whereabouts your customers are. It’s worth it.

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Otto Catalog: I’m off then
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Otto Catalog: I’m off then
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The last of its kind: the printing presses at Prinovis in Nuremberg slipped into gear once again on November 22, 2018 to complete the bulk order from Hamburg. The last ever print version of the Otto Main Catalog, with a circulation of millions, showcases an extract of Otto’s vast range of consumer products on 656 pages.
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beyond-print.net
2019-01-23T08:31:02+00:0023.01.2019|Market|0 Comments

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