First we thought: Why does Germany’s biggest daily financial newspaper, the Handelsblatt published by the Holtzbrink company in Düsseldorf, report so prominently on page 1 about the fact that aboutyou exists and continues the praise extensively on the inside? Not only the Handelsblatt, but also the news agency dpa and the national German daily Süddeutsche Zeitung (SZ) dedicate articles to About You. Kristina Läsker in the SZ, however, comments in a rather unflattering fashion when she says that Benjamin Otto, who stands behind the E-Commerce Website 'about you', is standing in a factory in Hamburg and looks down upon the journalists who are sitting on cardboard stools in front of him. Ouch:
Doesn’t sound so great when dealing with journalists, but this could be judged as a classic mistake of a young start-up. It is fitting that aboutyou.de explains openly in there Website-category ‘Jobs’ that they are looking for a PR manager (m/f) to support the marketing team – whilst making it sound as if company communication and public relations were primarily male jobs. Like this, it should be hard to find good press people.
In any case, one should come to the conclusion that the high media attention regarding About You is mainly due to one fact: The person behind aboutyou.de is Michael Otto’s son Benjamin Otto. Michael Otto is the almighty chairman of the board of the Otto Group and one of the worlds 3000 known billionaires. However, the legal information on the website states Sebastian Betz, Tarek Müller and Hannes Wiese as executives and doesn’t mention Benjamin Otto. For now, this does not indicate that Benjamin Otto assumes first hand business responsibility.
From a strategic point of view, this could mean that the Otto offspring is being protected in order not to obstruct his possible start at the Otto Group – just in case About You fails and does not manage to get into the black. However, we will try to find out if About You’s concept is really as innovative as its founders say and give an evaluation regarding About You in this article.
One of the first things we notice is the rather unconventional legal construct: Whilst the legal information on aboutyou.de only mentions the About You GmbH, there is hardly a hint that the newly founded Collins GmbH & Co. KG also seems to be involved. This is where we find the name Otto: registered as executives are Benjamin Otto and Tarek Müller. On Collins GmbH & Co. KG’s website, we find yet another company. There is also the Collins Verwaltungs GmbH – the managers of which are Benjamin Otto and Tarek Müller.
About You does not hold back singing its own praise. In its own description, it says that the fashion start-up of the Otto Group wants to introduce a new business model, an ‘open commerce’ project. According to this description, this was started by Benjamin Otto (38), who also acts as CEO (so why is he not mentioned as such in About You GmbH’s legal information?), and Tarek Müller (25). With About You, the company now offers ‘the first open business model on the German e-commerce market.’
Well – sounds big, somehow even too big and a lot like PR language. But alright, maybe we just understand too little of the fashion industry. In any case, the description continues that, based on a new infrastructure, shops with their own fashion apps for the digital generation are being created in cooperation with creative heads, developers, brand suppliers and traders. Collins’ first brands are, according to this description, ABOUT YOU and EDITED.
We are still having trouble understanding this – what is it that differentiates About You from its competitors? Underpants are underpants are underpants – at least that’s our opinion. Ok, there are differences in quality, form, colour and price. But what exactly is it that’s so big and innovative about About You that tempts Otto Group to talk about an allegedly big innovation in this case?
Let’s see what Benjamin Otto, Michael Otto’s photogenic son, has to say. He says that e-commerce is only at the beginning of a new digital era. Otto is the financial backer, the entrepreneur and the CEO of Collins, the Otto Group company that’s behind About You.
Benjamin Otto continues that it is their goal to make shopping for the young generation as individual and inspiring as their digital world already is. That is why, he explains in a rather grandiose manner, the first open commerce business model on the German market has been established and a sum in the triple figure million range has been invested by the Otto Group.
As we continue reading, we learn that Collins apparently supports the democratisation of e-commerce, as they put it, by drastically opening up to creative folks on the market such as content suppliers, developers, brand suppliers and merchants. In order to do this, they would have third parties develop a new kind of approach to fashion in terms of content, social media and mobile applications, all of which on the basis of a newly developed technology and business platform.
This made us come to a halt again: we still don’t understand what is meant exactly? How does About You now democratise the entirety of the e-commerce market in the fashion industry which is mainly divided between giants such as Amazon, Ebay, Otto or Zalando anyways?
It is not exactly convincing if the entire democratisation approach mainly consists of offering every fashion designer access to an online shop. However, even up to this point we don’t understand: Is this what About You offers?
The explanation given by co-founder Tarek Müller is also not very enlightening for us. He says that, in the long run, the best ideas are not developed within one company alone but mostly by individual creatives with which we can open up a new dimension for online commerce.
We carry on reading that the shopping brand ABOUT YOU was brought to life following this main thought and now offers young men and women between the ages of 20 and 40 a courageous online shop with aboutyou.de which extends its own fashion range of about 50,000 articles by an app portfolio that includes ideas of external partners. According to this explanation, creative, developers and suppliers had realised a rich variety of app concepts for the launch of the shop, even before the consumers would be officially informed in Autumn 2014.
Up until now we see mainly a lot of colourful soap bubbles rising without actually understanding, dear Benjamin Otto, what exactly it is that’s so innovative?
So let’s continue to move along the facts that we can actually understand. In any case, About You is one of the latest big projects of the biggest German mail order service provider, Otto Group. Besides the well-known Otto mail order service, the company which is based in Hamburg Bahrenfeld and was founded after the Second World War by Werner Otto also owns the logistics company Hermes and the ECE shopping centers which operate successfully across Europe. The Otto Group has 54,000 employees worldwide.
Since online companies can hardly profitably exist if they’re not found easily and prominently in the most important online search engines like Google and Bing, netz-trends.de tested on 08/05 their e-commerce presence on the internet. These were our results:
if you type “about you” into the bing.com search engine, it comes up with results that have nothing to do with the new Otto website. Amongst others, we found one hit for Google’s video portal “YouTube,” one hit for “you.de” (leading trade fair for youth culture), and a hit for the translation tool dict.cc for anything that has the small word “you” in its search query (translation for “you” in the English-German dictionary dict.cc). On the first page of the bing.com search results, we were unable to find a website with the name “aboutyou.de.” This mainly indicates the following two things.
The Otto subsidiary Collins believes that, at least in the beginning, they can go without big comprehensive SEO. It also shows that Otto mainly relies on Google for About You’s online marketing (of course – the search engine monopolist has a market share of about 90 % in Germany). Searching for the keywords “about you” gives a hit at the first position, a paid online advertisement in Google AdWords: "aboutyou.de - ABOUT YOU - der neue Shop. Dein neuer Style - ABOUT YOU Kostenloser Versand & tolle Apps!" (aboutyou.de – ABOUT YOU – the new shop. You new style – ABOUT YOU – free shipping & great apps!).
Underneath the paid Google advert, the first hit with editorial content is “aboutyou.lehrer-online.de” (a website with content for teachers), then the Google video website youtube.com with a reference to a video that includes the keyword “About You” (“Directed, Edited, Cinematography by Jeff VASH inspired by XXYYXX – About You ..."). Next up is the Austrian version of the previously described teacher’s website with the main link “lehrer.at/aboutyou” as well as the translation tool dict.cc. The latter simply offers a translation for About You into German.
Mind you, the fifth editorial entry in the Google search is what we looked for: the new Otto website, aboutyou.de. After this entry that shows exactly what we were looking for, Google lists a website offering lyrics. Keeping the following in mind, the outline of Google’s search algorithm can easily be understood:
Songtexte.com (songtext means lyrics in English) on the first page for the keyword “About You” basically means that Google has found a reference to a song which has the same keyword “About You” in its title (in our case lyrics for Norah Jones – Thinking About You). Dangerously close to Otto’s website About You is the constant rival from the US, online supplier Amazon. Even when searching for “About You”, Google displays Amazon on the first page of editorial hits since Amazon offers “Mad About You” as an e-book, an erotic novella by author Katelyn Faith.
So even if aboutyou.de’s visibility is at an acceptable level on Google (however, still far from being good), it is surprising that no SEM campaign (for example) seems to have been launched on bing by the time we have performed our little test (Wednesday, May 7). Something like this is actually unacceptable today since bing’s conversions are not worse than Google’s all things considered. On top of that, bing is slightly cheaper than Google.
One thing, however, is obvious when having a look at the website aboutyou.de: the keyword “about” which is part of the brand name About You, is everywhere. Yet we don’t know if aboutyou has been accepted as a registered trade mark by the German Patent and Trademark Office. We assume that this is not the case. However we still like that the word “about” runs through the website like a golden thread and really conveys the impression that we are somehow part of it even during our first visit.
On the cover page, we read “about nautik,” “about looks,” “about you,”” about now,” “about open,” “about blue,” “about angels,” “about glam,” “about queen” as well as “ABOUT APPS” and “YOU & IDOL – Check out the looks of your stars.” We can even find “ALLROUNDER[S]” on aboutyou.de including tips and tricks for “looks at the office and clubs.”
Netz-trends.de can also find the inevitable “Trusted Shops” seal of quality (yawn) as well as other indication that aboutyou guarantees fast delivery, 100 days right to return, buyer protection, safe payment with SSL encryption as well as data privacy.
We also read on aboutyou.de that the courier service for the clothing and fashion website is the Otto subsidiary Hermes as well as DHL. The online payment systems are quite limited and are along the lines of what the customer knows – and amongst all they are US American companies: MasterCard, Visa, Paypal. Slightly innovative and not very common or very well known yet is the offered payment system purchase on account – Rate Pay.
We at netz-trends.de don’t believe that a fashion and clothing website has to have a particularly innovative concept in order to be successful. However, we are convinced that it needs to have a high recognition value and we arrive at the decision: that is definitely the case with aboutyou.de.
Fact: the mail order service Quelle has virtually disappeared, Otto is still looking good. However, that this is not enough in order for Otto to hold its ground on a long term basis against Amazon or the Chinese rival Alibaba who is looking to go public in the US, should be common knowledge for everyone at Otto.
Accordingly, it is very important for Otto to find new digital brands and channels of distribution that can hold their ground on the World Wide Web even beyond the direct reference to the brand “Otto”. “About You”; the online shop for clothing, could become such an additional channel of distribution that could possibly become profitable from an entrepreneurial point of view.
The closest rival to About You is probably the website Zalando. An e-commerce expert, however, reported towards netz-trends.de that Zalando is deemed to be in high deficit with launching costs running up to more than 1 billion Euros already.
In 2013, Otto generated about 60 % of the entire retail turnover – about 10 billion Euros – primarily with its online shopping website otto.de. However, today the American website Amazon is already slightly bigger than otto.de in Germany. The German online shopping website Zalando that has been heavily supported by a Swedish investor is growing rapidly. Its turnover in 2013 was 1.8 billion Euros, a plus of 50%, according to the biggest German financial daily Handelsblatt.
Quite often, growing and capturing market shares worldwide seems to be a lot easier for US American websites. In the case of Amazon, this is due to a very strong SEO presence and an extremely aggressive online marketing using Google AdWords and Bing Ads. Be it lube or baby clothes, books or hairslides, Bose headphones or toilet sears – no matter what keywords the consumers search by online, Amazon is almost always a priority rank especially in the US search engine Google.
Google’s policy is that good content is key; therefore good content is ranked higher up. Google’s policy is also that the more a website is entangled in social media – such as Facebook, Twitter or YouTube – the higher it is deemed relevant. These social media criteria are at least deemed to be amongst the top 10 of about 200 criteria. Others are of course backlinks, references on good news websites, etc.
However, it is a major flaw in Google’s algorithm that Google ranks especially social media relevance is so drastically highly and that national differences are hardly considered – of course Amazon has more Facebook likes than Otto.
This is not primarily due to the higher quality of the shopping website Amazon, founded in Canada, but simply that is so much easier for English language websites to earn Brownie points in the social media sector than it is for German language ones.
It is, for example, not unusual for English language content – a journalistic article or an e-commerce offer – to earn a few hundred Facebook likes or Tweets on Twitter or Google+ recommendations within a few hours, for German language ones, however, this would be very unusual. At most, it would be German superstars, especially from football, who would manage to get 20,000 Facebook likes about a certain topic in an hour.
The efforts of the Otto Group to shift the traditional business of paper catalogues to the internet can most likely be compared to the efforts of Axel Springer AG. This major publishing house has relied on paper editions for decades and could proudly announce on page one of Wednesday’s edition of the Germany-wide edition of Bild that digital business is now driving the return of Axel Springer (Bild newspaper, Die Welt, BZ and others).
One of Europe’s biggest tabloids could proudly say that a strong online business keeps Axel Springer on track: in the first quarter of 2014, turnover rose by 4.4% to 692.3 million Euros, raising the return to 118.4 million Euros (+13.6%). According to Bild, this was the first time that Axel Springer managed to generate more than half of its turnover and return in the digital business.
Even if Otto and its online business manage to, at least structurally, go a similarly successful road as Axel Springer did compared to the respective traditional mode of business, we can say that this doesn’t necessarily assure a good future for the Otto Group. Compared to the worldwide potential of growth of Amazon (English language) or Alibaba (Chinese language), Otto is dependent on the relatively confined German-speaking world. This may be a reason why the Otto Group tries to gain an even stronger foothold in English-speaking countries with a new brand, aboutyou. This could make sense.
Whilst emphasising that it is easier for English-language websites to grow worldwide, we do not say that it is not possible for German companies to operate successfully on the internet. However, we do say that it is a lot easier for English-language websites, especially if they’re from the US. Part of the reason for this is that Western mass media reacts particularly submissive towards all digital news from the US and therefore pushes them through partly disproportionately extensive coverage even in Germany. This considered, the current attention the German media has for aboutyou is rather an exception, however, it will definitely help the website – and thus help the German internet scene.
Another fact is that Amazon can fall back on more than a billion people whose native language is English and the rival Alibaba similarly has more than a billion potential Chinese-speaking customers, Otto can only fall back on about 130 million German native speakers. A company such as Otto will never be able to generate such media attention in English-speaking countries that an American company can do in Germany and thus will never be able to gain this momentum from the media in the same way. This has direct consequences for the company’s purchasing power, sales power, growth potential and the willingness of banks and investors to give money for further growth.
Otto has now made it clear that they want to spend about 300 million Euros on digital projects until 2015. What sounds like a lot of money spent on online projects by Germany’s standards is rather modest on an international scale for digital and online business.
This is where Facebook easily invests 19 billion Dollars on an instant messenger like Whatsapp or Google buys Motorola for 12 billion Dollars, only to sell the mobile phone manufacturer shortly after on to the Chinese entertainment electronics company Lenovo for a lot less. The American financial news provider Bloomberg names the internet company Unister from Leipzig as the currently biggest German online project.
Bloomberg reports for example that Germany’s market leader in the online trade of package travels and flight tickets with more than a million customers is allegedly for sale for 1.5 billion Euros. Even though the company denied these rumours and put into perspective that Unister was only looking for bigger project partners, these digital transactions which receive quite some attention internationally show to which extent market leaders particularly are under scrutiny.
Within five years, About You wants to write black numbers, reports the Handelsblatt and refers to statements by Benjamin Otto. Five years? Even if the Handelsblatt quickly mentions that this is a typical time frame for young internet start-ups to gain profitability, it remains to say that this is not entirely true. Five years are a small eternity in the internet world and there are numerous examples for even big websites that wrote black numbers considerably faster than only after five years.
Thus, we believe that if the fashion shop About You that works with large-scale photographs is to be successful, profitability should be possible before five years have elapsed. However, this will not be possible without distinct brand development – i.e. online marketing complemented by traditional marketing such as TV or print advertisement. Should economic success not ensue, the alarm bells will likely ring in the Otto Group before those five years have passed.
About You currently employs 140 people. For a start-up company of this category this number is not very high, it is rather reasonable. However, it is still good to see that the Otto Group offers so many employees a development opportunity from the get-go at all.
It is known that e-commerce still has great potential to grow. This is not only true for the sectors package travels or clothing but the entirety of online trading. The professional journal Internet World Business currently reports about the fierce competition in the trade with animal food. According to this report, the Burda Medienhaus from Munich currently has the edge over their competitors with their platform Zooplus which brings in almost two thirds of the 400 million Euros pet supplies market.
Kristina Schreiber concludes in her article in Internet World Business that market shares can only be won by those who fight with no holds barred. She says that those who want to survive on the market don’t get around competitive prices, however, the Burda subsidiary Zooplus has almost past the threshold of profitability with their strategy of offering overly competitive prices. According to the Internet World Business report, the online shop for pet supplies only shows a profit of 3.8 million Euros before tax which is a rather small return for Burda standards. In 2012, the company’s accounts even showed a deficit of 2.6 million Euros, according to the report.
To see if About You can grow profitably will be exciting about Otto’s new project. However, the website is still far from being perfect as netz-trends.de also realised during the little test: Particularly the detailed view of the presented clothing sometimes takes unbearably long to load. This is even true for different browsers such as the Internet Explorer, Mozilla Firefox or Google Chrome.
One also wonders where the apparently thousands of provided articles are supposed to be. At the moment, the website still seems to be rather small, at least at first view, and goes against the trend that websites in e-commerce can, even should very well extend a long way down if they want to raise their conversion rate.
In any case: We would like to wish the Otto Group with its project About You a lot of success since it can’t be anybody’s interest that the USA always cut the deal in any online business sector. We need German competition. In the sector clothing sale, this could be the Otto Group if they continue to be ready to try even risky business models but still look for possibilities to optimize these with consequent controlling. The fact that trial and error is a concept in e-commerce should meanwhile have gotten around to controllers in the business who should accompany a project like About You using their expertise.
There’s no doubt that the e-commerce market continues to grow in Germany, Austria, Switzerland and the whole world. This is already indicated by the numbers provided by the German Retail Association (Handelsverband Deutschland – HDE) and the German E-Commerce and Distance Selling Trade Association (Bundesverband E-Commerce und Versandhandel – BEVH).
Whilst the HDE expects the online shopping return in Germany alone to be 38.7 billion Euros for 2013, the BEVH estimates the e-commerce turnover for Germany in 2013 to be 48.5 billion Euros. These are indicated growth rates compared to the previous year, so 2012, of 12.2% and 21% respectively.
Gerrit Heinemann, professor at the University of Applied Sciences Hochschule Niederrhein and head of the eWeb Research Center, shows his annoyance about the difference between both associations’ estimated return in the German e-commerce market in an article by Susanne Vieser in Internet World Business from April 14, 2014 and wonders how it is possible that two associations’ estimates are that far apart.
However, it still remains fact that return and growth rates will be somewhere in between. An e-commerce expert of one of the biggest online companies in Germany commented towards netz-trends.de that this highly depends upon the e-commerce branch of industry. The expert points out that the online travel market as well as the online fashion market, for example, grow faster than the online sales market for furniture.
It remains to be seen if About You manages to leave a lasting impression with the consumer, the customer, and if they manage to create and convey added value. One thing, however, is clear: the customers like easy suggested solutions for their needs. Half-baked explanations about apparently new business models don’t help the customer. However, we would like to put this into perspective: if it helps to gain the media’s attention, especially in the opening stages, we tend to favour the well-known phrase “the end justifies the means.”