One Year at OTTO: A Midterm Review with Division Board Member Boris Ewenstein
Boris, you joined OTTO just over a year ago. What surprised you the most? Which impressions from your early days have been confirmed, and which did you have to revise?
I expected a high level of expertise across all areas and touchpoints. This expectation has been confirmed, not least due to OTTO’s long history and transformation from a catalog to a platform business. The impression I had of the corporate culture has also been validated. My move to OTTO was about preserving core values such as appreciation, orientation, and care for employees while also guiding the company, together with my fellow board members, into the next phase of development. This includes increasing the pace and enhancing the drive for performance. I believe we can collectively improve in this area.
In what way?
One example is the documentation culture, which is characterized by a high standard of quality and completeness. However, sometimes a comprehensive PowerPoint presentation is not necessary, and things can be approached and resolved much more directly, quickly, and efficiently. For instance, with a short but precise Word memo. I already notice how we are increasingly moving towards cross-functional collaboration, supporting each other, and working together towards the common goal of generating real value for our customers.
This value is not least created through the offerings. OTTO operates as a hybrid platform, selling both its own products and assortments from marketplace partners. What are the challenges in balancing both pillars?
Our main task remains to create an attractive assortment for our customers—across all product categories and sourcing channels. This is not always easy with a hybrid platform. We must ensure that we can offer the right products and brands with the right availability at the right prices. This requires conscious curation. We want relevant, high-quality partners, also to cover deliberate gaps that we cannot serve through our retail business with strategically chosen partner assortments.
Why is Curation So Important?
Fully open marketplaces, where practically anyone can sell their goods, carry risks. For example, if I offer items that are extremely cheap, I can expect them to have a high conversion rate, meaning they sell well. The algorithms that control the search result lists make these items correspondingly more visible. Yet, these are not always the products that contribute to the long-term satisfaction of customers. This leads to a degradation of the platform's quality, and consumers have no compelling reason to shop there again based on that experience. These so-called downtrading effects must be managed on a hybrid platform. Therefore, we have very high standards for our partners. The offering must be 'just right,' not 'just in case.' And yes, attractive entry prices are part of that.
What About the Scaling Potential for OTTO Amidst All This Curation?
It’s worth taking a look at the overall German retail market, which, including food, is around 620 billion euros. Of that, 90 billion euros are generated online, resulting in a penetration rate of about 14.5 percent. In comparison, the UK stands at double that—27 to 28 percent. In China, it’s at 40 percent. This alone presents opportunities to scale up to 180 billion euros based on that model. At OTTO, we generate approximately 8 percent of the total German volume of 90 billion euros with our revenue of 7 billion GMV in the fiscal year 2024/25. There is significant potential to capture market shares here.
How do you plan to achieve this?
We want to inspire our customers and excite them through the interplay of brand, storytelling, and high-quality products. This is paired with exciting assortment-related services such as assembly or connection services for furniture and electrical appliances, or attractive financing options. This focus is paying off: our marketplace business alone grew by over 20 percent in net sales (GMV) in the past fiscal year. That’s where we’re continuing now. We have defined lists of marketplace partners that we absolutely want on the platform—also for new product areas we want to explore. This includes some curated Chinese partners, our "Pearls." I say this deliberately, as they are often misunderstood as being of inferior quality in public discourse. However, that is too simplistic. There are indeed Chinese partners who share our high-quality standards and can delight customers.
However, the Chinese competitors currently changing e-commerce are primarily known for cheap goods...
The success of these market players shows that there is a demand in this very low price segment. We also want to offer competitive prices, but without compromising our quality or sustainability standards. Instead, we aim to make this standard accessible across all product categories—such as in our furniture assortments or in semi-custom kitchens, which we can offer in collaboration with Küche & Co. at a very attractive price. A financing service can also enable customers to enter quality realms they might not even know are affordable.
When it comes to competition from the East, you are no longer just theorists: you recently visited China to get a firsthand look at the industry there. What impressed you?
The sheer speed of innovation. For example, the mobile phone and network equipment manufacturer Xiaomi, which has quickly pivoted to electric mobility due to dwindling international scaling opportunities. Within 18 months, they designed a car and built a factory with a production capacity of 20,000 units per month. This is exemplary of a country that filed over 1.6 million patents in 2023 alone and shows how quickly they can respond to market changes.
When discussing China, there’s often talk of regulation and lack of standards—this discussion is both correct and important. However, these competitors will quickly find ways to comply with thehigh EU regulations and the growing demands of consumer protection organizations—while maintaining their innovative strength. We need to pay attention to that. It’s worth drawing inspiration from their pace. At the same time, quality and aspects like sustainability remain non-negotiable for us. This is the tension we navigate.
Where else can we learn from China?
China excels at merging entertainment and consumption. We come from a world where people traditionally find products through search bars. In Chinese online retail, however, we increasingly see developments that work the other way around—products that seek out people, so to speak. This happens through entertainment, streaming, and live video formats or product offerings in news feeds that personalize the integration of cross-category purchasing interests. We are not quite there yet in the local market and, of course, have much stricter data protection regulations. However, we see potential for OTTO with formats like our live shopping to rethink interaction. The next step is to see how we can connect this with an "Interest Graph," meaning individual, personal interests, to address customers even more individually and purposefully.
Boris, the first 365 days are behind you. What will your second year at OTTO bring?
For me, the most important thing is to further increase customer satisfaction so that they keep coming back and recommending us. We want to achieve a lot this year. There are many brands we still want to acquire to enhance our assortment attractively. We want to further develop promising private labels like Lascana and Hanseatic and continue to promote and expand our truly first-class service offerings. In the B2B sector, we plan to connect with international partners, among other things. Through our advertising services, we want to create an even more relevant shopping experience for our customers and help partners achieve their goals. Additionally, we can assist advertisers in reaching customers beyond our platform, making us a strong marketing partner.
Last but not least, we see enormous potential in AI-supported product consulting in the shop. In the fourth quarter, we will launch a shopping assistant that helps customers find their desired product through dialogue, bringing traditional product consulting into the digital space. So there’s a lot to do—and I say this with great anticipation.
Thank you for the conversation, Boris.
