External factors (General) impact

on Otto group
 Political: the ongoing conflict between Russia and Ukraine has led to a series of economic sanctions imposed by the
international community on Russia. According to data from the European Commission, these sanctions have severely
limited Russia's access to EU primary and secondary capital markets, leading to a decrease in B2B ecommerce activities.
 Economical: Because of global inflation to be 8.8%, online prices are up by 3.1% year-over-year.
 In Social-Cultural and Demographic: Changes in societal attitudes towards online shopping also impact B2B
ecommerce. A survey by Episerver reported that 41% of B2B buyers stated that they would buy more online in the future.
 Technological: Technological advancements such as AI, machine learning, and blockchain are revolutionizing B2B
ecommerce. According to Gartner, by 2023, 30% of B2B companies will employ AI to augment at least one of their
primary sales processes.
 Environmental: The growing emphasis on sustainability is also impacting B2B ecommerce. A study by Unilever revealed
that a third of consumers prefer sustainable brands, which is pushing B2B ecommerce businesses to adopt more
sustainable practices. .
 Global: Disrupted supply chains and the imposition of economic sanctions have impacted the operations of various e-
commerce businesses
 Industry Environment that affect Otto
1-The Threat of new entrants
The e-commerce sector has relatively low entry barriers, allowing new players to enter the market easily
Some prominent new entrants that pose a challenge to Otto Group include: Wish, Zalando, Asos.
2-The bargaining power of suppliers:
Suppliers in the e-commerce sector have limited power due to the vast number of options available to retailers.
Otto Group can leverage its strong relationships and scale to negotiate favorable terms with suppliers, ensuring a reliable supply
chain and competitive pricing.
3-The Bargaining power of buyers
With the growth of e-commerce, buyers have increased access to a wide range of options and information and the switching costs
become low. This enhances their bargaining power
4-The Threat of a substitute service
E-commerce opens doors to various substitutes for traditional retail, such as online marketplaces and direct-to-consumer brands.
Otto Group needs to offer unique value propositions, customer loyalty programs, and seamless experiences to mitigate the threat of
substitutes.
5-Competition between existing businesses
 The e-commerce sector is highly competitive, with numerous players vying for market share.
The Otto Group is a major global player in the ecommerce industry, with competitors such as Amazon, eBay, and Alibaba.
Tangible resources of Otto
 Financial: Otto Group 's cash and cash equivalents at the end of the year
amounted to €1.1 billion
 Physical and technological: the company's logistics hub in Hamburg covers
an area of 200,000 square meters and can handle up to 300,000 parcels per
day. Otto Group has invested heavily in technology, including e-commerce
platforms, data analytics, and artificial intelligence. For example, the
company's proprietary AI-powered personalization engine, called "Collins,"
enables the company to offer personalized product recommendations to its
customers
 Organizational: Otto Group's organizational resources include its highly
skilled and diverse workforce, with over 50,000 employees worldwide.
 Intangible resources of Otto
 Human resources: The company has a highly skilled and diverse workforce, with
employees from over 100 different countries.
 Innovation and creativity:Otto Group is highly innovative and is constantly
exploring new technologies and business models. For example, the company has
launched several pilot projects using blockchain technology to improve
transparency and traceability in its supply chain.
 Reputation: Otto Group has a strong reputation in the retail industry, with a focus
on sustainability and social responsibility. For example, the company has set a goal
to make its entire value chain climate-neutral by 2030.
 Organizational capabilities : Otto Group's organizational capabilities include its
highly efficient logistics and supply chain management system . the company can deliver
products to its customers in Germany within 24 hours
Value chain of Otto
Primary Activities
Inbound logistics: Otto Group's inbound logistics activities include sourcing, procurement, and receiving of goods from-1
suppliers. For example, the company works with over 6,000 suppliers worldwide to source products for its retail stores and e-
.commerce platforms

Operations: the company's logistics hub in Hamburg covers an area of 200,000 square meters and can handle up to 300,000-2
.parcels per day

Outbound Logistics: Otto Group's outbound logistics activities include order fulfillment and delivery of products to customers.-3
For example, the company can deliver products to its customers in Germany within 24 hours

Marketing & Sales: Otto Group's marketing and sales activities include advertising, promotion, and sales of products through-4
various channels, including retail stores and e-commerce platforms. For example, the company's e-commerce platform, otto.de,
offers a wide range of products and services to its customers

Service: the company has a dedicated customer service team that provides assistance to its customers via phone, email, and-5
.social media
Value chain of Otto
support Activities
Procurement: Otto Group's procurement activities include sourcing and purchasing of goods and -1
services from suppliers. For example, the company works with suppliers to ensure that its products
.meet high standards of quality and sustainability

Technology Development: the company has invested heavily in artificial intelligence and data -2
analytics to improve its operations and customer experience
HRM: the company has a dedicated training program for its employees to develop their digital -3
skills

General Administration: Otto Group's firm infrastructure activities include support functions -4
such as finance, legal, and administration. For example, the company has implemented various
.sustainability initiatives, such as reducing its carbon footprint and promoting social responsibility
 Business-level strategy
Cost Leadership:
 Addressing challenges of B2B e-commerce locally and globally.
 Offering competitive prices while maintaining quality.
 Example: Otto.de online marketplace with streamlined supply chain processes and economies of
scale.
Differentiation:
 Seeking to differentiate retail brands through superior customer experience, broad product
assortments, and innovative services.
 Example: Outfittery's personalized clothing recommendation and styling service
Focus:
 Some brands focus on specific customer segments or product categories.
 Example: Babys 'R' Us targeting parents and young families, Crate and Barrel focusing on home
furnishings and decor for upscale customers.
Corporate-level strategy
Diversification:
 Otto Group uses diversification strategy to mitigate risks and leverage opportunities across different business units
and geographies.
Multiple retail brands across various product categories: Otto Versand, Crate and Barrel, Babys 'R' Us, and Outfittery.
Diversification helps insulate the company from downturns in specific segments.
Expansion :
Expanded internationally through acquisitions and partnerships.
Acquisition of majority stake in Netshoes for Latin American market entry.
Partnerships with companies like JD.com for product sales in China.

M&A:

Control over logistics, customer service, and product development.