Otto opens its network to third-party sellers

Otto Group will invest 50 million euros in its order fulfillment and parcel delivery infrastructure in Russia. The German company will also open its network to third-party retailers. With the investment the capacity of Otto’s logistics center will be doubled, creating almost 700 extra jobs by 2014.

Otto Group will also extend Parcel Shop Network, which is a courier service that is operated by German firms Hermes and DPD. In two years there’ll be around a thousand parcel collection points in 150 cities. But this investment must not be seen as an attempt to compete with Russian Post, one of Otto’s longstanding partners which delivered more than 15 million parcels for them. Parcel Shop Network is ‘there to complement the combination’, Martin Schierer, CEO of Otto Group Russia, tells The Moscow Times.

Alltogether, one might think Otto sees a bright future for their ecommerce operations in Russia. And we wouldn’t dare to disagree with that. The Russian ecommerce market grew almost 20% in the second half of 2012 and reached 15.6 billion euros that year. “Russia is one of the most interesting e-commerce markets. We are convinced that Russian telephone and internet sales still have a lot of potential”, Michael Otto told the Russian website. With 140 million people living in Russia, out of whom only 61 million are on the web, and of those only 26 million shop online, it’s easy maths to realize that number, and with it Otto’s potential customer market, could only increase.

Otto Group is now planning to develop its logistics infrastructure to the point where it would become more cost effective for competitors to use Otto’s services than building their own delivery networks in Russia. Otto Groups intent to open its network to third-party retailers isn’t that far-fetched as outsourcing of order fulfillment is happening more and more in the industry these days.