September 23, 2013, 1:17 PM

Otto expands its European e-commerce operation

The German retailer expands in France and Russia.

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Otto Group, Europe’s biggest online retailer after Amazon.com, is taking steps to build up its base in France and Russia.

Otto, No. 2 in the 2013 Internet Retailer Europe 500, has now completed its bid to fully acquire the e-commerce assets of Group 3SI, one of the biggest catalog and online retailing companies in France.

Otto, which has owned a 51% stake in Group 3SI, No. 12 in the Europe 500, since 1981, isn’t releasing many details, including the price of its bid. But Otto completed the deal to acquire a big e-commerce operation that’s investing heavily in the French online retailing market, which Paris retail trade association FEVAD estimates grew 19.7% to about $58.53 billion in 2012 from $48.90 billion in 2011.

Altogether about 20 Group 3SI e-commerce technology and fulfillment units will be rolled up into a new centralized organization, Otto says. Various Group 3SI employee groups and the board of directors approved the deal on Sept. 19. The new Otto reorganization of Group 3SI’s online retail and delivery units will take effect Jan. 1. Otto submitted its bid for the assets in July.

“The objective of the bid is to further support the development of the distance-selling activities through a simplified shareholder structure and to lead them into a successful future as e-driven companies,”Otto says.

Otto Group, which generates annual e-commerce sales of about $7.4 billion and owns and operates nearly 100 direct marketing and e-commerce brands worldwide, also is expanding its base in Russia’s rapidly growing online retailing market. Otto will spend about $67.6 million and add 700 jobs to expand its fulfillment hub and delivery network in Russia. Although it didn’t disclose specifics, Otto will further automate its warehouse in suburban Moscow.

Otto also will expand the number of its Hermes-DPD mail and parcel pick-up stores from about 350 across Russia to as many as 1,000 by 2015. “We are convinced that Russian distance retail still bears a lot of potential, especially in e-commerce, which is already responsible for more than 50% of total turnover,” says Otto chairman Michael Otto. “Russia is one of the most exciting markets in the online retail world.”

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