After returning AO.com’s German arm to profitability, boss John Roberts is eyeing expansion into France, Italy and Spain in the near future.
The electricals business recorded strong growth across both its markets with an 81% jump in revenues in Germany in the year to March 31.
AO.com also increased the profit margin of its German market from -2% in 2019 to 9% as its logistics capabilities were scaled and improved upon.
Chief executive Roberts told Retail Week that the turnaround in Germany is down to AO’s strategy to use the same playbook for all its markets – meaning ample opportunities to do the same across the rest of Europe.
“What we’ve been doing over the last couple of years is essentially repeating the playbook from the UK and that’s one of the lessons we have learnt, rather than reinventing for the local market,” he said.
“You can see in the margin progression that we’ve made in Germany the scale of the progress we’re making and we’ve also fixed the dynamics of our logistics operations. Bear in mind that we launched as a day-one start-up, not through acquisition or partnership – we did that from day one with a national next-day infrastructure, which is hard enough in the UK, but Germany is so much bigger.
“To get the economics of that into a really good competitive position has been a real journey for us. We’ve now achieved that and it gives us real fuel for our flywheel that means that growth is a really good thing in Germany – whereas, in the past, the more we grew, the more investment it consumed.”
“We’re going to invest in content creation. We’ve given the team the brief creatively to do to product content what Pixar did to animation”
John Roberts, AO.com
Roberts said the business will continue to invest in its product website and the available information to set it apart from competitors who are focused on improved delivery offers.
“We’re going to invest in content creation,” he told Retail Week. “We’ve given the team the brief creatively to do to product content what Pixar did to animation and really move the game on.
“Customers are now pretty ubiquitously shopping online, so how do we give them a better experience? The first thing they search for is the product and information – we want to be the destination for that as customers aren’t really thinking about delivery until they find the product they want.”
AO.com’s repeat strategy is potentially limitless, according to Roberts, as it is “a lot easier to roll out ecommerce to new markets than store operations”.
However, European expansion is not on the cards this financial year.
“It’s not as though we’re rushing to do another territory. We have a vast amount of opportunities ahead of us in the UK and Germany, but what we’re highlighting is that because we’ve fixed our business in Germany and learnt the lessons, we now have a playbook to enter those new markets,” he added.
- Don’t miss the best of the week – sign up to receive the Editor’s Choice every Friday
No comments yet