End of the online boom – the crisis hits P so hard

The hall in the Stade commercial area has had the yellow Amazon logo for almost two years. Everything seems to have been thought of – even covered bicycle racks for employees. Only one thing is missing: hustle and bustle. Because the logistics center never went into operation. 200 vans should have been distributing parcels up the Elbe to Cuxhaven for a long time. “After the unproblematic approval, construction began quickly. Not much has happened since then," complains a spokesman for Mayor Sönke Hartlef (CDU).

The dreary sight in the old Hanseatic city is a sign of the storm that is shaking up German online trade with increasing force. It's not just market leader Amazon that has a real estate service provider looking for subtenants - as an "interim solution", as a spokeswoman says.

At the end of February, the founders of the fashion pioneer Zalando, Robert Gentz ​​and David Schneider, shocked their employees by announcing that they would cut hundreds of often well-paid jobs in the offices. Shortly thereafter, the fashion retailer Peek reported

Another piece of bad news followed: The mail order company Otto, who otherwise likes to boast about his social streak, is closing its Berlin toy chain MyToys – including its own online shop, 19 branches and 800 employees. The insolvent online retailer Keller Sports shut down its web shop for good almost at the same time. And the employees of Galeria, also in the bankruptcy plan, received a list of 52 branches to be closed this Monday from employee representatives. However, a coherent online concept is still not discernible. "Blatant, often home-made errors," criticized the general works council in an internal letter that is available to WELT.

For the first time in its history, the growth-spoiled online trading industry is experiencing a real downturn. Last year, industry-wide sales in Germany fell by 8.8 percent to 90.4 billion euros. The post-pandemic boom crash has caught the industry off guard. “Everyone speculated when it came to growth. Now it's a matter of getting rid of the excess capacities," says e-commerce expert Jochen Krisch.

At first, only overfull warehouses were the problem - not only with fashion. Otto's e-commerce boss Sebastian Klauke reported a drop in sales of 14 percent in the "very profitable area" furniture for Germany. The Otto Group is threatened with a relapse into times of crisis that we thought we had overcome: "Our result will definitely fall very significantly," warned Klauke.

The closure of the subsidiary MyToys just before the 80th birthday of the owner Michael Otto shows how deep the problems go: Apparently even a sale came at virtually zero cost, like when Otto's sports retailer Scheck was handed over to the Galeria mother Signa three years ago no longer an option.

Deep-rooted problems across the industry are now becoming apparent. “Many large online retailers didn't have to pay attention to profits for years because they had raised a lot of venture capital. During this time, inefficient structures often emerged,” says Jens von Wedel, retail expert at strategy consultancy Oliver Wyman. “Fast growth was more important than efficiency. It was often easier to hire new people than to work on the technology.”

But when interest rates rise, investors' money is no longer easy to get by. The industry is rethinking: Amazon is stopping the expansion of a second headquarters near Washington - 18,000 people worldwide have to go. After all, the new Berlin Amazon office tower, the tallest in the city, is scheduled to be ready for occupancy in 2024.

Because the market leader is in a relatively comfortable position: Amazon can bear losses in retail because it earns well in its second business area, the sale of computing capacity to companies, explains e-commerce expert Alexander Graf. For example, Amazon can keep the prices for shipping low - and puts the other retailers under a lot of pressure.

The Zalando campus is symbolically located in the shadow of the future Amazon Tower. The complex on the banks of the Spree has seemingly grown unstoppably in recent years - office building after office building. CEO Gentz ​​diagnosed superfluous management levels and duplication of work there on Tuesday when the balance sheet was presented. Negotiations with the works council are ongoing, only then should it be certain how many people will have to leave. The only thing that is clear is that it doesn't apply to logisticians - here the industry works with flexible contracts anyway.

"E-commerce hasn't kept customers the way we all - including ourselves - thought," Gentz ​​admitted. In 2021, its sales had grown by an impressive 27 percent to 10.3 billion euros. In the past year there was suddenly no more sales growth, the operating profit fell by 81 percent to 81 million euros. 2023 should be similarly weak.

“Everyone in the industry is suffering. But those with a large capital buffer have an advantage,” says expert Krisch. The money from the IPO nine years ago gives Zalando room to rebuild – and the fact that the Berliners are operating profitably. At least for now.

Because experts see a threat: the competition from a rapidly growing giant from China. The cheap fashion provider Shein has its goods manufactured in countless sewing workshops depending on the order received. In this way he avoids the risk of being left with goods and produces an almost limitless range. This appeals – often via advertising on the social network TikTok – to fashion-conscious teenagers with a small budget: the shoppers of tomorrow.

“Shein is definitely the biggest headache for Zalando. It would take years to tie a similar network to producers - if it succeeds at all," says expert Graf. The Chinese are preparing a US IPO that would surpass the IPOs of Zalando attacker About You and the Munich luxury mail order company Mytheresa two years ago.

It is even more difficult for traditional retailers who have to connect their branches to an online shop. Only a few succeed as well as the Breuninger department store, which is regarded as a benchmark in Germany. Two years of state aid during the pandemic covered up the structural problems at P

Nevertheless, expert Krisch warns against exaggerations towards pessimism. Growth will return in two years at the latest, since large parts of the trade are not digitized: "Now the retailers are laying off people who will urgently need them."

"Everything on shares" is the daily stock exchange shot from the WELT business editorial team. Every morning from 7 a.m. with our financial journalists. For stock market experts and beginners. Subscribe to the podcast on Spotify, Apple Podcast, Amazon Music and Deezer. Or directly via RSS feed.