Why About You is successful in fashion retail despite high losses

When About You invites you to the Annual General Meeting in June, the business figures could lead to some uncomfortable questions. Because the online fashion retailer will increase its loss by 100 million euros, as recently published annual report proven. Accordingly, the pre-tax loss increased to almost 213 million euros.

A result that is currently not surprising in the fashion environment, because Otto is not doing much better (with a recent loss of 201 million euros). When the annual results were announced, Otto also hinted that the combination of the energy crisis and reluctance to buy, which is affecting the entire economy, combined with the war in Ukraine and the mood of crisis among the population, has put a heavy damper on business.

And so Tarek Müller, head of About You, had already announced in March that he wanted to put the brakes on costs. Savings in logistics, stricter advertising success control in marketing and campaigns and last but not least a closer look at the settings in the non-technical area should ensure a less hard landing here. About You had 1,283 employees in the past financial year – a good 100 more than a year ago.

But it is also true that About You will not reach the targeted two billion mark, but has overtaken Otto with 12.7 million customers, who already have 11.3 million customers. It is not surprising that Otto is clearly ahead of About You in terms of sales with 4.5 billion euros. Also interesting is the comparison with Zalando, whose number of customers, at a good 51 million, is almost as high as the total number of the entire Otto Group. Otto was able to benefit from the special situation in the corona pandemic much better than others, but the average number of orders per year at About You is now 3.1 purchases.

The shopping cart value of just under 55 euros per shopping cart has not changed that much, the value has declined somewhat. At EUR 169.60 per customer, the gross goods volume is slightly higher than in the previous year. Ultimately, however, all major clothing mail-order companies will have to win the race for customers’ favor, above all on the technology side and with the help of their own platforms – and Otto has already announced a number of measures that should help Otto stay on course. There is talk of 3D fitting to reduce returns as well as supposedly never-ending trend topics such as live shopping.

It remains to be seen whether and with which target groups this plan will work. About you doesn’t even come close to having the consistent in-house service portfolio that the Otto Group can fall back on, but it is the brand that is associated with what investors like to describe as “price fantasy”. The on average younger clientele with a higher digital affinity could help About You come through the crisis well – at least better than many other players in the segment.

What Otto and About You have in common is that they will have to make more targeted investments in the coming months and years: Because entrepreneurial mistakes could take revenge more quickly than in the past due to a lack of financial cushion. It remains to be seen whether About You will be able to grow faster than the market in the coming financial year – the chances of that happening are not bad.