A 59% increase in turnover, 600 jobs created last year and 60% more storage space in the logistics center. Digitec Galaxus saw its growth accelerate in 2020, aided by a pandemic that increased demand for e-commerce services. From now on, the subsidiary of Migros, which published its annual figures on Tuesday, wants to expand its know-how in order to break through significantly in Germany.
A year ago, Digitec Galaxus was pleased to have crossed the one billion dollar turnover milestone in 2019, thanks to a growth of 16% to 1,146 billion francs. In 2020, the increase was three times greater, with a turnover of almost 2 billion, at 1.826 billion. The company, which does not disclose its net income, says growth has been significantly stronger in some areas. Primarily at a regional level, with a turnover increase of more than 90% in the cantons of Geneva, Wallis and Ticino. Parts of the range were also in high demand, with sales more than doubling for DIY, baby, beauty, health, sports and cooking items.
Advantage for big players
How to value this growth? “She is extraordinary. Controlling such growth during a pandemic is a huge achievement. Still, the result is not entirely surprising. We already know that e-commerce in Switzerland grew by about a third in 2020. For years, large e-retailers have grown faster than small ones, and Digitec Galaxus is no exception,” said Ralf Wölfle, director of the e-business competence center of the Fachhochschule Nordwestschweiz and author of studies on e-commerce.
So there is a premium for the biggest players. But Digitec Galaxus has its own strengths, says Thomas Lang, head of Carpathia, a company specializing in the study of e-commerce: “It is clear that creating an online community is very important. Customers give advice, write a lot of reviews and ratings. At Digitec Galaxus, product data and presentation, as well as store use, are also state-of-the-art.”
The importance of community
An opinion shared by Ralf Wölfle. “The brand enjoys a high level of trust, which is especially important in times of crisis, says the professor. The company is ubiquitous through advertising. Customers often speak through a community, which increases the proximity of the company. Despite the rapid growth, Digitec Galaxus has managed to maintain an agile organization, which translates into a lot of innovation and the ability to quickly respond to changing situations.”
The company has given direction for the future. First in Switzerland, with a new logistics center in Utzenstorf, in the canton of Bern, which should accommodate 450 workplaces by the summer of 2023. Also abroad. “The activities of Galaxus Deutschland are very encouraging,” the company said. The German subsidiary exceeded all expectations and secured its 300,000th customer.” Galaxus.de will “significantly” expand its product range this year, the company says. Digitec Galaxus does not provide any further figures or information about its activities in Germany.
But the director, Florian Teuteberg, is ambitious. At the end of December, he confirmed in the New Zürcher Zeitung want to be among the top five e-commerce players in Germany. Attack other countries before then. “We have a chance to overtake Amazon in Europe,” Florian Teuteberg launched.
What about these goals? “It’s always good to have ambition. However, Amazon has a turnover of more than 20 billion euros in Germany alone, including market activities with third parties, while Galaxus’ activities are probably only worth around 30 million euros. I don’t think Amazon is trembling yet…” Thomas Lang replies. According to Carpathia, Digitec Galaxus is ahead of Amazon in Switzerland, whose sales in 2019 were estimated at 700 million francs.
Ralf Wölfle, for his part, is more optimistic. “Digitec Galaxus has an excellent and modern IT infrastructure and is supported by Migros, which enabled the expansion outside of Switzerland. Digitec Galaxus could be an alternative to Amazon in Germany with its content and community approach. Especially since the German subsidiary of the Swiss group benefits enormously from the synergies and services already provided for the Swiss market.”
Migros present in Germany
Note that in 2013, Migros sold its four stores of its regional cooperative in Basel to German distribution specialist Rewe. At the same time, Migros took over the German group Tegut, which mainly has supermarkets in the federal states of Hesse, Thuringia and Bavaria.
Jack Ma still hasn’t appeared. The founder and director of Alibaba, Amazon’s Chinese counterpart, has not been seen in public since November, leading many observers to believe he has been called into question by Beijing, in particular, who fears he will not shed too much light. At the same time, some media are reporting a possible nationalization of Alibaba. Ant, the group’s financial subsidiary, whose IPO was recently cancelled, would also be affected by this operation.
For now, these are just rumours, as the situation in China is extremely opaque. Jack Ma was able to insult the regime by publicly criticizing his country’s financial regulators a few days before Ant Group went public. In December, Beijing announced an anti-monopoly investigation against Alibaba, which was founded by Jack Ma in 1999 and has since become the largest group in Asia after rival and compatriot Tencent. Beijing wants to fight against the monopolistic tendencies of private groups like Alibaba, whose services are used by hundreds of millions of Chinese. IF.