E-Commerce Entry Late to the Internet Party

Pieter Haas of Media-Saturn and Martin Sinner of Redcoon have big plans to grow through expansion of online sales, key acquisitions and start-ups, but they enter an intensely competitive marketplace.
Pieter Haas, Media-Saturn chief, and Martin Sinner, new head of Redcoon, are bringing company cultures together.

Early in the morning, Martin Sinner boards the train from Munich to Ingolstadt. He greets Pieter Haas with “We’ll be seeing more of each other now, right?”

“I certainly hope so,” replies the head of Media-Saturn.

Europe’s largest consumer electronic retailers, Media-Markt and Saturn, are bundled in a holding company. The retail group ventured into online business late, too late, critics say. In March 2011, Media-Saturn took over 90 percent of Redcoon, a purely Internet-based retailer that is now completely owned by the holding company. At the end of 2011, Saturn launched its own online shop. Media-Markt followed in 2012. Mr. Haas wants to grow Redcoon more quickly and Mr. Sinner is expected to help. On November 1, the latter was made head of Redcoon and now wants to expand the purely Web-based sales – called pure play – within the Media-Saturn holding. This is the duo's first joint interview.

Mr. Sinner, what were your thoughts when you were offered the post as head of Redcoon?

Mr. Sinner: I was skeptical. I knew that the search had been going on for some time. That’s not for me, I thought. For one thing, I live in Munich and didn’t want to change that.

What convinced you to take the job after all?

Mr. Sinner: It quickly became clear that is wasn’t just about Redcoon, but rather about building a broad portfolio of holdings, through acquisitions and by acting as an incubator for start-ups. I witnessed that at the Axel Springer publishing house. (In 2006, Axel Springer bought the price comparison website Idealo, which Mr. Sinner co-founded. Eds) It will be more exciting with Media-Saturn because it will be more dynamic. Springer originally had great doubts – and rightly so – and only hesitantly ventured forward. Media-Saturn is the market leader in consumer electronics retail and in a strong position vis-à-vis the manufacturers. There is also money.

Mr. Haas, which online shops would be interesting for Media-Saturn?

Mr. Haas: It’s obvious we want to buy Amazon. No, seriously, we are happy to read articles in the newspapers that say Media-Saturn is now going after Amazon. We are on the right path. Not too long ago, there were only two headlines about us, either we were the ones that missed the boat on e-commerce, or the company where partners are constantly fighting.

 

Martin Sinner co-founded price comparison platform Idealo and was named Redcoon chief on November 1.

 

Speaking of fighting, what do Media-Saturn’s two shareholders, the retail and wholesale group Metro and Erich Kellerhals, think about expanding pure play around Redcoon?

Mr. Haas: We naturally presented our strategy in advance to the shareholders. No shareholder has ever opposed the online plans we are pursuing.

Weren’t you deterred by the power struggle that has been ongoing for years, Mr. Sinner?

Mr. Sinner: I certainly asked about it. I think the positions have been clarified. There were of course also court rulings.

Getting back to the acquisitions . . . 

Mr. Haas: Many online shops with sales of €200 million to €300 million ($250 million to $375 million) have reached their limit and can’t grow any further. They don’t get enough merchandise or are lacking liquidity to become bigger. That’s exactly what we offer: favorable conditions through Media-Saturn’s huge purchasing volume, capital to grow, as well as the corresponding logistics.

Mr. Sinner: The timing is favorable. The early Internet retail market is right in the middle of consolidating.

That would be the scale of the new project. And which products do you find worth considering?

Mr. Haas: Wearables like watches and fitness armbands or anything to do with intelligent home control systems, for example. Also, new shopping concepts such as subscriptions for printer cartridges or batteries. Services as well. With more and more televisions having integrated webcams, we could offer live chats with experts on questions or technical problems.

We want to reach the billion mark in sales. Pieter Haas, Head of Media-Saturn

Is there a specific budget for investments?

Mr. Haas: No. When a good opportunity comes along, we will strike.

And what about Redcoon?

Mr. Haas: We want to reach the billion mark in sales. Almost everyone in Germany knows Media-Markt and Saturn, but only about one-third knows Redcoon. We have a lot of work ahead of us, in marketing as well. Redcoon is operating in eight countries in Europe. We don’t necessarily need new markets, rather we have to strategically boost growth in the existing markets.

How are you going to do that?

Mr. Sinner: There are still some things to do in the field of business intelligence. Reiner Heckel, founder of Redcoon and its head until mid-2013, came from Media-Markt. He was a retailer, not an onliner like me. I’m driven by key numbers. I want to quantify everything that can be measured. Alongside procurement and logistics, Redcoon also must focus more on technology in the future. Big data is the key word, not just in the online business, by the way. The stationary stores of the other two sales divisions could also profit from that.

Do you have an example?

Mr. Sinner: With Apple’s iBeacon technology, for example, I can see who stays for how long at which shelves and where business is being made in the end. If that becomes established, then part of the sales originally attributed to online will eventually end up in the stores again.

The executives with shares in the stores will certainly like to hear that. Media-Markt and Saturn were late in launching their own online shops because store managers were concerned about their sales.

Mr. Haas: We felt the pressure to go online, but closed our eyes to reality for a long time. Over the past two years, we also heard the bang. Otherwise, we wouldn’t be promoting the connection of online and offline sales so strongly in the stores.

Pieter Haas has been with Media-Saturn for over a decade and became a board member at its parent company Metro in 2013.

 

But aren’t you becoming your own competitor with the pure play strategy? Some even talk of cannibalizationg between Redcoon and the online shops of Media-Markt and Saturn.

Mr. Haas: We disagree. Whoever buys from Redcoon just wants the cheapest price. Those are two different target groups. We have discussed whether we should offer pickups of Redcoon orders at Media-Markt stores though.

Why not? It would certainly be an advantage for Redcoon.

Mr. Haas: Yes, but it would be strategically misled. That’s why we quickly discarded the idea. With Redcoon, we want to specifically reach customers who don’t go to our stores. We should instead think about some form of partnership with supermarkets or gas stations, places that are everywhere a typical Redcoon customer regularly passes by.

Mr. Sinner, you spent several months in Silicon Valley, the IT and start-up paradise on the west coast of the U.S., with Bild newspaper editor-in-chief Kai Diekmann. Your group then developed new ideas for publishing house Springer’s digital growth. What stayed with you from that time?

Mr. Sinner: The way start-up founders and investors think is guided by exactly what Peter Thiel describes in his book, Zero to One. Set up something that isn’t like anything else and create a monopoly. We have unfortunately lost that in Germany. Our society must change its way of thinking – and politics can lead the way in this. Many investors in Silicon Valley are highly political. Mr. Thiel wrote a business book, but there is a lot of psychology and philosophy in it.

Media-Saturn should develop and build itself up, become more innovative. And it helps if you know how Silicon Valley ticks and what is coming at us. Martin Sinner, Head of Redcoon

So does that mean there will be a Media-Saturn Valley commune in the foreseeable future?

Mr. Sinner: Why not? Media-Saturn should develop and build itself up, become more innovative. And it helps if you know how Silicon Valley works and what we in Germany can expect from over there. In the field of wearables, for example, Media-Saturn could enter into partnerships with companies like Jawbone, the leader in fitness armbands. Along the lines of: ‘you show us your know-how and your product pipeline and we’ll take over marketing and sales.’

You co-founded and helped establish Idealo, the price comparison website. You are the classic entrepreneur. Do you fit into a complex structure like Media-Saturn, and moreover into conservative retail?

Mr. Sinner: In 2006, Springer took over the majority of Idealo. From one day to the next, we were part of a corporation. I learned to keep my team and myself at a distance from the organization, maintaining a certain start-up attitude without sealing ourselves off.

Mr. Haas: It is a challenge to bring the two cultures together. But who should be able to do it if not Media-Saturn as an entrepreneur-company? There is no danger of being absorbed by the holding company.

061

 

Kirsten Ludowig covers the retail sector for Handelsblatt. To contact the author: [email protected]