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AO, the online electrical retailer, is considering leaving the German market. The company from the United Kingdom launched there in 2014 but is struggling due to fierce competition, increasing costs and supply chain issues.
AO published a trade report of the third quarter of 2021, announcing a ‘strategic review’ of its German branch. The news follows a previous retreat from the Netherlands in 2019. The company seems to be rolling back their European presence.
German revenue dipped 24 percent
The Q3 numbers show that revenue from Germany fell 24 percent. Compared to 2019, the first 9 months of 2021 showed a growth in revenue. However, 2020 results were disappointing: German revenues dipped with 8 percent. In the UK, which traditionally generates the majority of AO’s revenue, the numbers remained stable.
Competition, costs and supply chain issues
The report says that German business was impacted by a number of factors. AO mentions an intensified competition in the online market, increasing marketing costs and issues with the supply chain. “We expect these trends will continue for the foreseeable future in the German market”, the report reads.
AO mentions intensified competition, increasing marketing costs and supply chain issues.
The company says it is focused on maximizing shareholder value and will review their German operations, of which the results will be announced ‘in due course’.
Recent exit from the Netherlands
Fairly recently, in 2019, AO announced they were leaving the Dutch market. This was only three years after their launch in the northern european country. At the time, the electronics retailer was confident about German operations and considered expanding into other European countries. The market share in Germany comprised over 3 percent in 2020.
AO’s leaving Germany will mark a European rollback altogether.
AO’s leaving Germany will thus mark a European rollback altogether, aside from their roots in the United Kingdom.
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