How the Biggest Online Retailer You've Never Heard of Will Take the U.S. Market

Last Updated Apr 16, 2010 9:00 AM EDT

Field and Stream an Otto International companyRiddle me this: Which corporation owns 123 companies, operates in 27 countries, and has been in the mobile phone-based commerce business for a decade? I'll give you a hint -- it's not an American company.

Still stumped? No worries -- not many have heard of Otto Group, the German retailing giant that owns a 96 percent stake in Crate & Barrel, the brick-and-click purveyor of chic contemporary home furnishings. And Otto may not raise its profile anytime soon despite the company's move to take a more prominent position in the U.S. market.

Second only to Amazon (AMZN) in e-commerce and first in the global mail order business, the family-owned mega-corp has built an empire by staying in the background and letting its brands have the spotlight. It's a strategy that's worked over the company's 60-plus year history, most recently with Otto's own social media site, Two for Fashion. "They are talking about fashion, not about Otto unless it suits," the company's division manager of new media and e-commerce, Andreas Frenkler, said about the site's launch in 2008. It's now one of the top fashion blogs in Germany and an integral part of the retailer's marketing strategy.

In the U.S., Otto set up a division called Otto International in the backyard of that other gargantuan retailer Walmart (WMT). In August, it quietly launched Field and Stream 1871, a brand of outdoor clothing, outerwear, footwear and accessories available exclusively on the brand's eponymous e-commerce site. True to form, the Otto name is virtually absent, appearing only on the site's privacy policy page.

It's curious that Otto would start with such a line, given that its withdrawal from the US market occurred when its acquisition of Eddie Bauer's parent Spiegel proved to be a spectacular failure. When Spiegel filed for bankruptcy protection in 2003 Otto was forced to cede the company to creditors. Eddie Bauer has been struggling ever since, and filed bankruptcy court protection as part of a proposed sale to affiliates of CCMP Capital Advisors last June.

Also, a quick look through the Field and Stream site now shows that it's still selling Fall-Winter clothing, albeit at deep discounts.

Still, the company has received plenty of plaudits for being a retail trailblazer including developing new distribution methods and customer channels. A Microsoft case study reports that Otto was first to use telephone ordering, to produce a CD-ROM version of its catalog in the 1990s (to deal with slow dial-up connections), and to build out one of the largest collections of online merchandise at www.otto.de. So it's no slouch when it comes to innovation.

The proof will be in the roll out of Field and Stream and any other brands Otto may have waiting in the wings. But the company would probably do better if it stays away from an already saturated U.S. fashion market and sticks to growing its sourcing business. WWD reported through years of growing its own retail brands Otto's created impressive in-house manufacturing and logistics divisions. Five years and 6 percent of revenues later, it's Otto's fastest-growing segment, and one that it can use to build a bigger success story -- while keeping a low profile, of course.