Media Markt: Another Go at Internet Sales

The European giant reintroduces its online business

13/02/2013

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After its first failed attempt, Media Markt, the European electronics and home appliance giant, is ready to reintroduce its online business.

This new bid comes as the company faces other major challenges: developing its business presence in China, the growth of Amazon in Europe, competition from the rival chain Best Buy, changes in demand for certain kinds of products and the rise of generic brands.

A case study on Media Markt by IESE Prof. Marc Sachon and consultant Eric Laux looks at the strategic and operational implications of the company delving back into the Web.

Each Company Is Unique
 

Media Markt, along with Saturn and Redcoon, form part of Media-Saturn Holding, a conglomerate controlled by the German group Metro.

Although part of the same holding company, each is managed independently. They even compete with each other. Most consumers are not aware that the three brands answer to the same boss.

Open Window on Conflict

Media Markt's first stab at online sales came in 2000, with the creation of an autonomous, independent portal for selling over the Internet.

Things did not go so well. This was due, in part, to Media Markt's decentralized structure. Each store tailored its advertising and operations to the needs of regional customers.

The emergence of the portal, with supply that everyone could see, revealed how heterogeneous Media Markt's merchandise and pricing actually were.

Seeking a Multi-Channel Strategy

The whole adventure was called off in 2007, but the company knew that renouncing online sales was simply not an option. With several studies showing that online sales are gaining more and more market share, while traditional sales are stagnating, at best, Media Markt knew it couldn't swim against the tide forever. It had to find a better way to go about it, one that resolved the conflict among its different channels.

In 2011, an opportunity emerged to acquire Redcoon, an Internet "pure player" that specialized in online sales of electronic goods at big discounts. The company used this transaction to resurrect the online sales platforms of Media Markt and Saturn.

Read full article on the IESE Insight website.