September 2001

Freemans and Grattan, two leading UK mail-order subsidiaries of Germany's Otto group, have pitched themselves firmly into the third-party fulfilment market with the launch of a company called Hermes General Service UK.

They share ownership of the new business with their German parent, which has been developing parallel Hermes operations in Germany, Austria and the United States. There are also plans for units in France, Switzerland, Japan and Korea.

The UK company will offer a comprehensive range of services to third-party customers, including home delivery, warehousing, call-centre operation, payment management, merchandising, catalogue and mailing production, Web storefront development and data marketing.

Nearly all these services will be bought in from Freemans and Grattan, including those of Parcelnet, the combined transport business the two companies have already set up. Hermes itself will focus on marketing and project development. In this it appears to follow the model of rival catalogue group N Brown's Zendor subsidiary rather than that of, say, Reality, in which GUS has united existing mail-order operations and more advanced e-fulfilment activity under a single banner.

Hermes UK's business development manager Tim Bruun, who joins from Otto in Hamburg, says the company is targeting both "clicks and mortar" retailers and pure-play dotcoms, although he recognises that the dotcom market has lately been in decline. "The survivors are more interesting than ever," he told e.logistics Magazine.

Until now Otto has held back from following other UK catalogue groups into the third-party e-fulfilment market, although Grattan in particular long ago branched out into the third-party retail delivery business through its Direct Line distribution operation, which is a leading contractor to fashion retailer Next. Grattan and Freemans and also joint-venture partners in Tesco and Debenhams Web ventures.

None of this business has passed to Hermes, but it has inherited some smaller operations for users such as Gray & Osborn, Next Directory and Trois Suisses.

Bruun says the company's international presence is seen as "an outstanding asset" which should appeal to users selling across borders. Through its Spiegel subsidiary, Otto is particularly strong in the US, where its Spiegel Hermes operation is already active. In Germany, existing Hermes customers include Avon and Lufthansa.