Originally published in Romanian in 2009.
The online store Quelle started out in Germany in 1927. It survived a world war, the Cold War and several crises. It went bankrupt in 2009. Now it’s clearing out its stock at low prices.
When I read the news, I asked myself in amazement: how can an online store go bankrupt after 82 years in business? I can easily understand online stores going bust in Romania, in a completely chaotic market that’s still taking shape and only a handful of years old. But Quelle?
Reading the title, you might wonder what store could have been online 82 years ago, when there was no … internet. Quelle got started and established itself as one of the most important retail brands in Germany in mail-order commerce.
Yes, mail order, the “grandfather” of modern online commerce. Beyond the logical evolution from one to the other, both types of business were built on the same advantage: lower prices, thanks to cost savings. With mail order, you have catalogs sent out by direct mail, followed by orders placed by post or by phone; with online commerce, we offer the “brochure” and the ordering through a website, ideally at pretty much the same time.
If I went by how many Romanian companies still treat their website like a brochure, and if I counted how many online stores in Romania still get most of their orders by phone, I’d say that when it comes to distance selling, we’re still somewhere around World War I.
Back to the point: with both forms of distance selling – mail order and online – the physical store disappears, the actual retail space, along with all its associated costs (rent, utilities, salaries). That’s where the cost savings come from, and that’s what makes it possible to sell at lower prices than brick-and-mortar stores.
Quelle settled comfortably into the pioneer’s chair of mail-order commerce, went on to become the leader in the 1960s and 1970s, and then let the dust settle, slowly but surely, over the brand, over its value in consumers’ eyes and, why not, over their enthusiasm for buying from Quelle.
When online commerce arrived, along with Amazon, eBay and Google, Quelle changed too, bringing in more and more of the digital side, but without fully committing or adapting to it, holding on to a reluctance that’s hard to explain.
As you can see on the Quelle Romania website, which is still active (the branches outside Germany weren’t losing money, so they weren’t sold off; a buyer is still being sought for them), even though it has most of the features of an online store, Quelle still insists on sending us a catalog, a little brochure, something offline, like in the good old days.
Ten years ago, instead of a radical restructuring and a complete, dedicated shift to digital, instead of using its resources to become a leader in innovation and online commerce, Quelle chose to merge with the Karstadt retail chain. The result was a camel-ostrich hybrid, with both online and offline presence, with online costs and offline expenses, with an enormous administrative and logistics machine, with fabulous inventories of tens of millions of products and bank debts of over 50 million EURO, and the ending was inevitable: bankruptcy!
Watch out for the dangers of online-offline integration, which we’re seeing here too (at an early stage) in the case of eMag (Romania’s largest online retailer). I’ve said it before and I’ll say it again: eMag is having an excellent run under Asesoft’s leadership and, at least for now, has no real competitor, neither online nor offline, but I don’t believe in the combined online-offline business model under the same brand and the arguments are obvious.
It wasn’t the global economic crisis that caused this ending, as the German government also concluded when it refused to give Quelle state aid, as it had for other companies, despite pressure from the unions, who knew the bankruptcy would bring another 4,000 people into unemployment (there are still governments that make rational decisions, despite the pressure). Quelle had been losing image, money and efficiency long before the crisis. This pioneer of online commerce lived its youth with courage and its maturity in full glory, but it didn’t have the courage to pass on its legacy in time, and it grew old, becoming less and less mobile, heavier, sicker and more inefficient. And, in the end, it died.