We’re celebrating 10 years of Galaxus

Ten years ago, Florian Teuteberg (CEO) and Martin Walthert (Head of Marketing) joined forces to launch the online department store Galaxus. In this interview, they look back on stubborn manufacturers, outdated systems and a meteoric rise.

Hello Florian and Martin! We’re celebrating 10 years of Galaxus. What was new about the concept of an online department store back in 2012?

Martin Walthert: Ten years ago, you could pretty much count the number of online stores with a wide, comprehensive range of products on one hand. In Switzerland, we were the first to offer something like that.

Why didn’t anyone beat us to it?

Florian Teuteberg: Specialists in certain product areas already existed – with digitec we were one of them. But online department stores where you can buy everything under one roof didn’t exist back then. Setting up a platform like that was and is hard work. On the one hand, you have to have the technical skills and systems to manage such an extensive product range efficiently. On the other hand, you have to build business relationships with hundreds of suppliers across all industries. That takes plenty of people and a lot of perseverance.

Galaxus was called «Gerda Home» at the very beginning and specialised in household products such as coffee machines and wash cloths. Why did you go for household products in particular?

Martin: digitec comes from the IT and home electronics corner of the market, right? Suppliers who had stuff like that in their range often carried household items, too. So it was obvious that we would expand in that direction at some point as well.

And how did you come up with the name?

Martin: (laughs) «Gerda Home» was meant to convey that old-school corner shop vibe – obviously in a tongue-in-cheek way.

Florian: We wanted to make ourselves and our brand relatable. While digitec was technical and cool, we wanted to create an accessible, personal environment with Gerda Home aka Galaxus.

Why did you change the name to Galaxus later?

Martin: «Gerda Home» was obviously a nonsensical idea – and not just because of the nod to a sexist trope, which would be seen as more problematic now than it would’ve been ten years ago. The name wouldn’t work for products such as sports shoes, lawn mowers or sex toys, either. Nor would it be appropriate for an international, multilingual online store.

digitec was already a strong brand in Switzerland at that time. Why was it necessary to bring in a second store, Galaxus?

Martin: digitec is a wonderful brand that’s best suited to selling electronic and digital products. But who would think to go to a store called «digitec» to look for bed linen or trendy, new sneakers? Widening our range in that way under digitec would’ve seriously watered down the brand’s expertise in its core areas and been an affront to its loyal customers.

Florian: Besides, digitec already existed as both a brand and a domain name in most countries. So, we needed a name that could be protected internationally.

Having two brands also means double the advertising effort. Has it been worth it?

Martin: Definitely! digitec and Galaxus have different target groups, different tones of voice and, therefore, different images. With digitec, we’re well placed in the field of high technical competence as none of our competitors are doing that seriously any more.

Today, Galaxus is also well known for its advertising. What’s the main idea behind the humorous and sometimes even provocative posters, banners and TV spots?

Martin: Our campaigns pull a few different elements together. We push the boundaries of the conventional advertising world, sometimes breaking them altogether. We shake things up visually, and surprise or irritate people. With authenticity, humour and an understanding of the realities of life, we want to create a sense of emotional closeness. In doing so, we differ significantly from the highly automated, technocratic, anonymous platforms that exist elsewhere internationally.

After the household category, products for gardeners and do-it-yourselfers were added soon afterwards. Toys, sporting goods and digitec’s IT and electronics range also followed suit. What was the thinking behind the initial range?

Florian: We wanted to offer our customers the widest possible range as quickly as possible. So, we launched one product group after the other in quick succession.

How did that go down with the customers?

Florian: We initially just put everything we got from our suppliers into the shop – even if the product data, availability or prices weren’t perfect. But we quickly realised that it’s pointless to randomly bring in new product ranges. So, we had to massively expand our Category Management team in order to be able to manage all of our product groups to a high standard. Not only that, but we also had to increase our warehouse capacity to ensure that in-demand products were available and quick to deliver.

In 2012, retailer Migros joined Digitec Galaxus with a minority stake of 30 per cent. How did that fit in with the birth of Galaxus?

Florian: After launching Galaxus, we realised that a massive investment was necessary in order to develop the new product categories at an adequate pace, increase warehouse capacity and make the Galaxus brand known across Switzerland. digitec was profitable, but those earnings wouldn’t have been enough to finance Galaxus’ growth. That’s why we started looking for an investor who shared our vision and had the financial might to take on that kind of project. We found the perfect partner in Migros. Like us, the company thinks long-term. It has supported our growth with loans, while at the same time giving us all the entrepreneurial freedom we need.

Florian, what are your fondest memories from the early days of Galaxus?

Florian: Seeing our ideas taking root. Every product and product category gained traction within a very short timeframe. The demand for a new platform was obviously there. I was also happy to finally be able to find what I needed on a decent online shop (laughs).

And the not-so-fond memories?

Florian: Galaxus wasn’t just a new online shop. There was also a completely new system environment behind it. We wanted to, or rather had to, replace digitec’s system – which, after about ten years in operation, had become completely outdated. We’d used Galaxus as a sort of test platform for the new system because it was dealing with much smaller volumes than digitec was. We took on the complete redevelopment ourselves, from ERP to online shop. It was a beast of a project which almost had us defeated.

Defeated? How come?

For several years, we had to work with two parallel systems, with the Galaxus system really just being a crutch at the beginning. It was riddled with errors and inefficient to run. And at digitec, innovation was petering out as the years went by because all our resources were going into the new platform. The transition from the digitec system to the Galaxus one was painful for the whole company, but also our saving grace. After that, we were able to efficiently develop digitec and Galaxus on one platform.

What else did you underestimate?

Florian: We’d assumed that manufacturers would welcome us with open arms. But most of them didn’t want to have anything to do with us at first. Either they really didn’t believe in the future of online business, or they wanted to protect brick-and-mortar stores and keep us down. We were kind of disillusioned that the resistance we got in the early days of digitec was repeating itself. However, it was clear to us that our customers didn’t just want to buy electronic goods online. That meant we had to get creative and procure a lot of products as grey imports – in other words, products that don’t have a direct equivalent in Switzerland. Building partnerships with manufacturers directly takes a lot of effort – the work is still ongoing today.

Digitec Galaxus recorded sales of more than 2 billion francs in 2021 and now employs more than 2,500 people. What kind of goals did you have in mind ten years ago?

Florian: In 2021, digitec posted sales of around 500 million francs. After a short start-up phase with Galaxus, we set ourselves the goal in 2014, together with Migros, of breaking the one billion mark in sales by 2018. Back then, it was more of a vision than a concrete goal, but with 992 million francs, we almost cracked it.

And what are Galaxus’ goals today?

Martin: We want to become one of Europe’s leading online retailers.

In 2016, Galaxus turned into a marketplace. Several hundred retailers now sell their products to Galaxus customers. Were you never afraid of losing control?

Martin: Whether we’re talking about product descriptions, prices or delivery times, opening up our online platform certainly involved some loss of control. We manage over four million items in a largely automated way. And various spots are under construction, which is a real pain. We’re not quite happy with the platform yet, which is why improving the quality of our product data – even in the midst of a fast-growing product range – is high on our priorities list.

Since the end of 2018, Galaxus has been available in Germany, too. It launched in Austria in 2021. Which countries will be shopping on Galaxus by 2032?

Martin: Probably every EU country.

And the UK?

Florian: That’d be an option, too.

What do you make of Galaxus’ market potential in Switzerland?

Florian: Huge, as ever. Still only 20 per cent of all non-food items are purchased online here. I see a potential of at least 50 per cent, as we’re already seeing in some more developed product categories.

Galaxus smashed the 100 million euro sales barrier in Germany and Austria last year. Were you surprised by the pace of growth?

Martin: This growth was pretty much in line with the ambitious estimates we’d set out in the executive team – for the fun of it, more than anything. So, we’re delighted, but not totally surprised.

What are the next steps for Germany and Austria?

Martin: In Germany, we’re now starting to build up the brand and launch major image campaigns too. In Austria, we’ll keep on experimenting and monitoring and will invest more at an appropriate time.

What path is Galaxus taking in terms of sustainability?

Florian: Taking a sustainable approach in how we deal with people and the environment is par for the course for us. At every level, we’re focusing more and more on how we can use our resources sustainably. This includes our own operations but, above all, we want to enable our customers to shop more sustainably.

Galaxus thrives on the back of its shopping community, which rates products, asks questions and comments on reviews written by the editorial team. Is there anything you’d like to say to the Community?

Martin: A huge thank you! Our Community brings our shops to life and gives the rather technical shopping platforms a human touch. In addition, the Community is a huge source of support because the people taking part in it support each other with competence and know-how.

Florian: Without all of you, Galaxus wouldn’t be what it is today. Thanks a million from me, too!