SHARE
COPY LINK

BUSINESS

Appliance kickbacks under investigation

Two of Germany’s biggest appliance makers, Bosch and Siemens, may have provided illegal kickbacks to retailers willing to push their goods to customers, according to a report in the latest issue of Der Spiegel.

Appliance kickbacks under investigation
Photo: DPA

The allegations concern BSH, a joint venture between the German industrial giants, that sells household appliances such as washing machines, refrigerators and ranges. Last year, Munich-based BSH had 39,000 employees and revenues of €8.8 billion.

According to internal documents cited by Spiegel, BSH gave sales staff, including managers at large appliance retailers gift certificates good at retailer Karstadt or with travel agents TUI in exchange for pushing Bosch and Siemens products to customers.

The magazine says BSH spent more than €10 million a year on kickbacks and that the company’s top management, including CEO Kurt-Ludwig Gutberlet, was aware of the illegal practice.

The company confirmed Friday evening that Munich prosecutors were investigating its past marketing practices. A statement also said “possible unfair sales promotions practices from the past,” would be looked into by BSH’s internal compliance unit.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

MONEY

Is there a future for delivery startups in Germany?

Startups which brought groceries to their customers’ doorsteps in minutes boomed in Germany during the pandemic. But as the Covid restrictions have fallen away and with the cost of living on the rise, the market is changing.

Is there a future for delivery startups in Germany?

At the height of the Covid crisis, startups like Gorillas, Flink and Getir appeared. They built up a dense network of warehouses in major cities across Germany, hired hundreds of drivers and promised to deliver supermarket products such as cold cuts, drinks or frozen food to the customer’s home in just a few minutes.

With customers able to conveniently order at supermarket prices via an app, quick commerce boomed during the lockdowns. According to the German Retail Association (HDE), the retail sector generated €204 billion in sales of food products last year, and the online share was 2.4 percent.

READ ALSO: EXPLAINED: The German regions attracting startups

But as the Covid restrictions have fallen away and the war in Ukraine has driven up inflation, demand for online groceries has dropped significantly and many delivery services that counted on rapid growth are now in trouble.

“Quick commerce was the topic in 2021 that went through the roof the most in retail,” says Kai Hudetz, managing director at the Institute for Retail Research in Cologne (IFH). “Even then, you had to critically question whether bringing a single yogurt pot to your desk in fifteen minutes could be a working business model.”

Berlin-based startup Gorillas, for example, announced just a few months ago that it was cutting hundreds of administrative jobs and recently gave up some locations in North Rhine-Westphalia.

Competitor Wolt, which does its core business with restaurant deliveries, has ended its latest experiment with supermarket products from its own warehouses.

Due to the intense competition in the market, competitive pressure is enormous, and the self-confidence of employees, who are increasingly successful in their fight for better pay, secure working conditions and works councils, is also adding to the strain on the startups.

Adapting prices also seems to be a risky strategy. “As soon as delivery fees are charged, for example, customers often go the 300 meters to the supermarket themselves and buy what they need or order from a cheaper competitor,” says Hudetz.

But the companies have little choice. According to its own information, Flink now only offers free deliveries for shopping carts of €50 or more.

All of the delivery startups have also said goodbye to their former ten-minute delivery promise: Gorillas and Flink now only advertise that they will be at the door “within minutes”.

However, there is still a lot of growth potential in the market, so it seems the supply will not disappear. But while some companies are struggling, big competitors are moving into position, says IFH retail expert Hudetz.

The delivery company Takeaway, which has dominated the restaurant delivery market in Germany for years with its Lieferando brand, recently opened its own warehouse for food in Berlin-Charlottenburg. From there, more than 1,000 products from local brands are now being delivered to customers on a trial basis.

READ ALSO: ‘Lack of diversity is a problem’: What it’s like to work at a Berlin tech startup

Wolt has not abandoned the grocery segment either, but has just adapted the concept. Instead of building an expensive warehouse infrastructure, the company now cooperates with local supermarkets, from whose stores the goods are picked up and delivered.

Large retail chains such as Rewe and Edeka have also been involved with their own services for some time. Rewe, for example, has invested in the start-up Flink in addition to its own delivery service.

With such business partners, the startup believes it is well equipped for the changing market and is even on the lookout for further acquisition opportunities. “We are looking at it very closely,” said a Flink spokesperson. “We have cash on hand.”

These changes will also soon affect the service that consumers can expect. Deliveries will take longer and also become more expensive, says retail expert Hudetz. “You’ll have to say goodbye to ten-minute delivery promises for everyone and for free. It’s going to come down to a premium service.”

By Matthias Arnold

SHOW COMMENTS