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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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AO World says its German launch gives it confidence for future international expansion, as it reports growing sales

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AO World says its German launch gives it confidence for future international expansion, as it repor
AO World says its German launch gives it confidence for future international expansion, as it repor
AO World today said its first international website, in Germany, gave it confidence for future overseas expansion, as it reported sales up by a quarter in the first half of its financial year.

AO.de, which launched at the beginning of October, is the first of a planned series of international websites. AO has replicated its UK operating model in the German market and is focusing on the major domestic appliances category as it learns about local preferences. It has a German head office, warehouse and hub infrastructure as well as in-house logistics covering last mile delivery and offering next-day delivery to most shoppers. "Customer feedback has been extremely positive and the levels of traffic to the site are most encouraging," AO said in today's interim statement. "Initial volumes were kept intentionally low to ensure we could deliver to promise, but now we have demonstrated operational effectiveness we are allowing sales to build. We are now in a position to accelerate the drive for sales and are taking necessary steps to facilitate growth."

AO today reported sales of £217m in the six months to September 30, up by a quarter from £173.5m at the same time last year. Pre-tax profits of £0.7m were down on the £2.1m reported last time, after the £3.3m cost of setting up the German operation. It said revenue from the AO website had risen by 38.6% to £173.7m, while total revenue, which includes income from third-party websites and logistics services, rose by 25.1% to £217.1m.

Chief executive John Roberts said strong UK sales had come at the same time as its launch into Germany. "This launch has given us confidence in our ability to replicate our models overseas," he said. "While this accelerated investment has brought forward our associated set-up costs for the period, our focus is on the long-term as we proceed with our strategy to deliver a market-leading proposition in new categories and countries.

"Although Germany has only been operating a number of weeks, we are delighted with the way our culture has transferred and the way it's operating and with the way sales are building."

The company said that trading in the second half of the year had started well and that it was well prepared for the peak trading period over Christmas.

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