CIO interview – OBI’s Tim Engler replatforms online retail

Home improvement retail in Europe is becoming increasingly digital, with online sales predicted to grow significantly by 2025. Aware of this trend, major German online retailer and franchise operator OBI has launched a new e-commerce platform as part of an organization-wide digital transformation. Tim Engler, responsible for the group-wide IT of OBI, builds the story for diginomica. 

In 2023, European DIY retail was valued at €368 billion, according to research by Cross-Border Commerce Europe, a retail business accelerator for the powerful economic region. Its research found that 15.2% of sales were online, with a value of €56 billion. The estimated growth of home improvement e-commerce will reach 18% by 2025 and be worth €66 billion. Aware of this trend, the Wermelskirchen headquartered business has begun refreshing its technology estate, including the increasingly important e-commerce platform. Tim Engler has led the implementation and says of its strategic aim: 

Home improvement has a low online share at present. As a customer, when you shop for home improvements, you don’t know exactly what you need. You need some inspiration and consultation, so the behavior of customers, to date, is to go into the stores, and that is a major part of our business.

However, sectors change. Back in 2014, European CIO for Nissan, Stephen Kneebone, told me he was seeing car buyers visit an online store seven times before actually arriving for a test drive. Engler is preparing for a similar behavioral change: 

There is a shift to online, especially in the pre-sales process. People are quite intensively researching online before they go to the stores, and that sometimes leads to a click-and-collect order or they at least have a checklist on their phone. Already every second customer in Germany visits the OBI website to prepare for the stationary store visit.

Pure online ordering and home delivery plays a minor role, but we believe that this will grow in the future; as customer behavior changes, there will be a shift in the next five years.

OBI is not waiting for the dust to settle on its bookshelves, and the launch of a new e-commerce offering is part of a raft of digital modernizations. OBI, which was founded in 1970, has over 600 stores, with 349 in Germany, with the others being in nine other European countries. 

Digital marketplace 

OBI and its leadership didn’t just want to replace its e-commerce platform. With a franchise model as part of its heritage, the retailer wanted to take this into the digital age and become an online marketplace for home improvement. Engler says: 

That brings complexity, but also the capability to do partnering. We are opening up to sellers as well as service providers and craftsmen. We want to interconnect these channels.

For the last 14 years, OBI has been using the SAP Hybris e-commerce platform, which Engler says had some customizations. With the platform aging and not being fit for the new ambitions of OBI, Engler began the search for a new technology tool. He says:

One of the key motivations was that our innovation speed and time to market cycles were getting longer.

After studying the market, Engler discovered and went on to select VTEX and its digital commerce platform; he says: 

We didn’t see any other provider that allowed us to handle stationary franchising as well as a digital marketplace without adding too many custom developments or other vendors; VTEX could offer most of it already built in.

Engler adds that being able to automate business logic, streamline the customer journey, and simplify the technology landscape using a composable architecture led to the selection of VTEX. The OBI digital commerce technology team is not large, and he was looking for a platform that would not increase their workload. 

OBI began planning its VTEX adoption in October 2022. Code began to be cut in January 2023, and then Engler launched the new site, which he calls a traffic-share go-live in October 2023. From October 2023, the German websites and stores were using both the new and old platforms side by side, and then, in February 2024, the German market went solely over to VTEX. All 349 stores and third-party sellers are now on a unified platform that links them as independent accounts to a central resource and provides customers with a range of delivery and collection options nationwide, including pick-up within two hours of ordering. 

Over the coming year, Engler says they will migrate the rest of the OBI business off the Hybris platform and on to VTEX. The implementation was done in partnership with systems integrator Mindcurv. He says of the strategy: 

E-commerce is one key pillar of our digital transformation. On top, we are digitizing our stores so that technology is more accessible for our sales employees with dedicated applications. For example, we enable in-store ordering of all digital marketplace products.

Digital build

OBI is carrying out a significant amount of technology modernization, ranging from hardware upgrades for store staff to acquiring and integrating new forecasting, stock management and sourcing systems. The enterprise resource planning (ERP) has been upgraded with a move to Microsoft Dynamics 365. OBI is also building its own customer relationship management (CRM) platform, Engler says: 

We are focusing on this in-house since we believe there is enough room for differentiation.

This shaped the recent technology acquisition decisions as the retailer looked for technologies with a strong API…