Zalando, Europe’s leading online platform for fashion and lifestyle, showcased their revamped business approach at a Berlin press conference on Wednesday. The move signals a shift from a platform-centric model to an integrated ecosystem, a transformation that reflects the brand's anticipation of evolving market dynamics and consumer expectations.
Recognizing Zalando's heavyweight status in the market, we seized the opportunity to offer our readers an in-depth analysis of the company's current market stance and its freshly minted strategy.
Zalando's Growth Plateau: Between 2018-2021, Zalando experienced strong growth, but like H&M and Zara, it has seen online sales stagnate at around the same level since 2021.
Shein's Remarkable Ascendancy: In contrast, Shein has managed to overtake traditional fashion giants. From being on par with Zalando in 2020, Shein is now 3-4 times larger, indicating a significant shift in consumer preferences and market dynamics.
A Closer Look at 2023: Zalando's Gross Merchandise Volume (GMV) stood at 14.6 billion euros in 2023, slightly down from 14.8 billion euros in 2022. Revenue also saw a slight dip from 10.3 billion euros in 2022 to 10.1 billion euros in 2023.
Stable Yet Stagnant: Despite maintaining a stable GMV and revenue from 2021 to 2023, the real term Average Order Value (AOV) has declined, partially masked by new customer acquisitions amidst strong inflation.
A New Vision for Fashion: Zalando is redefining its identity from being the "starting point for fashion" to becoming the "go-to destination for quality fashion & lifestyle shopping and inspiration.
"Refined Focus and Growth Targets: With an emphasis on quality over quantity, Zalando aims for a 5-10% annual growth in GMV and sales, targeting a 6-8% adjusted EBIT margin by 2028. The goal is to capture 15% of the European fashion market, leveraging a comprehensive ecosystem approach.
Elevating Lifestyle Segments: Zalando plans to enhance its Sports and Kids & Family categories, alongside a strong focus on fashion, providing a premium platform for brands seeking alternatives to established marketplaces.
Tailored Shopping Experiences: By utilizing advanced technologies like AI for size advice, which contributes to 60% of sales, Zalando aims to offer personalized and engaging shopping experiences.
Expanding Beyond Consumer Business: Zalando is leveraging its logistics, software, and service capabilities to enable e-commerce transactions for brands and retailers, both on and off its platform.
The Zeos Initiative: Through Zeos, Zalando extends its operational backbone to support the entire value chain of multi-channel direct-to-customer sales, from integration to fulfillment, aiming to simplify the complexities of cross-border e-commerce in Europe.
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