Zalando was founded in 2008 by two German university friends, Robert Gentz and David Schneider. The platform was initially launched as the European clone of the American e-commerce company Zappos. Today, the Berlin-based company has come a long way to become Europe’s leading online fashion platform. Zalando generates over €4.5 billion which is comparable to an established brand like Puma. The online retailer operates in 17 countries delivering to more than 26 million active customers. E-commerce giant buys clothing, shoes and accessories from around 2,000 brands available on the platform.
But how does Zalando keep a fast pace growth? Using RETVIEWS, we took a closer look at Zalando Strategy of their assortment’s recipe to help understand their success.
FROM SHOES TO LEADER IN FASHION
Zalando started its journey in 2008 as an online retailer selling only shoes. Soon, it slowly expanded the offering to other product categories. Today, the company offers all types of clothing for women, men and kids.
We notice that footwear is still an essential component of Zalando’s overall assortment mix representing 20,3% of their products which is 4,5 times more than H&M. Footwear is a product category well-suited for online retail. Mostly because it requires to have several sizes available which is something e-commerce can offer. Zalando manages to keep an extensive offering of shoes which is its core-business. In addition, the company successfully adds all types of clothing to increase revenues by growing the average shopping basket of its customers.
From high-street brands to designer labels, Zalando has something for everyone. In 2019, the online retailer even created its brands under the name “zLabels”, each targeting a specific consumer segment. Having a large customer base, creating their brands is a smart move from the online retailer strategy. When someone is browsing on e-commerce, his actions are recording and then available to the website owner. Since Zalando operates only online, the company collects a huge amount of data from the consumers’ behaviours on its e-shop. That allows them to identify customers’ demands. It also enables them to back up all their decisions with facts. Zalando leverages this data by selecting the right products at precisely the right time for the market. The online retailer uses private labels to fill “white spots” not served by its many brands.
In terms of market positioning, Zalando offers all kinds of brands from mass-market to high-end brands on its platform. On the other hand, its competitor Yoox concentrates only on the premium and luxury designers. To further evaluate this, we used RETVIEWS to take a closer look at the most frequent price for a dress on both platforms.
Zalando and Yoox are positioned differently but compete on the same products for several brands. When comparing prices of the same product across several department stores, it is evident that Zalando offers lower prices as compared to its competitors. Below is an example of prices for a Calvin Klein mini bag on different online retailers.
ALL SIZES MATTER
The e-commerce era enables consumers to shop directly from their home but also to enjoy a broader choice of products and sizes. Zalando understands that very well and offers many sizes to make sure consumers always find the product they need when browsing on their website. This broader choice of products and sizes increases sales and customers satisfaction at the same time.
Let’s take a closer look at the average number of sizes available for Zalando and its competitor Yoox. Knowing that the fashion industry average is 3,3 sizes available, we can see how serious Zalando is about the variety of choice on their webshop.
THE SPOTIFY OF FASHION
In ten years, Zalando went from an online footwear retailer to one of the largest fashion retailers in Europe, but the company has bigger plans for the future. Taking inspiration from Spotify, which has become the one stop shop for music, people listen to all kinds of genres, and the platform provides a personalised experience for everyone. Zalando’s founders think fashion will go the same way, a couple of websites will have huges catalogues. The more you interact with products on the websites, the more it will learn your style and be able to suggest you outfits based on your interaction.
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