The Explosive Growth of Zalando Infographic
Zalando, the rapidly risen online retailer based in Berlin, has become Europe’s leading online fashion platform. How did a small time shoe retailer become one of Europe’s fashion leaders? What’s their story, how did they become so successful seemingly overnight, and what's next for the company.
Table of Contents
- Infographic: The explosive growth of ZALANDO
- Article: 10 Ways Zalando Is More Than Just An Online Fashion Store
A common thought, though perhaps a naive one, is that the online fashion retail market is saturated and there's no room for newcomers to have any mainstream success. While it's true that technology pretty much allows anyone to knock up a web-store, source cheap products or sell on behalf of a larger company, it doesn't mean there isn't room for those who truly wish to innovate. Founded in 2008, Berlin based Zalando is a perfect example of this.
Like many low profit, fly by night eCommerce ventures, Robert Gentz and David Schneider began their business from home. They stuck to one niche - flip flops - and ticked all the required boxes to keep customers happy. But there was nothing particularly special about them. After all many other stores that had been around much longer also sold flip flops and footwear. Perhaps if they'd stuck at it, by now they could have been the leader in online flip flop sales, though it's more likely they would have just scraped by with search traffic and a few return customers, while hoping that Google bumps them up the shopping results.
This is the crux of Zalando's success. They didn't just knock up an online store with a cookie cutter shop based content management system, and they didn't just stick with one product and hope for the best. They expanded, innovated and went above and beyond what was expected. They are now one of the most successful fashion retailers on the web. In 2008 they only shipped domestically, now they are in 15 countries. In total they offer over 150,000 individual products, from over 1,500 popular brands. In just 4 years, between 2012 and 2015, their revenue has increased 260% to almost 3 billion Euros!
They are an eCommerce juggernaut. Why? Because they are more than just a typical online fashion store.
Below is a wonderful infographic "The explosive growth of Zalando" provided by our partners dr-discount.nl and our article "10 ways Zalando Is More Than Just An Online Fashion Store". Enjoy :)
10 Ways Zalando Is More Than Just An Online Fashion Store + Infographic
1) Product Variety
With over 1,500 brands with products at all price points, you'd be hard pressed to find another online fashion store with such variety that can still maintain all the latest trends. From officially partnered premium brands like Ralph Lauren, Versace and Michael Kors; to the mainstays like Adidas, Nike and The North Face; to unknowns and up and comers - it's all here.
They cater to men, women and children of all sizes, with all styles and types of clothing and accessories; and a wealth of information, guides and style notes. They didn't aim to just be another store, their goal is to be THE store.
2) They Give Brands A Real Platform
It's one thing to stock a brand's products, it's another to give them the platform and tools to further promote their products. Zalando invites brands big and small to open specialized individual stores, that make use of their innovative technology and wide reach across Europe. They also just launched "Fulfilment By Zalando" where these partners can leverage the company's infrastructure to cut their own costs.
This means by the end of the year Zalando will be able to handle a brand's Content Creation (product photos, descriptions and keyword tagging), Payment Processing, Logistics (storage and delivery), and Customer support. This is ahead of what even Amazon provides.
If a regular store is a road, Zalando is becoming the interstate highway.
3) It's All About The Customer
As well as going the extra mile for brands, Zalando also goes the extra mile for customers. One example of this is their generous 100 day return policy that allows customers to return any item (even if it has been worn to see if it fits) within 100 days of purchase. Returns are completely free of charge and either a full refund or store credit can be issued. In Vienna they are even testing a free pick-up service, where a courier will go to the customer and pick up their returns free of charge, so they don't even have to leave their home. Does customer service get any better than that?
While they are technically losing money by offering these services, they believe that goodwill pays off; and with 18 million active customers, it's hard to argue against it.
Zalando also offer free shipping, over 20 different payment methods across Europe, and regular sales and promotions. There's almost no reason for a customer to ever complain.
4) Not Afraid To Expand Overseas
It might be easy and comfortable to become the leader in your own corner of the world, but the true success stories are those of global domination. In 2008 Zalando was only active in Germany. In 2015 they now cover all the major countries in Europe.
You might wonder why they haven't just gone global. The answer is that they only launch in a new country when they know they can be the best. Expanding too fast and not understanding the local market has been the downfall of many ambitious companies. And even if they survive, providing a sub-par service is only going to tarnish the company's name. Zalando seems to have found the right balance, which leads into their localization efforts.
Zalando recognizes that just because a website can be accessed by people from all over the world, that doesn't mean it truly serves people from all over the world. That's why they offer advanced localization, rather than just a change in domain name from .com to .co.uk.
From pricing and payment methods, to the featured products and celebrities chosen to endorse them, Zalando truly caters to the customer’s experience and to the culture. For example, in Italy it is still common not to have a bank account or pay for products online, so they offer a cash on delivery service. Scandinavians tend not to participate in social media, so they are targeted with more of a straight-information approach. Zalando even offer customers in one country local brands they may be familiar with, that they don't offer in other countries.
Their goal is to make every person (no matter where they are located) feel at home. The outcome? It's working!
Part of a customer's decision making process is being reassured that what they buy will suit them. In the past this was the realm of friends and family. Today, Zalando employs style experts to interact with their customers to help fill the void.
Users share details about their style preferences and other information, and the experts create the best looks on an individual basis. This unique personalization builds trust, encourages sales, and saves the customer time!
7) Strategic Acquisitions and Diversification
Not only has Zalando acquired other companies along the way that are relevant and allowed them to increase market share (such as the online shopping software from Anatwine), they have also diversified away from being a strict online store.
In Germany they launched Zalon, a personalized fashion advice service. In 2015 they acquired "Bread & Butter" - a fashion trade fair that they will be using to launch a fashion festival. In December they purchased online advertising company Nugg.ad.
This diversifies their assets and feeds back into the success of the core Zalando brand.
8) Shares A Large Cut With Affiliates
Most companies view their affiliate programs as a profit making channel, but Zalando operates theirs at a loss for the sake of increased brand awareness. From professionals to customers looking to make some money on the side, their affiliates make between 3% and 10% of the sales they generate.
They also don't treat it as a throwaway area of the business. Affiliates are given all the tools and support they need, and because of this extra effort they too will go the extra mile to get more eyes on the company.
9) They're Ahead of the Technology Curve
Early adopters of technology always have an advantage over the competition, so it's surprising that so many online stores stick with the basics and never push forward with innovation. Zalando however are always at the forefront. They don't just adopt the latest trends, they try to understand them.
For example, they didn't just get some cheap app developers to clone the website so mobile users could access it, they took the time to understand what mobile users actually want and gave talented developers the space to do what they do best.
Their app uses high quality pictures that still load fast, intuitive swiping, and overall optimized mobile experience without losing any core features.
"We didn't have to go back and keep getting [approval]. We were fully empowered and trusted to develop this app by senior management," said Nuzhat Naweed, the head of mobile product and engineering at Zalando.
Perhaps this is why more than half of their customers are using zalando on mobile devices.
10) Willing To Take Risks
Those who play it safe (who stick to flip flops) might have moderate success, but those willing to take risks become a global phenomenon. Zalando was willing to forgo early profits for big profits later on. In its first few years they were operating at a loss and the founders never took a salary, but were building brand awareness like no other. A large portion of their budget went to marketing and advertising, running sales, offering coupons, and giving affiliates a cut.
At one point they couldn't even afford a plane ticket, but in the end it has paid off tenfold. According to estimates they may reach a yearly revenue of 7 billion Euros by 2020, when in 2010 they were at 150 million!