Last year Zalando grew by 30 per cent thanks to a quarter more customers. The e-commerce player expects to keep up the momentum and even triple sales from ten to thirty billion euros by 2025.
39 million customers
Zalando feels “stronger than ever”: Indeed, the Covid-19 crisis was merely a reassurance for the German fashion platform, which saw its sales increase by 23 per cent to almost 8 billion euros. The total sales volume (GMV) reached 10.7 billion euros, representing a 30 per cent rise.
Net profit amounted to 226 million euro, significantly more than the 100 million euro a year earlier. Customers returned fewer orders due to the Covid-19 crisis, admits resigning co-CEO Rubin Ritter. It had a positive effect on the profit figures. However, the return rate remains around 50 per cent.
Last year Zalando reached 39 million users, a quarter more than the year before. Southern Europe generated the strongest growth during the Covid year. In that region, significantly more consumers found their way to e-commerce due to several lockdowns. Today, more than half of the volume comes from outside the German-speaking DACH region (Germany, Austria, Switzerland).
“No longer simply online”
The company believes that online penetration will continue to rise, as the sales increase continued over the summer – when stores were open. Covid-19 has particularly accelerated existing trends, such as the fading of the boundaries between online and offline. The platform strategy that Zalando is using, therefore, turns out to be “really the right move”, says co-CEO Robert Gentz: “Zalando is no longer just competing online but on the whole fashion market.”
It does this primarily through its partnership programme, whereby brick-and-mortar stores are opened up digitally under the banner of “connected retail”. This way, stores that had to close during the pandemic could continue to sell their stock online. For Zalando, connecting physical stores means less inventory and more scale, while for partner brands and retailers the reach increases significantly.
Zalando also focuses on additional services for partner brands, particularly concerning fulfilment and marketing. Today about 40 per cent of the trade volume already comes from partners, and by 2025, it should be half the volume. This year, the online retailer wants to have affiliated stores in thirteen countries and reach three times as many retailers. “This is only the beginning of the integration of online and offline,” says Gentz. By 2025, 75 per cent of all physical fashion stores should be connected to the platform.
The Google of fashion
The promise is simple: Zalando wants to be the “Google of fashion”. The platform already claims to be Europe’s most visited fashion website, with one and a half times more visitors compared to H&M, and also wants to have the continent’s largest fashion app. In fact, 57 per cent of orders are coming in through the app. In the company’s five biggest markets, including the Benelux, the business reaches more than 20 per cent of the population.
These trends consequently raise the long-term goals: although the e-commerce player has already quadrupled its sales since 2014, Zalando now wants to triple them again by 2025. That would mean annual growth of 20 to 25 per cent and a total volume of 30 billion euros. The company is also aiming for a 10 per cent market share, with which it would claim market leadership both online and offline. Their current market share is 3 per cent.
Halving greenhouse gas emissions
At the same time, the company is raising its sustainability targets: by 2023, 25 per cent of the total trade volume should consist of more sustainable products. Previously, the ambition was 20 per cent of the GMV. “Compared to 2017, we have halved our greenhouse gas emissions. Where necessary, we also compensate, so that today we can already say that we are climate-neutral within our own operations, deliveries and returns,” says Ritter. This is remarkable because the top executive emphasises that the fashion industry emits twice as much carbon dioxide as the airline industry.
Therefore, his company is also investing in circular initiatives and collections and wants to guide partners so that 90 per cent of them also have science-based climate targets by 2025.
