For the first time, German e-tailer Zalando has departed from its renowned 'free' policy: in Italy, the company has started charging a delivery fee for small orders. A sign of things to come?
The end of an era
Italian customers now have to pay 3.5 euros in costs for orders below 25 euros: a remarkable shift in the commercial policy of a web shop that became famous for its free deliveries and returns. Whether the experiment will expand to other markets is not yet clear. Zalando claims this is a special case: Italy is a less developed market, where customers often only order one piece at a time.
The decision does raise questions: earlier this month, Zalando released a disappointing annual report, the result of too many hot summer days and too many returns. In order to improve, Zalando will have to make sure that the average amount of money spent per order increases. The company could achieve this through cross-selling or impressive sales of beauty products (a recently added category), but charging delivery and/or return fees is another option. Zalando recently introduced a customer programme similar to Amazon Prime, offering additional services such as style advice and even quicker delivery, in exchange for a yearly fee of 19 euros.
Analysts claim that the age of 'free' policies in e-commerce is coming to an end. Retail expert Gino Van Ossel therefore believes the policy will ultimately be introduced to other markets as well: "Turnover would not drop and profits would increase," he claims in Belgian newspaper De Tijd. "Zalando would only be discouraging those customers who place orders that do not make any money for them."