Zalando’s niche sites Emeza and Kiomi will shut down, not even a year after their inception. Insiders believe this confirms long-standing rumours about a possible IPO in the near future.
Zalando surprised everyone when it opened a web shop for luxury brands like DKNY, Michael Kors and Missoni in the beginning of 2013, brands that were claimed “not to feel at home at Zalando”. A luxury site, Emeza.de, targeted this higher section of the market. A month later, another site - specifically geared towards Zalando’s own brand Kiomi - was also launched. It immediately received a lot of criticism as plenty of people believed Kiomi would not be able to compete with large, general brands.
Some nine months later, Zalando has decided to pull the plug on both web shops in “the foreseeable future”. After that, Kiomi will only be on saleon Zalando and the luxury brands will have to content themselves with a premium section on Zalando’s web shop. In short, Zalando is moving back to its original concept where one web shop ruled the entire array of products.
Preparation for IPO?
It is unclear why Zalando has opted for the change in course, but a lack of luxury brands and disappointing sales could explain Emeza’s termination. Another possible explanation is that Zalando is preparing an IPO, as possible investors would prefer a more transparent business model. Zalando heading for the stock exchange has been a hot topic ever since the German Wirtschaftswoche magazine was able to browse through documents detailing the IPO.
It said that Zalando’s management would get 1.4 % of all shares, while employees would get another 1 %. These shares are valued at some 88 million euro, resulting in an estimated total value of 3.67 billion euro - a huge number for a company that has failed to make a single euro in profit ever since it launched. Despite a slower growth, Zalando is expected to get a 2013 turnover of 2 billion euro.
(Translated by Gary Peeters)