Zalando passes the 10 billion euros mark in sales

Zalando grew by a third last year, and the company is hoping for a fifth more gross sales this year. The fashion platform aims for a larger market share and wants to carry out logistics for non-partner brands.

10 billion euros mark

By 2025, Zalando wants to reach a gross turnover (GMV or sum of all sales) of 30 billion euros, and the German platform is well on its way to achieving this. Even after the exceptional Covid year 2020, the e-commerce player recorded gross sales of 14.3 billion euros last year, accounting for a staggering 34.1 per cent growth. Underlying sales (what Zalando earned itself) came to 10.4 billion euros, 29.7 per cent more.

However, this growth came at the expense of the profit margin, which came to 4.5 per cent, nearly one per cent lower compared to 2020. Especially in the fourth quarter, the Covid effect wore off, explains COO David Schröder, causing growth to slow down. Customers also spent a bit less money, partly as a result of discount offers on the platform.

10 million new customers

Zalando nevertheless gained more than ten million new customers in 2021, bringing the total to 48 million active customers across 23 countries. Last year, the platform launched in six new Eastern European markets, including Estonia, Latvia and Slovenia. The company is fearful of the impact of the war in Ukraine and has set up a task force to support those affected. Zalando does not employ any people in the country itself but collaborates with a private-label producer in western Ukraine.

Zalando is also expanding its membership programme Zalando Plus. At the beginning of 2022, one million customers were already subscribed to the programme, creating greater customer loyalty. Plus members visit the platform twice as often and spend three times more money: this contributed to the average number of Zalando customers’ purchases, which came to 5.2 purchases last year. By the end of 2023, the Plus programme should be available in eight countries.

Towards 10 per cent market share

The German group is expecting 2022 to be a volatile year. Nevertheless, the platform expects double-digit revenue growth and thinks it will outperform the European online fashion market. Zalando is also focusing more and more on market share. “Despite our exceptional growth trajectory, our total market share is now 3 per cent”, says co-CEO David Schneider. The company now aims to cover more than 10 per cent of the entire market.

To achieve this, Zalando wants to position itself as a logistics partner. Today, the group already has twelve logistics centres in seven countries, and, by 2023, four more centres are to be opened. The company claims to have the best fashion retail infrastructure in Europe and will open it up to the outside world over the course of this year.

Zalando as a warehouse

Brand partners will be able to use the fulfilment network for their own direct sales channels. They will also have the option to hire Zalando as a logistics partner and use the warehouses for what they don’t sell on the Zalando platform. “This is also good for the sustainability of the fashion industry”, Schröder believes: “By bundling all the stocks together, you remove the inefficiencies from the market.”

Zalando is thus increasingly becoming a pure platform that supports brands and less of a retailer itself: 30 per cent of all sales already come from partner brands and affiliated independent boutiques. Eventually, this should be about half.