Zalando wants to turn stores into warehouses

German fashion web shop Zalando wants to stimulate the direct delivery of goods through partnered fashion stores, after it turned out the German e-tailer lost a billion euros worth in turnover last year due to supply shortages in its own warehouses.

Stock pool

Zalando is already selling items of over a thousand physical German stores on its website, but in the next three to five years, the company wants to increase that number to 70,000 stores. “It is a massive stock pool we are tapping into“, head of connected retail Casten Keller told Reuters.

Zalando estimates the company misses out on 20 to 30 million transactions each year because certain items are (temporarily) unavailable. Considering the average order value is about 50 euros, that means more than a billion euros of missed turnover.

Platform ambitions

Galeria Karstadt Kaufhof, the largest department store chain in Germany, announced last week that the company will make its entire fashion range available on Zalando’s website. Initially, only the eight department stores of the merger company in Berlin will be involved, but in time all of the concern’s outlets will likely be linked to the Zalando platform.

Zalando charges a commission to its partners for all goods ordered through its website. The physical retailer is responsible for packaging and sending the items, as well as all associated costs.

The German web store recently also started collaborating with a store outside of Germany, a Marco Polooutlet in the Netherlands. The company is planning to seek out more partners in other European countries, which points to a shift in Zalando’s approach towards becoming a platform for sellers.