🌀 Zalando platform strategy Out, Ecosystem In🔄

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Zalando platform strategy Out, Ecosystem In🔄

Zalando, Europe’s leading online platform for fashion and lifestyle, showcased their revamped business approach at a Berlin press conference on Wednesday. The move signals a shift from a platform-centric model to an integrated ecosystem.

Recognizing Zalando's heavyweight status in the market, we seized the opportunity to do in-depth analysis of the company's current market stance and its freshly minted strategy.

• Zalando's Growth Plateau: Between 2018-2021, Zalando experienced strong growth, but like H&M and Zara, it has seen online sales stagnate at around the same level since 2021.

• Shein's Remarkable Ascendancy: In contrast, Shein has managed to overtake traditional fashion giants. From being on par with Zalando in 2020, Shein is now 3-4 times larger, indicating a significant shift in consumer preferences and market dynamics.

• A Closer Look at 2023: Zalando's Gross Merchandise Volume (GMV) stood at 14.6 billion euros in 2023, slightly down from 14.8 billion euros in 2022. Revenue also saw a slight dip from 10.3 billion euros in 2022 to 10.1 billion euros in 2023.

• Stable Yet Stagnant: Despite maintaining a stable GMV and revenue from 2021 to 2023, the real term Average Order Value (AOV) has declined, partially masked by new customer acquisitions amidst strong inflation.

• A New Vision for Fashion: Zalando is redefining its identity from being the "starting point for fashion" to becoming the "go-to destination for quality fashion & lifestyle shopping and inspiration."

• Refined Focus and Growth Targets: With an emphasis on quality over quantity, Zalando aims for a 5-10% annual growth in GMV and sales, targeting a 6-8% adjusted EBIT margin by 2028. The goal is to capture 15% of the European fashion market.

• Elevating Lifestyle Segments: Zalando plans to enhance its Sports and Kids & Family categories, alongside a strong focus on fashion, providing a premium platform for brands seeking alternatives to established marketplaces.

• Tailored Shopping Experiences: By utilizing advanced technologies like AI for size advice, which contributes to 60% of sales, Zalando aims to offer personalized and engaging shopping experiences.

• Expanding Beyond Consumer Business: Zalando is leveraging its logistics, software, and service capabilities to enable e-commerce transactions for brands and retailers, both on and off its platform.

• The Zeos Initiative: Through Zeos, Zalando extends its operational backbone to support the entire value chain of multi-channel direct-to-customer sales, from integration to fulfillment, aiming to simplify the complexities of cross-border e-commerce in Europe.

Last week, "The Online Features Driving Consumers to Shop With Brands, Retailers or Marketplaces" report, a collaboration between The PYMNTS Intelligence and Adobe, provided insights from a survey of 3,500 U.S. consumers on online shopping satisfaction. Here's a condensed overview:

📈 Overall Satisfaction:

• 🏆 Marketplaces lead with 80% customer satisfaction.

• 🛍️ Retailers are close behind at 76% satisfaction.

• 🌐 Brand websites/apps show 72% satisfaction, hinting at improvement opportunities.

🏅 Category Winners:

• 📱 Fashion and Electronics: Marketplaces outshine with up to 10 p.p.  higher satisfaction vs other channels

• 🥕 Groceries and Home Goods: Retailers have a slight 1p.p. edge.

• 🔌 Electronics: D2C brands trail in most categories.

▶🇺🇸 Amazon kicks off no-Prime-needed spring deals. Amazon's Big Spring Sale, running from March 20-25, marks a strategic shift to include all shoppers. The sale promises up to 50% off on beauty, sports, and more, challenging rivals and courting cautious consumers in a slow growth market.

▶🇺🇸 Amazon's AI magic transforms product pages. Amazon is on a magical AI spree, now letting sellers create product pages by simply pasting a link.

▶🇺🇸 Walmart's Route Optimization hits the market. Walmart Commerce Technologies rolls out Route Optimization, an AI logistics tool previously used internally, now available to all. With this, they've slashed 30M miles and 94M pounds of CO², showcasing the tech's massive impact.

▶🇪🇺 AliExpress faces EU probe over naughty bits. The EU is cracking down on Alibaba's AliExpress for spreading illegal content under the new Digital Services Act.

▶🇺🇸 Temu shakes up US market with Chinese twist. Temu's US seller onboard strategy sparks intrigue, revealing all are Chinese with US stock!

▶🇲🇽 Amazon spices up business in Mexico. Expanding its global footprint, Amazon Business sets up shop in Mexico, becoming a go-to for 18k local sellers and sparking a jobs bonanza.

▶🇫🇷 France takes on fast fashion with fines. France's latest legislation introduces penalties up to $11 on fast fashion, aiming to mitigate environmental damage. This move, unanimously passed by the lower house, signals a significant shift towards sustainable fashion, directly impacting giants like Shein and Temu.

▶🇪🇺 Shein scrutinized by EU's tough rules. Shein, the fast-fashion titan, now under EU's regulatory microscope with 108M EU users. The Digital Services Act aims to curb illegal content, affecting Shein's plans, including a U.S. IPO.

▶🇬🇧 Frasers ends Matches, luxury market trembles. Frasers Group's abrupt exit from Matchesfashion reveals deep troubles in the luxury marketplace sector.

▶🇪🇸 Inditex uses flagship stores to boost sales. Zara's parent, Inditex, adopts a counterintuitive strategy against online competitors like Shein, by expanding its flagship stores, resulting in increased sales per square meter and efficiency gains. Maybe Shein should look into retail? 🙂 

▶🇺🇸 Vestiaire Collective ramps up U.S. ads. Vestiaire Collective, the go-to for pre-loved luxury, unveils its 'Parlez-Vous Vestiaire Collective?' campaign for US market. It highlights its French roots, diverse inventory, and commitment to sustainability.

▶🇩🇪 Hugo Boss invades Roblox with denim power. Hugo Boss is doubling down on the gaming world, not just with a denim launch in Roblox but also debuting a fragrance-themed island in Fortnite.

▶🇪🇺 EU's big move reshapes gig worker rights. Following Belgium's lead, the EU compromise empowers member states to decide employment status for gig economy workers, affecting companies like Uber and Deliveroo.

▶🇵🇹 Uber Eats couriers plan largest strike ever. Portugal's food delivery couriers, using platforms like Uber Eats and Glovo, plan a historic strike on 22 March. They demand improved wages, better working conditions, and compensation for expenses, refusing to deliver for 6 hours to voice their needs.

▶🇺🇸 DoorDash fights abuse with AI SafeChat+. DoorDash's AI innovation, SafeChat+, is set to tackle verbal abuse in chats by detecting offensive language in real-time and empowers users and delivery personnel with immediate response options.

▶🇺🇸 Instacart reveals quirky state favorites. Instacart's dive into sales data reveals the unique shopping habits of U.S. states. Arizona loves booze delivery, Colorado orders dry mouth relief and frozen burritos, and Michigan surprises with orders for ice cream scoopers and kettlebells.

▶🇬🇧 Deliveroo dives into retail after turning profit. Deliveroo announces a groundbreaking profit of $109M in 2023, a stark contrast to the previous year's loss. The expansion into Deliveroo Shopping and advertising, alongside efficiency improvements, marks a promising future for the company.

▶🇵🇱 Bolt Food seeks food critics in Poznań!. Bolt Food is on the hunt for food critics in Poznań, offering discounts, free deliveries, and a photography workshop. Do you have what it takes to describe the texture of chicken in ten minutes?

▶🇰🇷 Meta faces sanctions in South Korea. South Korea's FTC is on the verge of sanctioning Meta Platforms for not safeguarding Facebook and Instagram marketplace users against fraud.

▶🇪🇺 EU overhauls Customs Code, fights fake green. The EU Parliament has taken decisive action, revamping its Customs Code to handle the surge in e-commerce and enforce standards on imported goods. Simultaneously, it targets misleading environmental claims by requiring verification of terms like "biodegradable."

▶🇺🇸 Wayfair sings new tune with brand refresh. Wayfair's "Welcome to the Wayborhood" campaign shakes up the brand with a new logo, jingle, and celebrity partners. As it gears up to unveil its first physical store in Illinois this spring.

▶🇸🇪 Klarna hit with $733K GDPR fine. Swedish payment giant Klarna has been slapped with a hefty $733K fine by a court for GDPR violations, concerning the clarity and accessibility of their privacy notes during March-June 2020.

▶🇺🇸 Michaels invests in MakerPlace growth. After launching MakerPlace in Nov 2023, Michaels steps up its game by introducing in-store selling pilots across the US, strengthening its position against Etsy. CEO Ashley Buchanan's vision for a "one-stop shop" for handmade sellers and customers begins to materialize.

▶🇺🇸 Allbirds kicks off with a CEO swap. Allbirds, amid a turnaround, announces a CEO change and store closures, aiming for revival. As Joe Vernachio steps up, the brand eyes growth despite a nearly 15% revenue drop in 2023, and shares below 75 cents from a $26 high.

▶🌍 Airbnb tightens privacy with camera ban. Airbnb announces a global ban on indoor security cameras in rentals by April 30, aiming to enhance guest privacy.

▶🌍 Allianz Trade boosts B2B eCommerce. Allianz Trade has unveiled "Allianz Trade pay," a comprehensive payment solution for B2B eCommerce, enhancing simplicity, security, and competitiveness in the sector.

▶🇺🇸 Reddit aims for a $748M IPO lift-off. Reddit's leap into the IPO sphere is not just about numbers; it's about community. 8% of shares are earmarked for users based on karma.

▶🇺🇸 Elliott walks away from Currys purchase bid. Elliott, known for its ambitious investment strategies, hits a brick wall with Currys, as its £742M bid gets the cold shoulder. With the door now closed on immediate advances, Elliott's pursuit comes to a standstill, affecting Currys' stock negatively.

▶🇺🇸 Prescient AI secures $10M to smarten ads. Platform promises eCommerce brands like Good American and Eight Sleep a revolutionary way to optimize ad spend, boasting significant ROAS increases and revenue growth.

▶🇺🇸 Big Sur AI secures $6.9M for AI sales boost. Boosting sales by a whopping 4x, it's clear that online shopping just got smarter.

That’s all. See you next week in the 🌀Maze!

Your guide through the maze

Artur Stańczuk Chief Strategy Officer at Packhelp, the leading European packaging marketplace. Previously worked ~8 yrs at Bain & Co. In the past, Digital Transformation Director at the leading Polish convenience chain Żabka and Entrepreneur that co-launched 3 startups