albert Chan
Zalando
Sector: Online apparel retail Countries of operation: 23 countries across Europe, with Austria, Germany, and Switzerland as primary markets (referred to as DACH by the company) Key product categories: Accessories, apparel, beauty products and footwear Annual Metrics [caption id="attachment_147154" align="aligncenter" width="700"]
*Trailing 12 months ended on March 31, 2022Fiscal year ends on December 31[/caption] Summary Founded in 2008 and headquartered in Berlin, Germany, Zalando is an online fashion retailer that operates in 23 countries across Europe. The company offers accessories, apparel, beauty products and footwear with free delivery and returns. It also offers off-price sales through its Zalando Lounge shopping club and outlet stores. Zalando sells over 5,800 brands and owns six private labels. The company sources products from 16 different countries, 126 sourcing partners and 195 factories. Its five main sourcing countries are Bangladesh, China, India, Portugal and Turkey. Zalando had 48.8 million active customers as of March 31, 2022. Company Analysis Coresight Research insight: Zalando’s positioning as one of the leading online fashion retailers in Europe, along with its expertise in technology, has helped the company gain market share. It has reported consistent, robust double-digit sales growth over the years—which continued even during the pandemic, when apparel demand has been severely impacted. The company’s custom-built, proprietary IT systems continue to enable data-driven decisions across the business. We view Zalando’s Partner Program, a marketplace allowing brands to sell to consumers via its platform, and its Connected Retail program, which enables store-only retailers to scale up their digital businesses, as key long-term growth drivers for the company. The Partner Program will help Zalando to scale and to lower its exposure to inventory risk when partner retailers convert to Zalando Fulfillment Solutions (ZFS). ZFS enables Zalando to hold and ship stock on behalf of its partner brand or retailer. Partners also gain access to Zalando Media Solutions (ZMS), the company’s marketing services business. Other growth drivers for Zalando include improved data-driven personalization, new product categories and new markets entries. In May 2022, the company launched its operations in two new markets – Hungary and Romania, following launches in six new countries in 2021 – Croatia, Estonia, Latvia, Lithuania, Slovakia and Slovenia, with locally tailored assortment, including local delivery, return and payment options. Additionally, Zalando continues the international roll-out of its subscription-based loyalty program Zalando Plus–expanding the program to the Netherlands and Italy and enhancing the program for French customers on November 3, 2021. Plus members spend three times more than non Plus shoppers and visit Zalando twice as often than non-members, according to the company. In the first quarter of fiscal 2022 ended March 31, 2022, Zalando Plus membership increased by 150% year over year to over 1 million members.
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- Attract more brands onto its Partner Program, a marketplace allowing brands to sell to consumers on Zalando sites.
- Convert more of those partner retailers to ZFS clients, enabling the company to hold and ship stock on behalf of the brand. Zalando targets to ship 75% of all partner items by ZFS by 2025, compared to 55% in 2021.
- Grow brands’ use of ZMS. Zalando expects ZMS to contribute 3–4% of GMV over the long-term, from around 2.0% of the company’s GMV in fiscal 2021.
- Expand its logistic network and invest in its proprietary cloud-based technology platform and inventory management capabilities. Additionally, develop its payments platform and externalize its capability to power its partners’ businesses outside of the Zalando platform.
- Capitalize on strong long-term growth opportunities in the €450 billion ($539 billion) European fashion market. Zalando aims to gain a share of over 10% of the market in the long term, expanding from 3% as of 2021.
- Aim to reach annual revenues of €20.0 billion ($24.0 billion) by 2025, from about €10.4 billion ($12.7 billion) in 2021, equating to a revenue CAGR of around 18%. Additionally, grow its GMV to more than €30.0 billion ($36.0 billion) by 2025, from €14.2 billion ($17.3 billion) in 2021, at a CAGR of 21%.
- Reduce carbon emissions emerging from its business by 80% by 2025, as compared to 2017.
- Expand its sustainable product assortments to 25% by 2023 from 22% of its GMV in 2021.
- Raise the recycled content requirement standard of its products branded from 20% in 2020 to 30% in 2023.
- Move away from a linear fashion industry toward a circular pattern of consumption, through recycling and reuse. Zalando aims to extend the lifespan of over 50 million of its products by 2023.
- Ensure that 90% of its suppliers will have emissions-based targets by 2025.
Company Developments
| Date | Development |
| April 11, 2022 | Zalando appoints Padmaja Bommareddy as new SVP of Corporate Development. Prior to joining Zalando, Bommareddy worked in Walmart where she helped lead the apparel omnichannel strategy. |
| April 4, 2022 | Zalando will roll out “Circular Design Criteria” of Berlin-based circular.fashion to ensure standardization of products designed for circularity by its 5,800 brand partners on the Zalando platform. |
| March 25, 2022 | Zalando opens a new store in Berlin to celebrate the 10th anniversary of the Zalando outlets; the new store is spread across a total of four floors, with over 1,000 square meters of area. |
| March 1, 2022 | Zalando announces that CFO David Schröder has assumed the newly created role of COO, which is dedicated to building and expanding Zalando’s capabilities to enable the company’s growth; Sandra Dembeck, who previously held several finance leadership roles at C&A, Compass Group and Kingfisher, replaces Schröder as new CFO of Zalando. |
| January 28, 2022 | Zalando collaborates with consumer electronics companies Apple and Beats to expand Zalando’s range with lifestyle products, including Apple Airpods, HomePods, Watches and other Apple accessories, along with Beats tech accessories. |
| January 4, 2022 | Zalando invests in recycling technology company Ambercycle, which recycles textile waste into a new fiber called “cycora”— a substitute for virgin polyester; the investment is in line with Zalando’s ambition to extend the life of 50 million fashion products by 2023. |
| December 17, 2021 | Zalando ships its first parcel from its new fulfillment center in Bleiswijk, the Netherlands. The new fulfillment center, with 140,000 square meters, is the largest site in Zalando’s European fulfillment network and brings the company’s assortment closer to customers in Belgium, France, Luxembourg, the Netherlands and the UK. |
| December 14, 2021 | Zalando announces that it will build two new fulfillment centers in Poland to meet increased demand and the rising attractiveness of Zalando Lounge in Poland and nearby markets. |
| November 11, 2021 | Zalando collaborates with local Czech delivery service company Zásilkovna to adapt Czech delivery preferences by providing more alternatives for deliveries and returns through a network of pick-up locations and lockers. |
| November 4, 2021 | Zalando announces that the company will start construction of its fourth logistics center in Germany by the end of 2021. With a floor area of about 100,000 square meters and nearly 30,000 square meters of mezzanine, the company expects the new site to complement Zalando’s increasing logistics network in the Europe. |
| November 3, 2021 | Zalando expands Zalando Plus loyalty program to the Netherlands and Italy and enhances the program for French customers. |
| October 28, 2021 | Zalando relaunches Zalando Zircle, the company’s peer-to-peer marketplace for pre-owned items. Currently available in Germany only, Zircle allows customers to return items bought from other users on the marketplace to Zalando. |
| October 26, 2021 | Zalando announces that the company has strengthened robotics in its logistics centers, with ten new TORU robots, developed by the robotics company Magazino, joining the retailer’s fleet in Lahr fulfilment center and actively participating in 2021’s Cyber Week fulfillment. By the second quarter of 2022, Zalando targets to complete the Lahr fleet with 28 robots in total. |
| October 21, 2021 | Zalando collaborates with the Hamburg-based content production company ORENDT STUDIOS to bring virtual production to Zalando’s Designer Category. |
| October 19, 2021 | Zalando expands its Connected Retail program to Italy, allowing retailers to sell their products to millions of customers on Zalando’s platform. |
| October 5, 2021 | Zalando introduces new business models and practices to accelerate circularity and extend the life of at least 50 million fashion products by 2023. The company piloted “care and repair” services to enhance post-purchase customer engagement and extend the life of customer’s products. Zalando also scaled the “redeZIGN for circularity” capsule collection from the company’s private label ZIGN. |
| September 28, 2021 | Zalando invests in the circular fashion and textile technology group Infinited Fiber Company, supporting Zalando’s goal of extending life of at least 50 million fashion products by 2023. |
| August 16, 2021 | Zalando promotes Meg Greenhouse to SVP of Zalando Technology Foundation and Masood Choudhry to SVP of Logistics. |
| July 29, 2021 | Zalando launches its operations in Croatia, Estonia and Latvia. Furthermore, the company expands its Partner Program to six new markets: Croatia, Estonia, Latvia, Lithuania, Slovakia and Slovenia. |
| July 21, 2021 | Zalando enters an agreement with Dutch logistics network Homerr to provide Zalando’s customers more convenient return option by enabling them to return their parcels via Homerr’s over 1,500 drop-off points. |
| June 22, 2021 | Zalando announces a collaboration with Sephora to create an online prestige beauty destination on its platform. Under the terms of the alliance, the beauty assortment will launch on Zalando’s site in Germany in the fourth quarter of fiscal 2021 and continue into other European markets in 2022. |
| May 20, 2021 | Zalando launches its diversity and inclusion strategy, “do.BETTER,” which offers a comprehensive action plan with commitments across four pillars: customers, leaders, partners and talents. |
| April 20, 2021 | Zalando launches a pre-owned clothing category in seven new markets: Austria, Denmark, Finland, Italy, Ireland, Sweden and the Czech Republic. |
| March 31, 2021 | Zalando expands its Connected Retail program to France. Karl Lagerfeld is one of the first French apparel companies to connect to the program. |
| March 5, 2021 | Zalando eters a long-term partnership with the Afro German Academic Network (ADAN) to promote career opportunities of Black and People of Color (BPoC) in Germany. |
| March 2, 2021 | Zalando collaborates with Dutch delivery service provider Fietskoeriers.nl to test evening delivery in four Dutch cities: Amersfoort, Arnhem, Nijmegen and Zwolle. As deliveries are made through cargo bikes, it does not cause any carbon emissions and reduces traffic in and around cities. |
| February 18, 2021 | Zalando expands Zircle, the company’s webshop dedicated to consumers looking for pre-owned fashion assortment, to Denmark, Finland and Sweden. |
| February 15, 2021 | Zalando announces that its Connected Retail program now has more than 3,000 active stores globally. The company has also expanded the program to Austria. Furthermore, Zalando noted that Belgium-based fast-fashion retailer C&A has signed up for the program. |
| January 28, 2021 | Zalando collaborates with the Ellen MacArthur Foundation to accelerate the retailer’s plans to extend the lives of its 50 million apparel products by 2023. |
| December 6, 2020 | Zalando Co-CEO Rubin Ritter announces he will step down from his role for personal reasons. The company’s supervisory board will work with Ritter to dissolve his contract, which is valid until November 2023. |
| October 16, 2020 | Zalando acquires Fision, a Switzerland-based company that offers mobile body scanning tools, to enable consumers to assess apparel fit virtually. With this acquisition, Zalando aims to help its customers generate precise body measurements and receive more accurate sizing advice. |
| August 11, 2020 | Zalando announces plans to accelerate its Partner Program, along with the Connected Retail program that allows store-only retailers to scale up their digital business. These programs witnessed outstanding growth during the first wave of the pandemic. |
- Robert Gentz—Co-CEO
- David Schneider—Co-CEO
- David Schroder—CFO
- Astrid Arndt–Chief People Officer
- Jim Freeman—Chief Business and Product Officer
Source: Company reports/S&P Capital IQ