Business & Industry

Dec 1, 2017

DRESS THE BEST

In the internet age, it's possible to purchase almost everything through online channels. From food to appliances, from books to all kinds of gadgets, from cars to holidays abroad and now even clothes, shoes and fashion items.

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By JORGE MATIAS

Founded in 2008, in Berlin, Germany, by Robert Gentz and David Schneider, Zalando is a German electronic commerce company working a cross-platform online store that sells shoes, clothes and other fashion items.

Initially, the company was specialized in the sale of foot ware but, soon, it included other areas of fashion and sports, following the original inspiration on the US online retailer Zappos.

Operations outside Germany began in 2009, when Zalando started offering deliveries to Austria. In 2010 the company launched in the Netherlands and France to which joined the United Kingdom, Italy and Switzerland, in 2011, and in 2012 it launched in Sweden, Denmark, Finland, Norway, Belgium, Spain and Poland.

Since 2013, inspired by the tech companies from the East, especially China, Zalando decided to overhaul its successful online store into a digital platform, remaking itself into a digital shopping mall, allowing fashion houses and retailers to use it for their own sales.

The operations core is conducted from Germany and, even though some critics stated that the company was digging itself an early grave, Zalando's firmly believed that it could only optimize its business operations by taking care of the management itself.

With internet technologies in the heart of their operation, the company, currently, employs over 1000 IT-workers alone in the countries with location advantages such as Ireland (Dublin) and Finland (Helsinki).

They gain their competitive advantage through their generous shipping and return policies, which come at no additional costs while promising a speedy delivery of the ordered items. Additionally, they offer 'payment after delivery', which involves a certain risk for the company. The option to pay after receiving the items, as well as the 90 days return policy are highly attractive options for internet shoppers and exert an even stronger influence on first-time online buyers who hold back on purchasing online often because of perceived risk.

The company is proud to showcase Europe's largest selection of clothing, shoes and accessories, representing over 1500 brands for men, women and kids. Zalando claims it's the most complete and safe way to create a perfect wardrobe.

But Zalando's history is not all made of success. The company's figures show that the digital platform was accumulating losses since its foundation, until 2014 when finally, they showed some profit. This was much due to the entry on the Frankfurt Stock Exchange.

The most important cost factors for Zalando are fulfilment costs and marketing costs, both taking up 50% of total revenues alone without the costs of sales included (marketing costs for itself fixed at 25% in 2010).

Plus, the company faced some controversy too, as the German newspaper Bild reported, in 2013, that Zalando received around 3.3 million euro between 2007 and 2012, in subsidies from regional development programs of the European Union.

Already in 2012, German TV channel ZDF broadcast a report on the packing and distribution centre operated for Zalando, where they showed appalling conditions for the workers.

The report showed that the workers were not allowed to sit down during their working day, they were continuously subject to scrutiny and their workspace was extremely confined.

Contacts * www.corporate.salando.de * Tel: +49 (0)30 2096 81 484

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