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The Business 

Zalando is an online platform for fashion and lifestyle that was founded in 2008. It offers clothing, footwear, accessories and beauty products. The company is active in a multitude of business areas such as online retailing, private labels, shopping clubs and style consulting.


Zalando opened up new business areas in the last years, where they f. ex. allow third parties to sell their products via the Zalando channels (online store and logistics) or give advice for marketing or advertising strategies. To take on one of the challenges that is posed by online shopping such as size's fit, Zalando approaches artificial intelligence and 3D technologies.


In 2018, the company changed its internal management structure and is henceforth structured into three main divisions, that are based on a sales channel perspective rather than on geographic regions:

  • Fashion Store – includes all the online stores of Zalando where current season products are offered

  • Offprice – includes the sales channels Zalando Lounge, outlet stores and overstock management, for example eight brick and mortar outlet stores in German cities serve as an additional sales channel for excess inventory.

  • All other segments – private label offering zLabels and various emerging businesses.

The fashion store continues to be the main sales channel and growth driver of this company.

Source: Company Data

Overview by business

Fashion Store


Zalando offers their customers under the segment Fashion Store a wide selection of fashion items. Clothing, shoes and accessories by international brands, spanning from widely known, popular brands to locally famous brands and private labels, all with free shipping and returns.


In total Zalando works with more than 2,500 international brands. By launching the beauty segment in spring 2018, Zalando continues its expansion: It currently operates in 17 European markets where over 31 million active customers are accounted. The online shops are tailored to the local needs of the customers in different countries.


Since 2010, Zalando has been developing own international fashion brands in their headquarters in Berlin. The product range includes shoes, clothing and accessories for women, men and children. It mainly functions to fill any gaps in the assortment of the Fashion Store. With a total of six brands, Zalando creates its own products and simultaneously covers the entire value chain from design to sale.

Source: Company Data

The Zalando Fashion Store is the biggest segment of the company and achieves nearly 90% of the company’s overall revenue (89%/88% in 2018/2019 respectively).


The company’s revenue overall showed great growth in the past. Since 2014 sales grew on  average by 19.6% (CAGR 2014-2019). The company targets a CAGR of at least 15% and has therefore exceeded their aspirations. The demand for online distributed fashion is growing
stronger and with Zalando’s very generous shipping policies and product range the customer base grows stronger and more loyal.

Source: Company Data

In 2016, there was a rise in EBIT which was mainly due to a significant short-term improvement of key operational costs, especially the fulfillment cost ratio.


Offprice


Zalando’s offprice segment serves to sell the last-season ranges and excess inventory. The Zalando Lounge f.ex. offers exclusive sales promotions at discounted prices to registered members only. Furthermore, all customers have the chance to make a bargain in one of the eight outlet stores available in Berlin, Cologne, Frankfurt-on-Main, Leipzig, Hamburg, Münster, Stuttgart and Hanover.

All other segments


In addition to the Fashion Store and Offprice segments, Zalando is active in a variety of up-and- coming business areas:


Zalon is Zalando’s own consulting service, where customers can get advice and inspiration directly from selected stylists when shopping. Zalon is part of the Zalando platform and connects freelance stylists and customers.


Zalando Fulfillment Solution develops Zalando’s logistic and makes those capacities available to external partners so that they do not have to deal with infrastructural issues and therefore can concentrate fully on their core competence in the fashion business.


Zalando Marketing Services enables Zalando to expand and optimize its marketing capabilities. All of Zalando's expertise and reach has been bundled into Zalando Marketing Services, which now offers personalized marketing services to brand partners.


Zalando Partner Service helps other players in the industry (for example brands, retailers or producers) to be digitally successful. For example, by linking inventories to multiple retailers, digitizing wholesale processes or integrating offline businesses into the Zalando platform.

Source: Company Data

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