After reporting an improved financial outlook for the current financial year, Zalando announced the launch of a “curated shopping” program for consumers and the acquisition of a minority stake in an interesting British software start-up that should help build up its own marketplace.
Confirming preliminary data for the first quarter, the big German-based e-tailer said its sales accelerated during the period, with stronger than expected growth in Germany, Austria and Switzerland, driven by less discounting and a booming demand for sneakers. Total sales increased by 28.5 percent to €644 million during the quarter, leading to an operating profit (Ebit) of €29.1 million, versus a loss of €22.8 million in the same period a year ago.
The adjusted Ebit margin of the company thus reached a level of 4.5 percent, thanks mainly to a better gross margin. Sales in the core markets of Germany, Austria and Switzerland generated a positive Ebit margin of 9.3 percent, but it remained negative at 4.7 percent of sales in the 12 other European countries where Zalando trades.
The positive momentum continued in the second quarter, and the management is now anticipating that Zalando's growth will reach the high end of a previously projected 20-25 percent range for the full financial year. The company had previously forecast a stabilization of the adjusted Ebit margin to last year's level of 3.7 percent, but it is now targeting a margin of 4.5 percent for 2015.
The strong recent growth was attributed in part to improvements in purchasing and fulfilment of orders. Further progress is expected through the introduction of a new “curated shopping” service, after a seven-week test with several thousands of customers and called Zalon (inspired by the French word Salon). A team of about 100 fashion experts, including fashion students and salespeople, counsels customers on the most suitable clothing and accessories, including shoes, after dressing up their individual profiles. About 90 percent of the advisers are freelancers.
Research indicates that about one-fourth of all online customers, especially males, are interested in some form of curated shopping in Germany, although only 3.6 percent have actually used this kind of service from suppliers such as Outfittery, Modamoto or Kisura.
Meanwhile, Zalando has acquired a 20 percent stake in Anatwine, a two-year-old British company that provides customized software to help brands and retailers to efficiently integrate their digital processes, systems and databases. Brand partners will be invited to integrate the technology to better merchandise their products through Zalando. At a later stage, retailers may also be encouraged to integrate their e-commerce operations with those of Zalando.