The Technology Behind Zalando’s Success: How the E-Tailer is Reshaping Fashion E-Commerce
From its roots as a startup founded in Berlin in 2008 by Robert Gentz and David Schneider, Zalando has risen to become one of the biggest names in fashion e-commerce in Europe. The company now sells more than 150,000 products from 1,500 brands and made waves last October with one of Europe’s biggest tech IPOs. So how was it able to achieve such sustained growth? In large part, according to senior figures in the company, it has been down to an innovative approach to unconventional technical solutions.
“We outgrew the market’s standard systems very fast and realised that to ensure the successful growth of our business we needed in-house solutions that we could tailor to our demands,” said Philipp Erler, senior vice president of Zalando Technology. The problem with Open Source technologies, he explained, is that they are built to fulfil many needs from a broad range of users while Zalando could only use a small part of the functionalities for its purposes. At the same time, especially in times of rapid growth and high innovative power, requested features in Open Source solutions are either missing or they could only be added with great effort.
And so in 2010, two years after the company was founded, Zalando replaced the Open Source shop platform Magento in a weekend-long switch with a self-designed solution. This meant the company did away with unused features the Open Source solution provided and gained more flexibility and better possibilities for innovation. “Thanks to the expertise of our team, we optimised even standard processes better, as we were able to derive improvements directly from the operative reality of our daily business,” Erler said.
The following years saw the gradual substitution of ready-made systems with in-house replacements in all business areas, from buying to content creation, order processing and logistics. Today, Zalando employs around 700 IT experts, 90 percent of whom are working on self-designed systems in the fields of engineering, product management and quality assurance.
Consistently Optimised Processes
Erler compared the Zalando platform to a highly-specialised F1 race car: “All processes are consistently optimised for one purpose. In our case, it’s the creation of the best online shopping experience for our customers.” In-house developments enable the company to measure, test and improve each process action as well as the functionalities that users are interacting with, he said.
Some of the central questions at Zalando involve the shopping experience and customer journey. Five years ago, at an earlier stage of the fashion e-commerce industry, having a broad range of different categories, products and brands was the key to success. But today users want a relevant, personalised and inspiring shopping experience, according to Christoph Lütke Schelhowe, who is responsible for customer experience at Zalando. “We are constantly looking for innovative approaches to provide our customers with new ways of discovering and interacting with our broad assortment. Our current focus is a personalised and emotional customer experience in order to make our offering more relevant.”
Within the past few months, the platform has had a major design facelift and the team also rolled out new features on desktop, mobile and apps across its 15 markets. All these changes help the online retailer to close the gap between the user and the product by creating an exciting web experience.
Today customers are welcomed by gender split entries on the landing pages. There are less teasers onsite, and those that are there focus on curated topics — along the lines of a fashion magazine. This editorial approach allows the retailer to engage users as they enter the shop and to offer a more tailored selection taken from the enormous selection of more than 150,000 articles.
Focused on Fashion
Product presentation on the detail page is now even more focused on fashion, with models striking emotional, dynamic poses and detailed photos of the products that can help highlight the special attributes of an item.
According to Lütke Schelhowe, retailers like Zalando have to learn more about their customers in order to create a relevant offering. A recently-launched personal shopping feed dubbed ‘My Zalando’ is one such approach. The recommendation engine combines data from recently purchased products with editorial content such as new arrivals. Customers can teach ‘My Zalando’ about their tastes by ‘liking’ brands. The company is currently running live tests with the feature but is considering positioning it more prominently within the shop, or even adding further functions such as a swipe feature.
One of the highlights of the past few months was the international launch of Photo Search — an image recognition function integrated in the Zalando app that shows similar products based on a photo. “Customers often recognise what they want only when they see it,” said Lütke Schelhowe. The software matches given forms, patterns and colours with products from the shop and presents similar articles to the customer. The idea for the image recognition feature came from Zalando’s Hack Week in 2013 where a project team developed a first prototype named ShaZalando. The annual Hack Week sees around 700 employees from all branches of the technology department pause their daily work in order to focus on creative ideas, developing concepts and building first prototypes.
Tech teams at Zalando are developing fast and iteratively, said Philipp Erler. The e-tailer aims to take features live as soon as possible, carrying out testing and adapting to ‘real life’ conditions later in order to ensure the maximum impact for customers.
From Social Shopping to Virtual Reality
“Hack Week is another way of giving our technology teams the possibility to implement their own ideas. The range and scope of projects is impressive and the teams develop prototypes within five days, without any limitations,” he explained.
The third Hack Week was held in December 2014, with projects ranging from social shopping to virtual reality to smart wearables. Team Zketch built around the image recognition approach and prototyped a tool that compares sketches to what’s on offer in the shop in real time, for example showing rings when drawing a circle. Others focused on voice command or the integration of social platforms similar to Facebook and Pinterest, while one team built an avatar named Zalanda, who helps customers with requests.
“We are absolutely sure that e-commerce and the way we shop online will change tremendously over the next few years,” Erler added. Zalando is hoping to stay on top of this trend by encouraging its tech team to think outside of the box and in 2015, Elrer said, they will work even more autonomously, having complete freedom in the realisation of projects.
Customer demand for a high quality and individual shopping experience is rising — and so are the technical requirements for an e-tailer. Zalando has set about tackling the need for maximum flexibility and constant innovation by dismissing standard systems and developing tailored technical solutions in-house. Thanks to making this transition early on, senior figures at Zalando hope the company is at least one step ahead of its rivals companies, and will look to focus on future topics that may reshape online shopping once again.
This article was written in conjunction with Zalando.
