Inside Zalando’s transition from fashion e-commerce giant to a ‘platform for fashion’
I’m continually amazed that people still think of Zalando as a fashion e-commerce company, and/or a ‘tech-enabled’ services provider. In reality, Zalando is a pure technology company that just happens to sell clothing and shoes, and it may in fact prove to be one of Europe’s definitive tech companies.
Last Friday, I spent the better part of the day at Zalando’s offices in Berlin for the occasion of the company’s ‘Zalando PlayDay’ press event, where it outlined its vision for the future to around 50 journalists from across Europe. What Zalando is trying to transform into, after about seven years as an online fashion retail company, is a veritable digital ‘platform for fashion’ (more on what that actually entails below).
Zalando is publicly listed, so you can look up the key numbers for yourself, but just to serve as context for what follows: the company currently employs about 10,000 people — including warehouse staff — and booked nearly €3 billion in revenue in 2015, up more than 33% (PDF) from the previous year. Its operating profit was roughly €108 million in 2015, which it earned from handling more than 55 million orders made by customers in 15 European markets.
The company pays a lot of attention to the ‘technology’ part of its fashion tech play. Today,‘Zalando Tech’ employs around 1,200 people in hubs like Berlin, Dublin and Helsinki, with more of those opening in Europe in the near future. That’s a lot of software engineers, developers and UX experts, with more joining the company (from around the world) almost every day.
In order to pursue further growth — Zalando realises that the fashion market is a lot bigger than its current share, even if it concentrates solely on European markets today — the company is putting a lot of long-term effort into becoming a platform for fashion rather than a mere e-tailer. What it really wants to be is the place where people and fashion can connect, rather than a place where people go to buy fashion.
What that basically means is that Zalando wants to serve as a sort of operating system for the entire online fashion supply chain, from creation to personalisation, working with brands and intermediaries on online and mobile storefronts and payment gateways, to setting up modern fulfilment centers and ultimately the delivery of items to consumers.
It means working with its roughly 1,500 fashion brand partners to create custom shops inside Zalando’s online store and streamline fulfilment, inventory and risk management in collaboration with labels — big or small — but also third-party service providers like stylists, logistics providers such as Liefery and marketing affiliates.
That requires different thinking compared to building a pure-play e-commerce company, and Zalando has in fact been restructuring its entire organisation in the past 18 months to better enable its platform strategy and cater to a wide variety of partners.
Zalando is also building a new HQ in Berlin, where it was born in a simple flat back in 2008. Dubbed the ‘Zalando Campus’, the new office will house some 5,000 employees from more than 100 different countries once completed (in 2018).
(On a sidenote, I got to tour the upcoming campus in virtual reality with Oculus’ Rift goggles, which adds another level to simply looking at a maquette or concept art.)
The company is also diversifying its offering, breaking it down into focused services and products such as Zalon (a curated shopping service), Zalando Media Solutions (a digital advertising service) and Fleek (an ‘inspiration’ shopping app).
Last Friday during the ‘PlayDay’, journalists were invited to experience all these products first-hand, and conduct one-to-one interviews with a wide range of Zalando executives and product managers to get a better sense of the new offering and its broader platform strategy.
The proof is in the pudding, of course, but what Zalando proved (to me, at least) last week is that it knows damn well where it’s heading and where it needs to invest to get there, and it’s become a master of communication around its strategy and products.
And, to repeat, that it’s a technology company at its very core.
(All images above credit to Tech.eu)