Zalando plans to double growth by 2020
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Zalando plans to double growth by 2020

Online fashion retailer Zalando has unveiled ambitious plans to double in size by 2020 – and now we know how it expects to do so. The company, founded ten years ago as a German footwear retailer, was worth €5 billion in 2017 – by 2020, it wants that figure to have increased to €10 billion. How does it plan to achieve that growth? Global expansion, new categories, payment flexibility, personalisation, and a focus on delivery.

Zalando’s share price has risen by 5% over the last 30 days

graph 2706 zalando

SOURCE: Yahoo Finance

Zalando will launch in Ireland and the Czech Republic this summer, bringing the total number of countries in which it operates to 17. That will enable it to add the 23 million people who currently use its platform. As it continues to expand globally, it could end up as a specialist provider. Speaking about brands like H&M’s Monki and Cheap Monday, Kantar Consulting Ecommerce specialist and senior analyst Alvaro Morilla Villanueva said: “In some cases, Zalando may wind up being the exclusive distributor of some of these brands simply by dint of being the only accessible platform that sells them.”

Zalando will also be adding new categories to its online shop, having particularly highlighted beauty as an “underdeveloped market and potential growth opportunity.” According to retail analyst Richard Hyman: “Zalando’s beauty offer is relevant and tight, and it has a handwriting that its stick to. As a business, it has scale and momentum in this market, and that’s very powerful. A few years ago, no one had heard of Zalando in the UK. It’s all about building a momentum and maintaining it.”

Payments marks a significant opportunity for the company to stand apart from its peers. To achieve its growth goals, Zalando is aiming to offer “an unmatched level of convenience, tailored to fashion.” That includes ‘try now and pay later’ options, as well as a 100-day returns policy.

Villanueva also points to Zalando’s personalisation options as a best-in-class opportunity to embrace growth, saying: “In terms of Zalando’s brand image and appeal, it has been quick to embrace digital trends in the fashion space, becoming one of the best-in-class examples for personalisation. Its mobile app is easy to use and full of tools and content. This focus on mobile makes perfect sense, considering its mobile order share is over 50%. Zalando is great at what it does – the ease of the platform, selection and personalisation tools are best in class.”

The last area Zalando is hoping to drive growth with is deliveries. The company currently operates eight international warehouses, 17 domestic carrier integrations and two express carriers, and offers same-day delivery in 14 destinations. With an expanding European delivery network that promises to increase speed, it’s yet another area the retailer could use to stand out.

Disclosure

Dominion holds Zalando in its Global Trends Luxury Fund.


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