Online Sales Central to Zara’s US Growth Strategy

Inditex, parent company of fast fashion retailer Zara, is now relying on e-commerce rather than physical expansion, to drive US sales and trounce rivals such as H&M. This is a radical departure for a company that has always based its growth strategy on its bricks and mortar footprint. Last September, Inditex rolled out a Zara online store for Spain, UK, Germany, Italy and France and the company will start processing online orders from the US from the 7th of September.

Although Inditex has long used promotional websites to draw attention to Zara’s product stable, the company is only now beginning to use the online channel to gain a competitive edge.

“Zara’s move online in the U.S. is overdue—it’s the largest online apparel market in the world,” said Sucharita Mulpuru, an e-commerce shopping analyst at Forrester Research in an interview with Bloomberg. “The web is a great strategy for them. It’s much cheaper with their nationally recognized [Zara] brand to launch a Web store than to invest in real estate in 50 more malls in the U.S.”

Zara has a strong brand presence among the 25 to 35 year old customers the retailer is attempting to reach online. Inditex eclipsed H&M as Europe’s biggest retailer in early 2006 and has grown its sales 53% since early 2007. Last year, the company derived 89 of its sales revenue from Europe and Asia with the remainder from the US.

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