Building an Online Retail Hit from the Shoes Up

By Campbell Phillips | 04 Jun 2012

Launched as an online shoe retailer in 2009, Zalando now ships a massive range of fashion and lifestyle products to ten countries throughout Europe – it even prints a popular quarterly fashion magazine.

Founded by German entrepreneurial pair Robert Gentz and David Schneider in 2008, Zalando was created with to fill a gap in the local online market. Just like Zappos or the Australian equivalent, StyleTread, Zalando went after a product category that other retailers didn’t think would work online.

The start-up was incubated by Rocket Internet and Oliver Samwer, who has a reputation for helping to set up online retail clone businesses in new markets. In that sense, Zalando began operating with a mission to follow in the footsteps of successful US-based online footwear retailer Zappos, but targeting the European market. Beginning with footwear as a starting point, Zalando was able to quickly ‘own’ the niche, before ploughing in to other categories.

Now, just over three years since the webstore’s launch, Zalando is recognised as a leading online fashion brand in Europe, delivering to customers in ten countries and growing.

Launch with Good Product and a Solid e-Commerce Strategy

The company’s headquarters are located in Berlin, where the international team manages and runs all the Zalando country websites. Of course, in a region like Europe it’s necessary to have a website that is specific to each nation the company targets. This is the only way to offer truly tailored customer service – a major focus for Zalando, according to Philipp Thienel, Zalando’s UK Country Head.

“Offering excellent customer service is at the core of Zalando’s business philosophy,” explains Thienel. “The unique service mix includes free shipping and returns, a 30 day return policy and a free customer service hotline.”

Of course, the service offering wouldn’t mean anything to Zalando’s customers if it weren’t for its ability to provide a great product range first and foremost, Thienel says.

“Zalando’s offers shoppers an incredible selection of brands and products. The extensive range includes all the latest shoes and fashions for women, men and children, sportswear as well as beauty and living products. All these factors make up the perfect and hassle-free shopping experience.”

A number of Zalando fashions available online.

A number of Zalando fashions available via the webstore.

Zalando’s ability to cater to the needs of such a variety of customers owes its success to the speed and agility of its web development team. As the company has grown, both in terms of inventory depth and international penetrance,  new websites need to be built and new features and functions need to be deployed to them.

By handling this development entirely in-house, Zalando’s skilled staffing resources have to be quite significant, but the rewards outweigh this investment. This method has enabled Zalando to continuously scale while offering a consistent and cutting-edge on-site experience.

“Clear presentation, detailed product views, as well as search and filter functions on the website enable customers to quickly find their desired product,” Thienel says.

“All marketing, IT and customer service technologies are developed and managed in-house, which enables Zalando to quickly optimise and adapt operational processes to meet our customers’ needs. To manage increasing demand in logistical services, Zalando has established long-term partnerships with external providers.”

Currently, Zalando owns two warehouses in areas surrounding Berlin, from which it supplies its inventory. There are also plans to open a third later this year, near Erfurt, Germany.

Consolidating an Online Experience with Editorial Expertise

As far as emerging trends in retail go, the blending of media and product has been accelerated and accentuated by digital technologies. Zalando has been making good use of this, by supplementing traditional media strategies with the production of specialist fashion publications.

“Zalando implements a very effective marketing mix, combining online, offline and TV advertising,” says Thienel. “In addition to that, Zalando produces a quarterly glossy fashion magazine that already counts among the highest-circulation print magazines in Europe.”

The Zalando Magazine celebrates the success of the brand by providing fashion news, product information and style advice to a broad readership, however the true power of the publication is its ability to lend credibility to the online store, giving it the much sought after status of ‘thought leadership’ that is the envy of any fashion start-up.

The Fashion news blog from Zalando is an example of its use of editorial content to enhance its brand.

The Fashion news blog from Zalando is an example of its use of editorial content to enhance its brand.

To further bolster this expert characterisation, Zalando also publishes an online magazine, ‘News & Styles’ with which “Zalando provides high quality editorial content, offering styling advice and on-trend fashion inspiration,” Thienel explains. “A team of in-house editors develops and produces news and fashion features. Guest authors include international fashion bloggers, journalists and celebrities that contribute on a regular basis, adding to the quality and variety of the content.”

Beyond this, the company dedicates resources to ensuring a consistent social media strategy is also provided for all its international audience.

“A dedicated social media team manages the growing international Facebook and Twitter communities by regularly implementing integrated campaigns to engage users and increase brand awareness,” Thienel says.

Attributes for Ongoing Success

While Zalando was originally conceived as an online shoe store, its continual and incremental transformation is indicative of a business that is able to change with an evolving landscape. It has grown to the point of being able to offer its own in-house fashion range, which it launched for the first time earlier this year. The range included an “exclusive capsule collection” by the Berlin designer, Bernadett Pinkov.

However, the story doesn’t end there.

“Our main focus now lies in growth and expansion into new markets,” Thienel says. “We want to continue to offer all our customers the best possible online shopping experience in terms of brand selection and service. In order to achieve this, we will further invest in optimising our processes, systems and infrastructure.

“We believe that e-commerce is a macro-trend across all European countries, so it is paramount Zalando’s offers perfectly curated services to meet the needs and wants of the customers in those countries. The success that Zalando has had in the key markets outside of Germany has proven this strategy,” Thienel explains.

Roughly a year since launch, Zalando has produced a turnover of 160 million Euros. In the first half of 2011, they exceeded this figure with a net turnover of 200 million Euros and this growth is expected to continue.

“This growth is the product of strong structures that we continue to invest in, and a consistent marketing strategy.”

European online shoe and fashion retailer, Zalando.

Seeking more information on how to get an online retail venture off to a flying start? See our complete A-Z guide, Power Up: The Online Retail Entrepreneur’s Guide.