Careers at Zalando
Zalando’s mission is to create the world’s best online fashion experience.
Robert Gentz and his friend David Schneider were graduates of WHU – Otto Beisheim School of Management, a German business school. Gentz wanted to start an Internet company, and focused on the shoe category. His goal was to create a simple and convenient means for purchasing footwear online – something similiar to Zappos in the U.S. He and Schneider carried out research by interviewing shoe store customers about their preferences. They found that most sought an assortment that was up-to-date and had a large selection with a wide variety of sizes, styles, and colors. Most importantly, they learned that shopping was an emotional experience for many.
The two aimed to create a store that would offer a high-quality, consistent, customer-focused presentation of products. They obtained an initial investment from the Samwer brothers, a group of investors who were old acquaintances, which enabled them to hire programmers. In the fall of 2008 they officially launched Zalando, an online retailer that offered a small variety of shoes from select brands. The site gained wide popularity in Germany, and within a few months they needed to obtain warehouse space in order to ensure timely shipping of products. In 2009 the company started shipping to other countries in Europe, and moved to a new office four times the size of their old one.
In 2010 the two recruited old university friend Rubin Ritter to join so he could help set up some key processes. These included developing a technology platform customized to the needs of the fashion sector and capable of identifying specific customer preferences. That year would prove to be a turning point, as Zalando expanded its scope from shoes to apparel for men, women, and children. The company also introduced Zalando Sports, offering a wide range of sportswear and equipment, and Zalando Beauty Section, a shop for cosmetic products. Zalando’s success led it to be listed on the Frankfurt Stock Exchange in 2014, and to expand its reach to 15 European countries by 2015.
Benefits at Zalando
Business model of Zalando
Zalando has a mass market business model, with no significant differentiation between customer segments. It markets its products to men, women, and children. That said, approximately 75% of its customer base is female and most are between ages 25 and 45.
Zalando offers five primary value propositions: accessibility, price, customization, innovation, and brand/status.
The company gives consumers access to a large selection of products (150,000 each season) from a wide range of brands (over 15,000) that include global, local, and private label offerings.
The company is able to offer customers low prices due to its operational model. It only orders products from its manufacturer partners after a sale has been completed, enabling it to save on storage, inventory, and logistics expenses. These savings are then passed on to buyers. The company also offers frequent discounts to customers who are registered with its site. The specific section “Zalando Lounge” provides daily notifications of limited-time deals offering savings of up to 75% off the manufacturer’s suggested retail price (MSRP) for top brands. Customers can stay aware of current and upcoming promotions by subscribing to daily and weekly e-mail newsletters. Zalando also offers free delivery and returns with a return policy of up to 100 days.
The company enables customization by creating country-specific versions of its website and mobile apps. Further, it allows customers to select the type of newsletter they receive via e-mail. They can choose between a daily newsletter featuring all current deals and a weekly newsletter previewing upcoming promotions. They can also tailor their settings in order to turn off newsletter notifications or suspend them for a period of time.
The company fosters innovation by cultivating its in-house expertise. It maintains a team of over 1,000 technology experts, who work in teams to turn new concepts into prototypes that are quickly tested and rolled out into stores for customers to enjoy.
The company has established a strong brand due to its success, and bills itself as Europe’s top online fashion platform. It serves more than 18 million active shoppers in 15 countries. Its website generates more than 135 million visits a month and had net sales of €3.0 billion in 2015.
Zalando’s main channel is its website, through which it acquires most of its customers. That said, it also operates brick-and-mortar stores in Berlin and Frankfurt. The company promotes its offerings through online (search and affiliate) advertising, TV advertising, and its social media pages.
Zalando’s customer relationship is primarily of a self-service, automated nature. Customers utilize its website or mobile app while having limited interaction with employees. The company’s site includes a virtual tour of its various sections, a “Size Guide” identifying specific measurements for various categories (Small, Medium, Large) by country, and answers to frequently asked questions. That said, there is a personal assistance component in the form of phone and e-mail support.
Zalando’s business model entails maintaining and updating its platform for its 18 million customers.
Zalando maintains the following key partnerships:
Fashion Stylists – The company retains the services of independent fashion stylists who provide personal shopping tips to its customers through an online tool called Zalon. Stylists receive a commission for their advice.
Logistics Providers – The company works with a wide variety of logistics companies, including last-mile delivery and long-haul service providers. One of its most prominent partners is PostNord. Zalando also has eight return centers across Europe managed by third-party service providers.
Marketing Affiliates – The company maintains an online marketing technology platform on its website and app through which third-party brands can advertise their offerings. These brands market Zalando on their sites and apps in return. Both parties earn a commission as a result.
Zalando’s main resource is its proprietary software platform that underlies its website. Its main physical resource is its group of three fulfillment centers, which forms one of the largest online retail footprints in Europe. Its main human resources are its team of 1,000 technology experts across 100 countries who continously come up with innovations, and its team of 400 fashion employees (product managers, buying teams, trend scouts, etc.) who study the industry for the latest trends.
Zalando has a cost-driven structure, aiming to minimize expenses through low operating expenses, significant automation, and low-price value propositions. Its biggest cost driver is cost of materials, a variable expense. Other major drivers are in the areas of sales/marketing and distribution, both fixed costs.
Zalando has two revenue streams:
Product revenues – The company generates revenues from sales of third-party and private label products on its website and mobile app.
Advertising revenues – The company earns a commission from third-party companies who advertise their offerings on its marketing platform (website and mobile app).
info: Robert earned a degree in Business Administration from the WHU – Otto-Beisheim Graduate School of Management. He previously served as the CEO of Unibicate, a Latin American social network. He oversees technology, HR, and strategy at Zalando.
info: David earned a degree in Business Administration from WHU and an MBA from Universidad de San Andrés. He oversees brand marketing, sourcing, and private label issues at Zalando.
info: Rubin earned a degree in Business Administration from WHU and an MBA from the University of Texas. He previously worked at McKinsey & Company. He bears responsibility for operations, sales, finance, and corporate governance at Zalando.
info: Jan earned a degree in Business Administration from WHU, an MBA from BEM Bordeaux Management School, and a Ph.D. in Economics from RWTH Aachen University. He previously worked in the Investment Banking divisions of Credit Suisse and Morgan Stanley.
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