German tech start-up Zalando has been growing rapidly since its inception in 2008 and grew its sales by 50 per cent to 1.8bn euro last year. In 2013 it managed to break-even for the first time across the DACH region (Germany, Austria and Switzerland) and claims it’s the fastest European company to ever reach 1bn euro in net annual sales. Currently operating across Europe, the firm has spread to Belgium, Spain, Poland, Norway and Sweden in recent years.
Robert Schutze, Zalando, country manager for UK and Poland tells Retail Gazette about the importance of pick up points, its online marketing strategy and why it cut its UK office by 75 per cent last year.
What does Zalando want to achieve in the UK and how is it going to do it?
At the moment we are where we want to be with Zalando in the UK and the business is steadily improving. For example, we switched our logistics provider to Hermes to offer pick up points in order to make it more convenient for our customers. In every market we offer a unique service and want to make sure our customers get free delivery and free 100 day return period which makes online shopping very easy. We are improving our IT systems all the time and recently re-designed the premium section of our website and recently revamped our logistics centre in Mönchengladbach to make it more efficient. We’re constantly working for localising our offer. We have no plans to extend our team or logistics operations in Berlin to the UK.
How will you market yourself to a British audience?
We always localise our marketing mix, in the UK we are focussing on different online marketing channels such as SEO, affiliate and display. We have a local team here in Berlin so we have local experts working for the UK for specific marketing channels. Currently, we’re working mainly with online marketing and are collaborating with offline marketing partners such as exchanging flyers. But there are no TV ads, however, we are always reevaluating new ways of marketing so TV could be an option in the future.
Why did Zalando decide to pull out of the UK?
Zalando cut its UK office to three people because its operations would be much more efficient if the buying department was centralised in Berlin. It also decided to keep its office in Paris. We currently have over 60 international buyers who work from the Berlin office.
Online fashion retailers tend to experience quite a high returns rate. What steps are you taking to deal with the issue of returns at Zalando?
Our business model is offering free delivery and free returns no matter what and we strongly believe that this is the right way to go, because we want to offer our customers the most convenient way of shopping online. Making returns difficult wouldn’t help to build customer loyalty and build customer satisfaction. From a customer perspective, returning something that was bought because it doesn’t fit is not convenient so we always look at possibilities of new technology so we can avoid this. We’re looking at solutions such as virtual fitting rooms, other fitting tools and we’re developing new ways of showing our products with a 360 view.
Do you think the tablet and smartphone shopping boom could slow down, and if it does, what is your strategy to deal with it?
From a personal perspective, I think the boom is still going on and the shift to mobile or m-commerce will still continue. I can’t give a time-frame but this is not a short term trend and I strongly believe this is a megatrend that is shaping the shopping experience for consumers in a new way.
How do you go about fully understanding what your customer wants to buy from Zalando? Could you launch anticipatory shipping like Amazon?
Anticipatory shipping is currently not planned but we manage our offer to consumers through web local and buying teams who constantly screen the market to look for what trends are developing so in terms in assortment offering we have a dedicated team for that. We have 1,500 brands offered – the biggest in the UK. We are constantly developing how we can make it easier for the customer to find products that they like.
You have moved around quite a lot in the last few years and have worked in lots of different companies and locations. Are you likely to stay at Zalando for years to come? How do you feel about the job and what have you learned so far?
I’m planning to stay here and I have to say Zalando is offering a unique working environment. We have employees from more than 50 countries – so it’s a very international atmosphere and is like a condensed Europe in our office. Most of the foreign employees are employed in the Tech department. For me, having a lot of international exposure, it’s a very positive thing. At Zalando we always give our employees the opportunity to come up with new projects that have impact on our business. It’s a very dynamic company. Even though we started six years ago we have the dynamics, spirit and flair of a start-up but the professionalism of a European market leader.
Any staff perks?
Because we have so many international employees it’s obviously important to offer the opportunity for everyone to learn German to feel better here in Berlin. For incoming employees from other countries our HR department gives them a working permit, registration and all the paperwork that is needed to work here.
What’s the future of retail as a whole? Where do you see retail being in ten years? What do you think it’s going to look like?
As a pure play we are mainly concerned on e-commerce on retail though we believe e-commerce is not a short term trend but a megatrend that will continue to shape how customers will be shopping. On that perspective, customers will have more opportunities to shop and it is up to the customer to shop offline or online.
Does Zalando have an UK exit strategy if things don’t go so well?
We are where we plan to be so we are focussing on establishing our business in each of our markets and that is our core priority. From a company DNA or attitude perspective we are very dynamic and we always look for different solutions. So whenever we see something that doesn’t work as we think it should work then we quickly adapt to it and find new solutions.
CV: Robert Schütze
Country manager for Zalando Poland Feb 2014 - present
Country manager for Zalando Poland May 2012- Feb 2014
Consumer Goods & Retail at Roland Berger Strategy Consultants Feb 2012- April 2012
Key Account Management at Henkel April 2010- July 2010
Compliance at Bosch Packaging Technology July 2009- Dec 2009
Treasury Department at Bank Zachodni WBK S.A Jan 2008- Feb 2008