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Zalando’s ‘bill-me-later’ option hurts profits but growth is strong

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Zalando, the German fashion pureplay, is celebrating a second consecutive quarter of rapid growth, despite profits taking a hit.

The fashion e-tailer, Europe’s largest by sales, recorded a sales boost of between 33 and 35% in the three months to the end of June, but operating profit would come in lower than last year.

Seemingly, this is down to the ‘bill-me-later’ service offered by Zalando. Across Germany, Austria and Switzerland, the most common payment choice is payment via invoice, where the customer pays with a money transfer after receiving the parcel. Costs related to this were supposedly higher than expected for Zalando’s second quarter. Consumers across these markets are more reluctant to diverge their credit card details for online purchases so the ‘bill-me-later’ practice offers a viable alternative.

The Berlin-based group floated on the Frankfurt stock exchange in October last year and in March earlier this year, management board member Rubin Ritter said that the group would continue to focus on growth rather than profitability for 2015.

To support this growth, Zalando will soon go on a recruitment drive, increasing headcount from 7,500 to 10,000 by the end of the year, with particular focus on tech experts.

Zalando ships apparel and accessories to circa 15m customers in 15 European countries.

 

 

 

Published on Tuesday 21 July by Veebs Sabharwal

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