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 t