Zalando is never one to disappoint when it comes to unexpected turns and ideas. After purchasing their own trade show and pocketing a few top-notch fashion partners (such as Topshop or Beyoncé’s recently launched Ivy Park), the Berlin-based fashion e-commerce giant now wants to enter new grounds with its “platform strategy”. Having been the much-attacked baddy for traditional brick-and-mortar retailers for most of its existence, Zalando now aims at incorporating offline stores into their shopping experience. To simplify this, the enterprise recently purchased Tradebyte, a software program that helps companies to digitalize their assortment – only one of many measures in the course of becoming somewhat of a “Google for fashion”. We sat down with Moritz Hau, Zalando’s country manager Germany, to discuss the dimensions, opportunities and obstacles of the platform strategy and how to personalize an assortment of more than five million styles.
You have just held a speech about the democratization of fashion – but isn’t fashion fully democratized already?
Of course the market is much more democratic than it has been 20 years ago. But democratization has many aspects. One great example of democratization are the changes that are happening in the media business right now: Today, digital media is available in a comprehensive, quick and easy way via platforms such as Netflix or Spotify. Our goal is to make this a reality in the fashion business as well. We see that today’s fashion consumers are digital and are always browsing on their phone. But a huge share of fashion products are still waiting offline, e.g. in stationary retail with millions of garments lying around unseen because people would have to go into a store to actually take a look. We want to change that mismatch and help to connect all players in the market – be they customers, brands, retail and department stores, producers, stylists and bloggers – on our platform. We see ourselves as matchmakers.
What does that mean more hands-on?
Imagine a future where fashion can be as easily accessed as music can be right now. You are in the city, open the Zalando app and see a pair of shoes that you like. Then the app tells you: There is a store at a 3 minutes walking distance where you can get them. Or you are waiting at the hairdresser’s and see a great styling of Scarlett Johansson. The app recognizes the clothes and shoes she is wearing and tells you that you can order the dress from Zalando but get the shoes delivered directly to you at the hairdresser from a local shop that stocks them.
Imagine a future where fashion can be as easily accessed as music can be right now.
But in a perfect world you would then have to work with EVERY retailer there is…
Well, it is our vision to build a huge network to offer our customers a broad selection and flexibility. As part of our platform strategy we are currently testing various new products and services. We have just started to work with a first store, Bodycheck in Berlin. Their assortment is now integrated into the Zalando shop. Customers are informed on the product detail page that the product they are looking at is offered by a partner and will be delivered by them directly. This is just a first step, we are interested in co-operating with all kinds of stores – from niche or specialized stores to verticals. Our main goal is to make their assortment shoppable online, but we are also thinking about click and collect solutions as well as return points in the store – that would also mean increased traffic for the retailer.
If there are products that the Zalando customer might be interested in, why doesn’t Zalando just buy them itself? What’s the benefit of the partner program for you?
From an economic point of view, there are three pillars of costs for an online shop: expenditures for actually buying the product, fulfillment costs and marketing expenses. In the partner program, the first two pillars are redundant. And of course it pays off as the customers for example enjoy a greater assortment and can be offered a product even if we are already sold out.
Aren’t there many obstacles in integrating external shops’ assortments into your own platform?
Of course there are challenges that we need to address, such as the need to streamline product photography and integrate different merchandise management systems. Another challenge is personalization: We currently have about 150,000 different styles on stock and it’s our task to present what is relevant for you and inspires you. And with our aim to make all fashion items available online in Europe, we speak about millions of styles, so that job gets harder and harder.
How can you reach a good personalization?
There are different ways. One is a logarithmic personalization which is definitely a right step. But human input is as important. Personalization also depends on the customer’s feedback, via personal shopping and styling services like Zalon or by liking or disliking styles and brands in our personalized feed in the shop. When people see the added value, they are willing to share this information.
How did Zalando change its fashion approach?
In the beginning it was all about making fashion available online. Then we discovered that we should not simply offer everything to everyone. Now, we drive fashion competence. Our approach is to continue increasing the breadth of our assortment, but tailor the experience to every customer's unique taste. As I said before, personalization is key. Our new campaigns connect more fashion forward consumers with our aspiration and focus on certain niches of our assortment. For instance with our current campaign we focus on ‘Fashion meets Sports’. Previously we had a lingerie campaign and cooperation with Calvin Klein. Also special sizes (big and petite) become more important. Each niche and section has its own specialties and we need to respond to these requirements on point.
Zalando adresses fashion sports with current #MYMATCH campaign
Keyword content: what’s your strategy in this field?
In the past, we have been focusing on shaping our brand and create a clear brand image. We mainly thought in campaigns, one after another and in between it was kind of quiet. What we now want to achieve is an ongoing conversation instead of a sporadic monologue. To do so, we have to strengthen our content team but we also have to push our channels and create more ways of consuming our inspiring content through our offers. I cannot mention any concrete ideas yet, but I strongly believe in content, because it helps with personality building and, as said, personalization is a big part of our strategy. Our consumers range from classic to fashion forward, so if we had to say which content can address them all alike, the answer would be: none. With targeted content, not only preferences are important, but also the user’s environment – with the help of geo data, for instance. Let’s say it is 8:30am and you are moving at 30 km/h – this means you are probably going to work using public transport. In this very moment you might just want to see something quick and funny. Whereas when you are sitting around at 8pm, not moving – which could mean you are chilling on the sofa – you might be open to a completely different, more extensive kind of content. Our vision is to offer targeted content that addresses the needs of every consumer in different situations.