Europe's Fashion Ecommerce Platform Zalando Adds Loyalty Plan to Keep Amazon at Bay - eMarketer

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Europe's Fashion Ecommerce Platform Zalando Adds Loyalty Plan to Keep Amazon at Bay

Paid membership service debuts in four German cities

July 20, 2017 | Retail & Ecommerce

Fashion-focused European ecommerce heavyweight Zalando is launching an Amazon Prime-like paid membership program as it looks to keep ahead of its hard-charging US rival’s share of the region’s digital commerce.

Dubbed Zalando Zet, the program offers premium services like faster delivery, same-day pickup of returns, personal fashion advice via telephone or Facebook chat and early access to sales.

Zet will begin as an invite-only program for shoppers in Berlin, where Zalando is based, plus Frankfurt, Hannover and Leipzig. Customers in the pilot cities will be able to test the service for three months, then become members for an annual fee of €19 ($21). Additional cities in Germany will follow within the next few months, according to the company.

“To make it as easy as possible to buy fashion online, Zalando constantly invests into customers by piloting new and innovative services and partnering with brands and retailers,” said David Schröder, Zalando’s senior vice president of convenience. “Zalando Zet is the next step within our strategy of providing an even more frictionless shopping experience, tailored to fashion.”

Active in 15 countries in Western Europe, Zalando has become one of the region’s largest online retailers of apparel and footwear. According to company statistics, its online shops attract over 200 million visits per month across Europe.

In 2016, Zalando’s 6.1% market share of digital sales of apparel and footwear in Western Europe trailed leader Otto by just one-tenth of a percent, according to Euromonitor figures cited by Bloomberg. But that standing is under threat by Amazon, which ranked a close third with a 5.7% share.

Top 10 Apparel & Footwear Retailers in Western Europe, Ranked by Share of Apparel & Footwear Digital Sales, 2016 (% of total apparel & footwear digital sales)

Zalando’s total revenues rose 23.0% in 2016 to €3.64 billion ($4.03 billion), attributed in part by increased site visits and more purchases per customer. But sales gains in its core business in Germany, Austria and Switzerland, as well as in the rest of Western Europe, were down from the increases seen in 2015.

A similar scenario of slightly slowing growth looks to be developing this year. This week the company announced preliminary first-half 2017 revenue expectations of €2.07 billion to €2.09 billion ($2.29 billion to $2.31 billion), representing year-over-year growth of 21% to 22%.

Speaking about the company’s first-half results, co-CEO Rubin Ritter said: “We are pleased with the performance in the first half of 2017 and continue to invest in order to meet our ambitious growth targets for the full year and beyond. ... Our investments, for example in our fulfillment capabilities and the launch of our membership program Zalando Zet, are the cornerstones for future growth.”

Investors were less impressed: Zalando’s stock price fell by 8.27% on the day that the first-half guidance was released—its largest drop since shortly after the company’s 2014 initial public offering, according to the Financial Times.

Cliff Annicelli


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