“For Zalando, every day is like Christmas”
Online shopping startup-turned-giant Zalando will reach revenue of about € 1 billion in 2012, according to Zalando CEO Rubin Ritter. That’s double the revenue that Zalando reported in 2011, which already saw a huge increase compared to 2010.
“For Zalando, every day is like Christmas,” a Zalando executive is quoted in Wirtschaftsblatt.
Zalando, funded by the Samwer brothers and JP Morgan, is certainly growing at a very rapid rate. In 2013, Zalando will open a distribution and shipping center in Mönchengladbach, fresh on the heels of another center it opened in Erfurt in 2012, and where it employs more than a 1000 people to handle and ship goods.
The only problem for Zalando (like for other e-tailers) is profitability: the company is expected to lose money again – in 2010, it reported losses of about € 20 million. It will report on 2011 losses in the coming weeks, but the 2011 losses are expected to be higher.
The key to online shopping profitability is the return rate of goods. Just like most e-tailers, Zalando offers a free return policy, no questions asked. The problem is that some people buy shoes, clothes and accessories to wear them once or twice and then send them back. Zalando won’t comment on its return rate, but denies that it suffers from a higher than average return rate for the industry.
According to Wirtschaftsblatt, Zalando’s expansion is causing some concern at Hamburg based mail order company Otto. Otto is planning a marketing campaign specifically to counter Zalando’s rapid growth in the fashion segment.
Photo: Kevin Dooley, Flickr
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