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Inside Zalando’s plan to be the home of ‘streetwear, new luxury and fashion inspiration’

By Caitlyn Terra


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Business |Background

Image: Zalando newsroom

Online retailer Zalando has been part of the fashion industry for almost 15 years now. During that time, the German company has introduced many new services and expanded its range considerably. Now, the platform is consciously working on not just being a general e-tailer, but becoming the destination for “new luxury, streetwear and fashion inspiration”.

On Monday evening, Zalando announced it had acquired a majority stake in Highsnobiety, a fashion and lifestyle platform and a creative consultancy agency. The takeover is in line with the ambition that Zalando has emphasized in recent years: To become the destination for 'new luxury', focusing more and more on diversity and inclusivity. With the acquisition of Highsnobiety, Zalando immediately gains a huge wealth of insight about streetwear, something that fits with its recently launched campaign that focuses entirely on streetwear.

Zalando's journey is one of many steps, as becomes clear once again when one takes a good look at its history.

From German retailer to global giant - a look back at Zalando’s growth

Today, Zalando is much more than just an e-tailer, it has a true platform business model. The principles of this could already be seen in 2011 - two years after its launch - when it opened a marketplace for third parties, allowing it to expand its range considerably. This collaboration with other parties has only become more important over the years.

Zalando took its first steps into the luxury segment in 2013, but not under its own name. Back then, it launched a new project: luxury fashion platform Emeza. Visitors could log in to the new platform with their Zalando details, but the luxury fashion platform did not prominently mention that it was a subsidiary of Zalando.

Soon after, the webshop of Zalando-owned brand Kiomi was announced. The brand focused on both menswear and womenswear and mainly sold 'fashion classics'. However, Emeza and Kiomi did not last long - nine months after the launch, the platforms had already stopped. Developing the two brands took too much time, so the focus instead returned completely to the Zalando brand, CEO David Schneider said at the time. But Schneider indicated that the luxury segment was still interesting for the platform, and in May 2014, the renewed premium segment at Zalando was launched.

Zalando proved again in 2015 that it was still coming out with surprises when it announced it was the new major investor of the Berlin fashion fair Bread & Butter. The move signalled the end of the fair as it was known, and the introduction of a new consumer-oriented fashion festival. The aim was to bring brands and consumers together during the event. Bread & Butter would return as a three-day fashion festival (Bread & Butter by Zalando) where brands could show and sell their new collections directly to consumers. The audience that came to the first edition were therefore drastically different from those attending during the previous fashion fairs: Not fashion professionals, but fashion lovers in their twenties to forties.

Big names such as Google and Marni were associated with the new event and were part of special collaborations that Zalando was setting up. However, fast forward to 2018, and it appeared the event had experienced its last edition. “Everything we invest in and try must take us strategically forward as a company while also being scalable. With Bread & Butter we have hit natural limits,” an announcement read at the time.

With today's knowledge, another chapter in Zalando's history that stands out is its acquisition of basketball and streetwear retailer Kickz in early 2017. At that time, Zalando was already focusing more on selling streetwear. The target group of Kickz was also a major reason for the acquisition. However, Kickz did not remain in Zalando's portfolio for long. Zalando sold the company in December 2019 because there was a lot of overlap between the Kickz's range and that of Zalando, which had expanded considerably in two years.

Zalando reiterated in June 2017 its goal to become the fashion go-to destination in Europe during the Zalando PlayDay in Berlin. The e-commerce player outlined plans to expand its business model and offer B2B services. “We want to become the operational system for the fashion world,” the company said at the time. From that moment on, fashion brands that offered their collections via Zalando could also transfer the delivery to Zalando. At this time, the ultimate platform strategy the company has today is gradually taking shape.

Growth beyond fashion

Fashion alone was no longer enough. In 2019, Zalando expanded its platform into the burgeoning beauty segment. That same year, the company also began testing a physical resale clothing store called Zircle. This move to second-hand appears to have been a harbinger a year later, as Zalando added a pre-owned category to its platform in 2020. At the same time, the e-tailer announces it would add luxury fashion brands to its range. Zalando said it was taking this step to further underline its mission of being the starting point for fashion. “Young consumers especially like to mix and match high street fashion brands with sports and designer items,” said Zalando's co-CEO at the time, David Schneider. “Premium has been our fastest growing category in recent months and we see unprecedented potential in this area,” he said.

The story didn't stop at fashion, luxury items and beauty. Zalando announced in 2020 its intention to become more diverse and inclusive. At the time of the announcement, the company said it planned to offer beauty products for all skin tones and planned to partner with at least 70 black-owned brands by 2022. The company said it would also start de-gendering its websites and apps in 2020 - that meant customers could register without having to provide information about their gender, and gender-specific pronouns were no longer used in communication to customers. Last year, Zalando launched a genderless landing page for all unisex items across its platform.

Looking at Zalando's steps in recent years, it is clear the company is not going for the approach of an everyday e-tailer. The company has been working for years, through trial and error, to create its own niche within the online fashion world. In the fiscal 2021 year, Zalando reported a 29.7 percent increase in revenue to 10.4 billion euros, as its net income increased to 234.5 million euros from 226.1 million euros the previous year. The e-tail giant counted 48.5 million active customers across 25 markets in 2021, with a total of 252.2 million orders placed.

Zalando faces fierce competitors in the fashion e-commerce world, such as About You, Otto, Net-a-Porter, and many others. It is therefore not surprising that the company wants to create its own niche. The e-tailer has been developing for years, which ensured that it ended up in ninth place in the Top 100 Cross-Border Marketplaces in Europe in 2021, and first place in terms of the fashion industry.

How and whether the acquisition of Highsnobiety will ultimately contribute to Zalando's journey, we’ll have to wait and see. But one thing is for sure: it won't be the e-tailer 's last surprise move.

This article was originally published on FashionUnited.NL before being translated and edited into English