Zalando targets a larger share of the fashion e-commerce market with new "ecosystem"

German company Zalando is looking to grow its share of the fashion and lifestyle e-commerce market with a new evolved pan-European "ecosystem" aimed at boosting both its business-to-business (B2B) and business-to-consumer (B2C) to further “deepen” customer and partner relationships.

In a statement, Zalando said the updated evolved "ecosystem" strategy would help the e-commerce business drive growth through 2028 after its gross merchandise volume slipped 1.1 percent to 14.6 billion euros in 2023.

It will boost its B2B business by "opening up its logistics infrastructure, software and service capabilities to be a key enabler for e-commerce transactions of brands and retailers,” regardless of whether they take place on or off the Zalando platform.

Zalando notes that in the mid-term, it sees the B2B growth vector developing into a multi-billion-euro business. For its consumer-facing activities, the European e-commerce retailer said it would differentiate itself “through quality to offer the best possible shopping experience in fashion and lifestyle, enhancing its role in customers’ lifestyle journeys,” by elevating existing categories such as sports and kids and family to distinct propositions, and by offering personalised inspiration and entertainment.

David Schneider, co-chief executive of Zalando, said: “Our B2C strategy around quality, lifestyle and inspiration clearly sets us apart from the competition and will continue to win us market share.

“Our customers want even better usability, convenience, and digital experience. But beyond that, new digital-first generations of customers want inspiration and entertainment while shopping online. Using our data and technology, we can integrate engaging content into e-commerce and enable personalised conversations with our customers. There is a massive opportunity to engage with customers on a whole new level.”

Zalando looking to develop both B2C and B2B to boost growth

Zalando states that this new “ecosystem” model would set it on the path for growth in the medium term and would support its new financial targets through 2028. Zalando is aiming for a compound annual growth rate of 5-10 percent for both gross merchandise volume (GMV) and revenue over the next five years. The outlook for adjusted earnings before interest and tax (adjusted EBIT) as a percentage of revenue is 6-8 percent in 2028.

With both B2C and B2B, Zalando is looking to cover in the long term the equivalent of 15 percent of the European fashion market, which is worth 450 billion euros.

Robert Gentz, co-chief executive of Zalando, added: “Our ambition is to return to strong growth and continue our margin expansion, as reflected in our new mid-term guidance.

“In B2C we will move beyond transactions by giving our 50 million customers across Europe even better quality experiences and products that fit their lifestyle and personalised content, inspiration and entertainment. In B2B, we will power the businesses of partners and merchants on and off Zalando, leveraging our unique logistics infrastructure, software and services.”