Connected Retail - The future of retail

This year more than ever, Zalando has shown that “online” has become even more important, also for bricks-and-mortar retailers. Nonetheless, there are still some retailers who don’t have a multichannel strategy. Zalando has the perfect solution for them: Connected Retail. FashionUnited spoke to Søren Gundtoft Johansen, director of Connected Retail Technology Zalando SE, about how Europe’s leading online platform for fashion and lifestyle intends to help vendors digitalise their business.

What are the positive aspects of Connected Retail?

Søren Gundtoft Johansen: Connected Retail is based on four ideas: the first is availability – through Connected Retail, bricks-and-mortar vendors can sell to millions of Zalando customers. On Zalando’s end, this increases the availability of merchandise and, in the long term, ensures that consumers are never again confronted with a product being sold out.

The second is selection – despite spanning 600,000 items, Zalando’s product range still only accounts for 50 to 70 per cent of the range available in bricks-and-mortar stores. By integrating retailers in our platform, we not only give customers access to previously unlisted items; retailers also have an added bonus: as online sales significantly increase inventory turnover, retailers can renew their product range several times during the season. The result: ranges that are more up-to-date, which gives customers a reason to visit their store more often.

The third point is the local aspect. Using the filter provided, customers can choose to have only those items shown to them that are shipped by a certain store. As a result, we give customers both the possibility of intentionally supporting bricks-and-mortar retailers and the possibility of getting their delivery faster since they no longer come from a warehouse, but from a store near them. This also affects the fourth point: sustainability. In the long run, we can offer services like “Return in-store” or “Click and Collect” with Connected Retail. This means that customers can return items to the stores that they would otherwise return by mail, or they can reserve an item on Zalando and then pick it up later at the store. Services like this save sending packages back and forth.

Who is Connected Retail for?

Connected Retail is for all kinds of fashion retailers. We are offering this service to multibrand stores, monobrand stores and department stores, but also to niche providers like sports retailers, sneaker stores – any retailer with a relevant product range can participate. Especially earlier this year, when customers were unable to shop in downtown areas because of the lockdown, Connected Retail showed itself to be an important source of additional income for many retailers.

How exactly does Connected Retail work?

It is very simple. We build uncomplicated solutions for bricks-and-mortar retailers who, for a variety of reasons, don’t have their own digital channels. Digital isn’t the core business of such bricks-and-mortar retailers and we understand that fully. That’s why the solutions we develop must be easy to understand and efficient; we offer a high level of service in order to get customers on board and help them connect to the Zalando platform.

What do retailers need to provide to Zalando?

Not much. All we need is the EAN, the price and location of the store. Once we have that, we can match it with the inventory.

What obligations do retailers have to take on?

There are no obligations. We enter into an agreement by defining the purpose of our joint business activities. Then we have an onboarding process that takes approximately two weeks. Then we’re in business and retailers receive their first orders. It takes about two weeks for the first order to come – they can still end the collaboration whenever they want. Retailers also decide which items they would like to sell and also set their own price.

How many orders does a retailer receive per day on your platform?

The average number of orders differs from season to season, whether the next season is around the corner or whether there is currently a sale. From seven to 20 orders, anything is possible. Our most successful partners receive 6,400 orders in just one day. So there is definitely plenty of demand.

What about customer care?

Retailers are assigned a key account manager, who is always there to help them. If any questions arise during the onboarding process, retailers can call us at any time and receive immediate assistance.

What costs should retailers expect?

In order to support retailers during the second wave of the pandemic we are currently experiencing, we have waived our commission until the end of the first quarter 2021 and will continue to pay out earnings to our partners on a weekly basis. Retailers pay the costs of shipping and have to provide the packaging material. These are the costs that stores currently have to take into account.

How are returns handled?

Return shipments from customers are sent to the relevant store from which the item was shipped.

Are there any further advantages?

From participating retailers, we know that they are now able to offer product ranges with even more variety because they have access to a broader customer base online. In the past, they might have been reluctant to stock an extravagant item on the shelves. With Connected Retail, retailers know that there is a considerable chance this item will be sold – at least online. So they can take more chances when they order merchandise and design their store to be even more inspiring. Their store is then transformed into a showroom so that both they and their customers can enjoy the offline shopping experience all the more.

What are the next steps for those interested in participating in Zalando’s Connected Retail?

All retailers have to do is visit the website and contact us. There they will find a detailed description of the onboarding process. Basically, you fill out a form, send it to us and then we call you – all without any commitment.