How Zalando is targeting the digitally-native consumer with its new e-commerce strategy

Online retailer Zalando is on a mission to drastically boost its fashion and lifestyle e-commerce ecosystem and profitability by targeting the digitally-native consumer with its new business-to-consumer and business-to-business strategy.

The updated strategy sets out the path for growth in the medium term, but will also support new financial targets up until 2028. With this, it aims to cover the equivalent of 15% of the European fashion market, which is worth £384 billion (€450 billion).

This year, revenues declined by 1.9% to €10.1 billion. It's sure to say that Zalando has set its sights high and its targets even higher.

In the short term, the company plans to return to growth during 2024 with revenues up by 0-5%. Meanwhile, adjusted EBITA is expected to sit between £324-384 million (€380-450 million).

Robert Gentz, Co-CEO of Zalando, said: "Our ambition is to return to strong growth and continue our margin expansion, as reflected in our new mid-term guidance."

B2C: Becoming the go-to-destination for fashion and lifestyle shopping

Zalando’s B2C strategy aims to differentiate the e-tailer within the market through 'quality' to drive customer acquisition and retention - the key to driving growth. This will see it revamp its assortment, digital experience, sustainable and inclusive choices, as well as personalised convenience.

The second growth pillar is to expand further as a lifestyle destination, expanding its sports and kids and family categories.

The third pillar is based on integrating content into commerce and offering personalised inspiration and entertainment. As part of this, Zalando is using data and technology to create entertaining content that will enhance engagement, a journey it already started with its acquisition of Highsnobiety in 2022 and the launch of Stories on Zalando in 2023.

David Schneider, Co-CEO 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.

"New digital-first generations of customers want inspiration and entertainment while shopping online… There is a massive opportunity to engage with customers on a whole new level."

B2B: The operating system enabling e-commerce on and off Zalando

In addition to B2C, Zalando will report figures for its B2B segment, starting in 2024. The company’s recently launched ZEOS business promises to allow Zalando to "shape the European fashion and lifestyle industry beyond its own consumer business".

The updated strategy will also help Zalando to be an "enabler of positive change" for a more sustainable and inclusive future in the fashion and lifestyle industry.

Dr. Sandra Dembeck, CFO at Zalando, said: "Our financial discipline meant that we were able to deliver on another quarter of improved profitability.

"These improvements, along with our healthy balance sheet, enable us to invest in the strategic priorities of our ecosystem vision, such as the quality of the customer experience, new fashion and lifestyle propositions, technology to increase customer engagement and expanding our B2B offering. We have the financial strength to successfully build the ecosystem for fashion and lifestyle e-commerce."