Retail

eCommerce Fashion Seller Zalando Pivots To Luxury Apparel

Fashion Seller Zalando Pivots To Luxury Apparel

Zalando, Europe's largest online fashion retailer, is making an ambitious foray into the €38bn luxury clothing market. The company plans to double its eCommerce offerings from premium makers like Moschino and Alberta Ferreti within three years, according to a report in Financial Times.

The retailer is aiming to capitalize on the growing trend of shoppers making high-value purchases on the internet. David Schneider, co-chief executive at Zalando, said he's seen younger shoppers mixing and matching high-value brands with sports and designer pieces. He added that premium items have been the company's quickest growing category recently.

Zalando also recently announced a 20 percent rise in full-year revenues, hitting €6.5bn, and its adjusted core earnings reached €225m, which is up from €173m in 2018.

The company's number of active customers rose from 26.4 million to 31 million year on year. Orders increased from 116 million to 145 million.

Zalando's shift to selling premium goods came along with a plan to also focus on secondhand goods on its platform. By combining the two, the retailer has positioned itself as a sort of two-pronged "starting point" for European customers interested in eCommerce fashion. The company's approach is reminiscent of the success of other online giants like Netflix and Spotify.

Co-CEO Rubin Ritter said the aim was to become "the one app" that customers utilize for their clothing needs.

In 2020, Zalando expects revenues to continue climbing at a slower rate from previous growth spurts, rising 15 to 20 percent this year. Adjusted core earnings will likely reach €225m-€275m. The retailer said it has not yet seen any impact from the Coronavirus outbreak, though it did take precautions on Thursday (Feb. 27) by canceling its annual results press conference in Berlin.

Chief financial officer David Schröder said the company considered itself well prepared for any changes, and had taken the necessary precautions thus far.

Though Zalando has been expanding its operations, other companies want a piece of the pie, as well.

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