The Ecommerce Platform’s B2B Services Led the Way for the Strong Growth
Online fashion retailer Zalando reported sustained economic recovery with earnings rising by 5 percent to reach 2.4 billion euros for the third quarter. This marks the e-commerce firm’s second consecutive quarter of growth after experiencing numerous quarters of losses in the wake of the pandemic-driven online shopping boom.
Zalando’s business-to-business services led the growth, with revenues in this category skyrocketing by 11.1 percent. Zalando has adopted a strategy similar to Amazon’s in building infrastructure, software, and services for brands and other e-commerce retailers. Its B2B revenues climbed to 239.7 million euros from the previous year.
Zalando’s ZEOS fulfillment service, a broad logistics solution meant for fashion and lifestyle brands, now fulfills orders for nine external e-commerce platforms and brands, with a recent addition being the fast-fashion website, Asos. The company has also established a logistics and shipping center outside Paris to serve France and its surrounding regions.
Zalando’s Chief Financial Officer, Dr. Sandra Dembeck, said in a statement, “Consumers love the quality brands we are adding, spend time with our exciting digital experiences, and embrace our expanding lifestyle offerings.” Investor responses to the positive turn were encouraging.
However, due to expanded technology investment, the adjusted earnings before interest and tax in Zalando’s B2B division decreased by 3 percent from the previous year, settling at 6.7 million euros. CFO Dembeck affirms, “To capture further growth opportunities, we are investing into initiatives such as evolving our Plus loyalty program, offering more inspiring content, ramping up our tech hub in China and driving localized convenience for customers via our European logistics network.”
The company’s consumer-facing shopping revenues ascended by 4.3 percent to reach 2.2 billion euros after adding half a million users in the third quarter, totaling 50.3 million active users.
Zalando has continued to amplify their brand offerings, now featuring Marine Serre and A-Cold-Wall, as they aspire to solidify their status as a lifestyle destination with a focus on fashion. The company is also growing as a content hub by enlisting influencers to curate fashion choices and create entertainment videos similar to the popular short-form format used by TikTok.
Zalando’s AI assistant, which was initially launched in April 2023, has now been introduced across all its 25 markets. For the consumer category, the adjusted EBIT increased by 3.5 percent from the previous year to 86.7 million euros, indicating improved gross margins and lower fulfillment costs.
The gross merchandise volume, or GMV, rose to 3.5 billion euros in the third quarter, depicting a 7.8 percent year-over-year leap. Consumers have also been spending more on the site, with the average spend reaching 61.1 euros, an increase from 58.8 euros during the same period in the previous year.
In line with its Oct. 10 guidance, Zalando expects an annual revenue increase of between 2 and 5 percent and foresees adjusted EBIT to range between 440 million euros and 480 million euros.