New and improved: Invoice payments at Zalando

Zalando introduces a more convenient payments experience

The payment process is crucial to how customers perceive their shopping experience at Zalando. Now more than ever convenience, flexibility and conscious spending is important to our customers and hence in the focus when it comes to new product features and improvements at Zalando. At the Zalando check-out, customers can choose from various payment options with invoice being the preferred payment option of the majority of customers in Germany. Zalando has extensively worked on an improvement of its current invoice solution and is happy to now offer it to customers. Tessa Roetzmeier, Head of Product at Zalando Payments tells us what this is all about.

Tessa, Paying with invoice is well-established amongst Zalando customers. Why are you changing something now?
Indeed, invoice is by far the most popular payment method for Zalando customers in Germany and many other markets. What customers like in particular about this payment option is that they can try on and feel the items before paying for them and as such defer the decision on which items to keep to a later point in time. However, the invoice product as it is currently available at Zalando is a little outdated. One first area where we saw optimization potential is the automatic calculation of the payable amount for instance. After the customer returns items or applies a voucher, the payable amount is not automatically calculated and transparently communicated, leading to a lot of cases where customers pay unintentionally late or the wrong amount. Second, customers have to remember to pay. Third, the outstanding amount can currently only be paid with a manual bank transfer – Who hasn’t made a typo when entering a series of digits? By offering additional payment methods we want to enable customers to be done with the payment in no time and at low effort.

An improved invoice product. This sounds quite technical. What happens exactly?
Paying with invoice in essence allows customers to settle the payable amount (after reduction of cancellation and returns) within 14 days (in Germany) from the moment of shipment. The key value proposition of giving customers more time to decide which items to keep is still at the core of the new Invoice. What is new is that customers are now able to access the payment overview at any time via different entry points where they can actively select items they want to keep and view the payable amount which is automatically calculated thereafter. Unlike the usual invoice, which had to be paid by bank transfer, customers will be able to pay the outstanding amount using other payment methods too – for example PayPal or credit card. We understood that it is essential for customers to be reminded in a timely and transparent manner when, how and what they need to pay and improved our customer communication at all points in the user journey accordingly. The new process provides an unmatched level of flexibility and convenience for Zalando customers.

How does the new invoice work, step by step? 
It is really easy: Customers simply choose the Invoice option in our check-out process and do not pay anything at this point. As soon as their package has been shipped from one of our warehouses, a few days later they will get an email or push notification from us with a payment link. They can either pay immediately or take up to 14 days to select what items they want to keep. We will do the math for them and calculate the outstanding amount for the selected items. Customers then pay using their preferred payment method. The service comes at no additional cost for the customer. 

How do customers benefit from this new process?
When you pick out the items you want to try on in a physical store, you don’t pay before taking them to the dressing room and you can choose to pay with your preferred payment option, usually credit or debit card. Why should it be any different when shopping fashion online? We previously offered invoice payment for the convenience of paying later but now with a more transparent overview of outstanding amounts and a full menu of payment options to choose from, customers can experience a seamless payment flow tailored to their individual preferences. 

Some claim that deferred payments lead to overspending. What is Zalando's position on this?
We are convinced that our enhanced Invoice option gives customers more control over their cash management by making the entire payment flow more comprehensive. Our focus is to give customers as much information as they need to make well elaborated and responsible spending decisions and pay on time so that they do not encounter late payment fees. We do not want to encourage disproportionate spending, nor do we experience any benefits from customers paying late while e.g. being in the dunning process. If customers have a bad experience at Zalando, it is very unlikely that they will visit our platform again. We optimize our products purely based on what helps our customers to have the best shopping experience at Zalando. 

Is there any feedback from customers yet? 
Our deferred payment process has always been popular: In Germany, more than half of our active customers already use it as their first choice. We are still in the testing phase with our improved Invoice option and will gradually make it available to all Zalando customers in Germany. Other countries, where Invoice is also very popular, may follow at a later stage. The initial results of our test in Germany are already very encouraging. We will carefully listen to our customers' feedback and continuously improve the new Invoice product to meet our customers needs. 

More information can be found here.