How we accelerate growth for up-and-coming brands in difficult times

Diane Berte, VP Sales and Marketing, shares her take on why it's so important to support small and mid-size partners with new machine-learning advertising capabilities, and how ZMS' 5 million EUR fund can help kickstart their business in these difficult times

The current market environment created various challenges especially for smaller and mid-size fashion companies at an unseen scale. A lot of brands are facing overstock issues, consumer demand is changing rapidly and not as predictably as in the past. While many smaller brands are aware that investing in Marketing would help them to drive growth, they are often not able to open up further budgets, as financial liquidity is a top priority. This can result in typical “cold start problems”, occurring when products do not yet have a significant awareness or customer base to start with. 

What is a cold start problem and why is data key to overcoming it?

When partners launch new products or enter a new market on digital platforms, they often face this problem. It means their products / brands first have to build up a certain awareness, traffic, reputation, and “data footprint” on these e-commerce platforms, in order to be more easily discovered by consumers.

But how does a brand trigger initial interest and sales acceleration?

There are different marketing options, depending on individual goals and ambitions. One easy way to start for smaller brands is investing in sponsored ZMS advertising formats such as Co-Curated products, which push styles up on the Zalando catalog. On the one hand, this generates visibility and additional sales, while it also enables our machine learning technology to quickly gather more factual data about the shoppers who like and buy specific products. 

These data learnings act like a kickstart and result in a win-win situation for brands. Next to incremental sales, the analyzed engagement and sales data help our advertising and product recommendation algorithms to more quickly and precisely address the product’s target audience than without advertising, whilst also accelerating product sellout via organic or sponsored placements. Partners often experience initial sales uplifts of up to 30% when running a Co-Curated Product campaign and grow about two times faster in the first three months compared to partners who don’t run campaigns. This is how many major brands initiate go to market success stories for product and brand launches, as well as for entering new markets. Besides launching these campaigns, ZMS can also create forecasts for partners that help them to understand which level of advertising investment leads to which sales impact.

To make this data-driven advertising acceleration accessible for smaller and mid-size partners, we have set up a 5 million EUR fund.

We at Zalando believe in the diversity of fashion and at the same time, we’re aware of the current challenge of many smaller and mid-sized partners to invest in marketing. To enable them to take initial steps in growth marketing strategies, we created a dedicated fund of up to 5 million Euro until the end of 2020, which will be allocated to smaller / mid-size partners, who aim to drive their growth with us via the Partner Program. The focus area of budget allocation will be advertising formats on Zalando, as these formats enable direct growth as well as data network effects, to further scale their business on Zalando.

Find out how we can best support you in the current business environment

Key takeaways and how to leverage the 5 million EUR fund

  • When fashion companies enter new digital platforms, markets or launch new products, they often face cold start problems 
  • Investing in advertising helps to overcome these challenges by driving initial sales (on average ca. 30% sales uplift) and furthermore enable our tech systems to gather data for personalized recommendations
  • These data learnings act like a kickstart and enable further sales acceleration
  • As it is currently hard for many smaller / mid-sized companies to invest into marketing, we created a dedicated fund of up to 5 million Euro until the end of 2020 in order to enable these companies to re-accelerate their business via the partner program
  • Fund offers 5K onsite visibility in H2 2020 for up to 1,000 smaller partners via the Partner Program. Please reach out to to check eligibility and learn more.

How algorithms optimize advertising on Zalando in real-time

Every time a customer searches for products on Zalando, a bidding request is sent to our system in real-time. The ZMS system aggregates relevant data points, evaluates thousands of candidate ads with our machine learning models, and decides what product to show where - all within 10-30 milliseconds. Every second, we score tens of thousands of ad contents to match sponsored ads in real-time with user preferences, browsing histories, and further data points. Our recommendation engine optimizes this process and leverages techniques such as machine learning, incrementality modeling, auction mechanisms, and deep learning. This way we ensure brands reach the right target groups and shoppers see more relevant product recommendations.

Learn from concrete use cases how to leverage data to build your brand