No centralized logistics? No problem. How Vero Moda and Zalando Lounge are reimagining partnerships

The Story

Vero Moda entered the world of fashion in a small town in the middle of mainland Denmark in 1987. Their founder, Troels Holch Povlsen, saw the name "VERO MODA" on a t-shirt and spontaneously decided on the name of the women's brand. And like that, Vero Moda was born. Vero Moda has become a one-stop shop for women looking for new trends, accessible styles, and fashionable must-haves.

Pre-pandemic, Vero Moda's leading sales were typically in one of its 640 brick-and-mortar stores across Europe, with 241 stores in Germany. However, pandemic restrictions forced the closure of stores and expedited their plans to shift to a varied digital multichannel approach. To ensure cash flow throughout difficult times, Vero Moda and Zalando Lounge kick-started strategic discussions concerning the German and Swiss markets.

Vero Moda had a two-tiered challenge: 

• They wanted to explore additional revenue streams that utilized overstock without cannibalizing their online fashion store.
• They wanted to find a way to manage and simplify the decentralized logistics process from their many stores across Germany to a single warehouse.

What are decentralized logistics?

Decentralized logistics are when articles move further from the central stakeholders (or brand) to the end customer through various warehouses and locations. Instead of having one central warehouse, there are many. This allows high delivery flexibility, a more agile approach, and brands to be tuned in to a specific area's demand to better service their customer base. On the other hand, there is also a risk of misallocation, a higher effort for inventory management, and more requirements to ensure uniform quality standards.

So, how did they do it?

Step 1: Guidelines on logistical processes

As it was the first partnership of its kind, Vero Moda and Zalando Lounge stayed in close contact, ensuring specific guidelines on logistical processes and the quality of goods. Both Vero Moda and Zalando Lounge empowered each other with knowledge sharing, expertise, and experience in their fields, with one main requirement: Simplicity first. 

Step 2: Deconstructing decentralized logistics

>60k articles in >1850 boxes were sent from 119 Vero Moda stores across Germany to the Zalando Lounge warehouse. Zalando Lounge then managed sales and customer fulfillment. Vero Moda could hand over not only their overstock as per the usual Zalando Lounge offering but the logistics and fulfillment process for the first time.

Step 3: Reaching new customer types

With an audience that overlaps the main Zalando Fashion store by 7%, liquidating stock via the Zalando Lounge enabled Vero Moda to reach new customer types. It was a win-win-win! A win for Vero Moda to find a uniform logistical solution and output for their overstock, a win for Zalando Lounge to display a diverse Vero Moda assortment, and a win for the customers that get to save on price and not on style.

Vero Moda's top tips for unlocking new revenue streams

Be open-minded: “The challenges that we thought we'd have didn’t turn out the way we’d expected. It worked out and I can say that it’s partly because of all the support from Zalando Lounge. You have to be open minded when trying a new sales channel. Be bold and try something new to find new customers and ultimately revenue streams.”

Keep it simple: “Not only regarding logistics but the handling process. Make sure that you have simple solutions in place to communicate with your stores and the easiest way to communicate regularly with Zalando.”

Cooperation is key: “Everyone onboard together. Communication throughout the entire process is so key. Zalando Lounge had an idea about how to do most things, and when they didn’t, we would work on it together to achieve our goals through communication and support.”

About Vero Moda