Zalando Reports Strong Revenue Growth in Q3

Financials Q&A with Co-CEO Rubin Ritter

Following the announcement of a 28.7% revenue growth to EUR 1,074.7 million in Q3, Zalando Co-CEO Rubin Ritter elaborates on the third-quarter numbers and the highest customer growth experienced since 2015.

Zalando experienced strong revenue growth in Q3. What are the drivers behind it?
There are a number of drivers behind the 28.7% revenue growth this quarter. We were able to add about 1 million active customers compared to the second quarter, which is very strong and – in fact – the strongest active customer growth since the second quarter of 2015. We see that the order frequency has increased to an all-time high. Traffic has been very strong with more than 600m visits on both our web shops and apps. We were also able to significantly re-accelerate the growth in DACH.

Zalando continues to focus heavily on investment. Can you talk us through some of the investment opportunities and areas?
We continue to invest in the four most important elements of our customer proposition, and as we can see, the focus on investments is already paying off. First among them is our focus on building the world’s best digital experience in fashion e-commerce. Improving search, browse and inspirational aspects of the online store has contributed to increased revenue per user as well as increased visits. With the opening of our third international tech hub in Lisbon at the beginning of 2018, we will see further development and sophistication in our technology. 

Secondly, we continue to invest heavily in convenience for our customers. Our new fulfillment hub in Lodz, Poland will begin construction in the coming days, and the first parcel was dispatched from our satellite center in Stockholm last month; significantly reducing delivery time for our Nordic customers. We remain open-minded to new logistics solutions and continue to pilot new delivery methods such as “Zalando bringt’s dir” in Berlin, where customers are able to choose a 60 minute delivery slot for an even more personalized delivery experience.

The third investment area is in brands, with a focus on male customers at the beginning of the year in the James Franco campaign and an ever-growing assortment. We see continued strong results in this area. Further, we had a very successful Bread & Butter where we launched about 450 exclusive products, which leads me on nicely to the final investment area. At the core of our experience is, of course, the vast assortment we offer our customers.

Tell us more about the assortment and its continued expansion.

Launching this October was Pull&Bear; the second Inditex brand we serve after Oysho, and a very exciting addition. We have a fascinating new project that we launched with adidas called "miadidas". Exclusive to the adidas web shop and Zalando.de, the online interactive module allows customers to customize a number of iconic adidas products with individualized colors, fabrics, sole designs and more.

We are really looking forward to the launch of our beauty category in the first half of 2018. This is a very sizeable opportunity with significant expansion potential. It’s a logical next move as we maintain our mission to offer a “one-stop” shopping experience for all. With the move into beauty, our customers can truly buy a complete look across all price points and from head to toe. From a business point of view it is yet another way to monetize the traffic that we have and to create reasons for customers to come back to our site even more frequently.

In short, we continue to work to make our assortment more relevant for our customers.

Any new projects you can share for the coming year?
We have plans to launch a totally new experience next year called "Next Gen", which we have substantially tested in the Sports category in the last month and have witnessed great results. With the growing number of fulfillment centers, the new tech hub in Lisbon, launch of the beauty category and expanding assortment in general, 2018 is primed to be another exciting year for Zalando.

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