Full Year 2017: Financials Q&A with Rubin Ritter

Tenth anniversary year promises further investment in customer proposition

Following the announcement of Zalando’s full year figures 2017, Co-CEO Rubin Ritter sheds light on investment areas and where he sees Zalando heading in its 10th anniversary year.

Rubin, looking back at 2017, what was your personal highlight?
There have been so many amazing projects over the last twelve months, it’s hard to pick a specific one. Overall, 2017 was another year of major strategic and operational progress. We made real headway in several key areas, be it assortment, digital experience, convenience, or our new and emerging businesses, such as Zalando Media Solutions. Our major theme throughout 2017 was to keep investing to enable growth. Seeing this philosophy pay off is really satisfying. We are on the right track and will continue in this direction in 2018.

You mentioned growth. In the DACH region–your home market–you’ve regained momentum. Can you share any insights?
Zalando-wide, we pulled off a strong finish to 2017 despite the challenging environment in the fashion industry overall, especially in October. We’re very happy with the development in the DACH region, as this illustrates how investments into our customer proposition have paid off. For example, we launched Zalando Plus in July, and most of our current same-day delivery and return-on-demand cities are in Germany. We’ve seen strong active customer growth in DACH, both in retaining existing and adding new customers.

We’re growing strongly and winning market share, and our investments today will help us to continue on this path.

Rubin Ritter, Co-CEO

Looking ahead, your guidance for 2018 reflects Zalando’s growth strategy and continues to focus on investments. Which areas will you be focusing on this year?
We see tremendous potential across the fashion industry, and growth continues to be our top priority. We continue to set ourselves ambitious targets. Currently, we have a 1.3 per cent market share of the European fashion industry; we’d like to grow this to 5 per cent in the long term.
We’re growing strongly and winning market share, and our investments today will help us to continue on this path. Our focus will be on our assortment, the digital experience for our customers, convenience, and our emerging businesses. This includes, for example, launching the beauty category by the end of March and advancing our personalization efforts further, taking our customers on an ever more inspiring journey. As we aim to create the best convenience experience for fashion, we’ll introduce bundling multiple shipments in one return, or the extension of PayLater; a payment option that’s showing great traction with our French customers. We also plan to hire 2,000 new employees, most of which in Berlin, to make sure our initiatives and subsequent growth are supported.

The last market launch was back in 2013. Why expand now? Can you share any details about the markets you’re looking at?
So far, our focus was on getting our existing markets and categories right. We are now at a point where we have enough bandwidth to branch out again. Launching a new category with beauty and two new markets this year is an exciting move for us. Right now, we’re looking at a number of different options.

Let’s stay with expansion: The beauty category will go live by the end of March. What do you expect in the first year?
The beauty market is a sizeable opportunity for us, with attractive market trends that enable us to leverage our strengths in technology and logistics, and our understanding of brands and customers. We plan to launch with at least 100 brands initially in Germany. A period of important optimization and learning will follow, and then we will gradually roll out to other markets. For 2018, I expect a smooth launch and enthusiastic adoption by our customers.

Finally: What are you most excited about for 2018?
Heading into unknown territory is already incredibly exciting. Moving into new categories and markets will certainly be one of the highlights this year.

Want to know more about Zalando? Get up close and personal in our 2017 annual report.