Customers don’t just want ‘more’, they want ‘better’

As the first quarter of the new year comes to a close, it’s safe to say that 2023 will be a year of change for the fashion industry, including Zalando. This is why we sat down with founder and co-CEO David Schneider to get his view on changing customer needs and what it means for Zalando and their partners.

David, hi! Let’s have a look ahead - what does 2023 have in store for Zalando?

For us as a company, 2023 will be a year in which we strengthen the foundation for our future success. Today, we’re serving over 51 million customers in 25 markets in Europe. Zalando is a leading destination for fashion customers in Europe. This is a great achievement. But we also know that what brought us here will not necessarily make us successful in the future. The way people are shopping has been changing, especially when looking at younger generations. We need to adapt to those changes if we want to continue our success.

What are the signs of this change?

In the beginning, Zalando was all about unlimited choice. This was a bold vision. And for a long time this assortment span was one of our strongest selling points and exactly what our customers were looking for. But customer behaviour has changed. Customers these days don’t just want “more”, they want “better”.

What will make Zalando successful in the future?

Our success and the success of our partners is based on the customer engagement we have built up over the years. This won’t change. We want to stay in a leading position, so we need to further deepen our relationships with customers. Since we founded Zalando, we’ve always listened to our customers. We talked to them on the phone, we delivered parcels ourselves, and tested constantly. We iterated a lot because we were clear on what we wanted: building something that was truly relevant for our customers and which brings across the heart of fashion. This has remained at the center of everything we do at Zalando.

To stay at the top of their minds, we have to bring the most relevant assortment to our customers - and this certainly includes the next generations to come. It’s not about expanding the offer anymore. It’s more about creating strong relevance; creating local relevance in our markets, relevance for specific audiences and an emotional bond. That means more focus, deeper relationships with customers and brands that make a difference.

What does this mean for the customer experience of the future?

There are three factors that will play a major role. The first factor clearly is inspiration. We definitely see a growing importance of inspiration and storytelling for fashion customers, over purely transactional elements such as product information and the checkout process. That’s why we increasingly tell the stories behind the brand and the product – especially with the help of Highsnobiety, which we acquired last year. We have created more than 80 curated product drops since the start of the collaboration. These drops were viewed by over 7 million unique users, who showed significantly increased engagement with much higher click rates.

The second factor is curation. Over the last years, our assortment has grown rapidly, we doubled our assortment from 2020 to 2021. In some areas this has led to customers feeling overwhelmed with the choice they have. Therefore, we have reviewed our assortment strategy and are taking decisive steps now to ensure our customers always find what’s most relevant to them when browsing and shopping on Zalando.

And last but not least there is personalization. Technologies such as augmented reality, artificial intelligence and computer vision are opening up many new opportunities to make shopping even more engaging. This includes enhanced online search and discovery, tailored recommendations on size and styling, and customer service, taking the customer journey to the next level. There’s a lot of untapped potential in the market.

What role do partners play in driving this experience of the future?

Together with our partners, we have experienced tremendous growth over the years. Zalando has always been and will be about leveraging each other’s capabilities and building on each other’s strengths. Looking ahead, we want to further elevate the multi-brand environment, creating experiences that excite customers and brands alike. We are building a destination that features the most relevant brands, products and stories for our customers, from upcoming labels to local heroes to trends. Our partners play a crucial role in achieving this vision.

To support our revised assortment strategy, we recently introduced a new fee and commission structure for our direct to consumer business models that provides transparency to our partners as we’re moving away from different commission schemes in Connected Retail (CR) and the Partner Programm (PP) to one unified approach, regardless of the model. We’re also revisiting our brand portfolio to elevate our platform and deliver a more curated assortment from the most sought-after brands to deepen customer relationships.

To make processes easier for our partners, we’re constantly improving our partner portals, which put partners in the driver’s seat when it comes to growing their businesses and maximising sales on Zalando. At the same time, we’re investing into technologies to help customers find the right fit on the first try with our size & fit efforts. In the long run, this can help brands better understand their customers’ size and fit demands, too. This means that brands could learn more about the fit of their items to manufacture collections that are tailored to their customers in a way that will consume less material and produce less waste.

Can Zalando remain the partner of choice for brands?

Our success has always been and will remain a shared success story with our partners and we are confident the changes reflect our commitment to continued shared growth in the best possible way. Now is the right time to build the next generation of e-commerce together. We’re thinking one step further by looking at the next-generation of e-commerce as a combination of inspiration, experience and convenience, all tailored to our customers. And we’re excited to go on this journey together with our partners.