Leveraging tech to build
the next generation
of e-commerce

Earlier this year, Zalando announced the evolution of its strategy aiming to build an ecosystem for fashion and lifestyle e-commerce. B2B, with the ZEOS brand, is a key pillar of this strategy, helping brands and retailers successfully run their e-commerce business – on Zalando and beyond. What solutions is the ZEOS team currently working on to achieve this vision? Karolina Kozłowska, Director of Product at ZEOS, gives some insights.

Karolina, ZEOS was launched on the premise that Europe is difficult for brands to do business in. What exactly are the challenges?

Indeed, Europe is complex. It is often thought of as one market, but it is actually a combination of many different and unique markets. While Europe offers huge potential for brands to tap into, they need to operate between different languages and currencies and offer a localised convenience experience when it comes to payment and delivery options. Zalando knows firsthand that it takes a lot of effort, know-how and investments to overcome all these challenges.

What's more, with the rise of e-commerce, the online shopping experience in Europe has changed significantly over the last decade – consumers expect to find the right products through their preferred local channels, whether that's a brand's own online shop or a major shopping platform. They also want to receive their parcels in the most convenient way – for example, home delivery in Germany, but collection from a parcel locker in Poland and ideally with all multi-brand orders packed in one box and with hassle-free returns.

How can ZEOS help brands and retailers overcome these hurdles?

The key to success lies in the combination of a highly efficient logistics network and AI-based solutions empowered by data. At ZEOS, it all comes down to the power of one. It starts with one integration – ZEOS connecting the dots for a seamless e-commerce journey. A brand that previously had to deal with multiple integrations to different marketplaces can now integrate an unlimited number of sellers in one go and update their data in one place. One stock pool means that all the stock a brand wants to sell is stored centrally in our fulfilment centres. Stock can then be moved seamlessly across all enabled channels, ensuring optimised stock levels and maximum product availability. And finally, one control panel connects commercial and inventory management aspects across all markets and channels, supporting brands with business decisions, and as a result ensuring efficiency and growth.

We believe only by bridging the current gap between physical and digital logistics, we can truly impact both business growth and sustainability – with a final goal to avoid sending up to 100 million unnecessary parcels each year across various brands and retailers in Europe.

Unnecessary parcels? You'll have to explain that in more detail...

Again – it all comes down to that perfect fusion of an optimised logistics network and digital steering solutions based on artificial intelligence. In the physical layer, ZEOS will increase efficiency with its one-box delivery and returns by allowing multiple brands to use the same fulfilment network and by bundling orders for cost and environmental benefits.

How does this work? Well, our operations are designed to avoid stock splitting and give our customers the best possible choice. By consolidating all stock into one central stock pool, brands can service the largest and most relevant European marketplaces, as well as their own webshop, from a single inventory. At the same time, we consolidate multi-brand orders, which is truly a win-win: customers are happy to receive just one parcel and brands save up to 20 percent on their logistics costs. It is simple: One order. One box. One shipment. One return.

At peak times, for example, Cyber Week, we can even consolidate several orders that are placed within a certain time frame. Zalando customers are already familiar with this one-box solution when they order items from both Zalando and partners in one go.

And in the digital layer?

Firstly, we would like to decrease unnecessary returns by offering Size & Fit advice – thanks to that technology we have already reduced size-related returns on Zalando by 10% for items for which we offer size-related advice. Secondly, we want to give brands the best possible trading insights to increase sales and reduce return rates at the same time. We aim to holistically guide the brands‘ full multi-channel and multi-market e-commerce journey to optimise stock and increase its availability across various channels.

That sounds promising, but also like a big project.

We are essentially building an operating system for fashion and lifestyle. This is indeed an ambitious mission but we believe that, to overcome the hurdles I’ve mentioned, we need to take a holistic view of the brand's entire e-commerce journey. Starting with warehousing and location, replenishment, understanding how to trade inventory across channels and markets in Europe, and how best to handle returns. Our multi-channel fulfilment solution is already available, allowing brands and retailers to manage their e-commerce business through our platform while we fulfil their multi-channel orders in one place. We are currently working on enabling additional sales channels and further markets. At the same time, we are working on an easy-to-use suite of tools aiming to present data-based insights to our partners.

Karolina spoke about this topic at this year's Shoptalk summit in Barcelona. The following video shows a summary: