Since its launch onto the Berlin startup scene in 2008, fashion and lifestyle retail company Zalando has become one of the most successful online retailers in Europe, especially in the fashion segment. The DACH region, comprising Germany, Austria, and Switzerland, is Zalando’s core market. The company is also active in other European countries with increasing popularity, and for the first time in 2018, the company’s revenues from the rest of Europe
. As of the first half of 2023, Zalando generated nearly four billion euros in revenue, of which 1.7 billion came from DACH, and 2.2 billion euros originated from other European markets. In its headquarters country, Zalando is no longer an online-only retailer. After successfully launching its first physical store in Berlin in 2018, Zalando now operates outlet stores in 15 other city locations across Germany.
A year without growth
The COVID-19 pandemic skyrocketed
Zalando’s market capitalization to an all-time high of 28.4 billion U.S. dollars in 2021. That year, Zalando profited from the massive shift toward online shopping, and its
year-over-year (YoY) revenue grew by nearly 47 percent. However, Zalando and other online retailers felt the financial impact of the pullback when traditional brick-and-mortar stores reopened. As of December 2023, Zalando’s market cap dwindled to 6.2 billion U.S. dollars, and the YoY revenue decreased to negative 3.2 percent. To make matters worse, the company’s recovery was further hindered by inflation and other macroeconomic conditions running rampant in Europe. It is not just Zalando that struggles to turn a profit during these uncertain times. According to a global survey, inflation and economic downturn were voted the
greatest challenge for fashion retail brands in 2023 by industry executives.
Greener and fairer e-commerce
There has been a reckoning in fashion retail regarding sustainable, fair, and traceable practices. Like other European retailers, Zalando has been taking action to become more accountable in the fashion industry, while also being a pioneer of second-hand fashion by launching its
‘pre-owned’ platform in several markets. According to the company’s corporate responsibility reports, since 2017, Zalando has reduced its
Scope 2 greenhouse gas (GHG) emissions, although the overall release of GHG has increased due to business expansion. In 2023, Zalando earned a
Fashion Transparency Index score of 40 out of 100. This meant that Zalando was deemed successful and transparent in disclosing its environmental and sustainability goals, as well as manufacturer relations. Zalando’s action aligns with the opinion of industry executives, who consider sustainability to be the biggest opportunity for fashion retail brands in 2023.
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