Zalando announced in March that it wanted to increase its profitability after a slump in profits last year and “reduce the complexity” that the group has acquired over the years. The online retailer wants to achieve this through a savings programme, which also includes extensive job cuts. Now the company has also announced that it wants to optimise its product range.
After the first quarter of the new year, Zalando has decided that changes are in store for the rest of the year, the online platform announced.
“In the beginning, Zalando was all about offering our customers unlimited choice – that was our bold vision. And for a long time, our wide range of products was one of our biggest advantages and exactly what our customers were looking for,” explains David Schneider, one of the two Zalando founders and co-CEOs.
But customer behaviour has changed and Zalando is no longer striving for a wider but a “better offer”, David Schneider continues. For this reason, Zalando wants to reduce it’s offer and optimise its product range.
The online retailer did not initially disclose which brands are affected by the portfolio review.
“It is no longer primarily about increasing our offer. We want to create relevance: local relevance in our markets, relevance for specific target groups and an emotional connection to customers. For us, this means more focus, deeper customer relationships and offering brands that our customers want,” says Schneider.
The new customer experience is to be created based on the three pillars of “inspiration”, “curation” and “personalisation”. According to Zalando, inspiration and storytelling are increasingly important for its customers. Today, shoppers are no longer interested in the mere ordering process, which is why the company is increasingly showing the story behind the brands and products.
Zalando receives support in this area from Highsnobiety, in which the platform acquired a majority stake last year. Since the beginning of the collaboration, Zalando has created more than 80 curated product drops, which have been viewed by more than 7 million Zalando customers.
Zalando doubled the number of products in its own shop from 2020 to 2021. In some categories this had led to customers being overwhelmed by the wide selection. “That is why we have reviewed our product range strategy and are introducing measures to ensure that our customers always find what is relevant to them on Zalando,” says David Schneider.
To make shopping online even more attractive, Zalando wants to personalise the experience. Technologies such as augmented reality, artificial intelligence and computer vision will improve the search, enable customised size recommendations and find styling tips for customers.
To support the implementation of the revised product strategy, Zalando recently introduced a new fee and commission structure for its direct sales models to create more transparency in its partner base. In doing so, the company is moving away from different commission models in Connected Retail (CR) and in the Partner Programme (PP) towards a uniform approach, regardless of the model.