Zalando Case Study
Zalando代写 The aim of this report is to present a strategic analysis of Zalando.The resources of the organisation help identify its major…
1.0. Introduction Zalando代写
The aim of this report is to present a strategic analysis of Zalando. The resources of the organisation help identify its major capabilities which in turn can help in the development of the core competency of the organisation. This can lead to competitive advantages and ensure that there is growth (Hill et al., 2014). This report first presents a comprehensive analysis of Zalando and its competitive advantage. This is followed by an assessment of market growth and development opportunities. As well as options for angel investors with respect to the future of Zalando and its growth.
2.0. Competitive Advantage Comparison of Zalando and Asos
Competitive advantage is gained when organisations develop or acquire a set of attributes which can provide it with the opportunity to outperform its competitors. From a resource based view, it is argued that competitive advantage is gained through the notion of core competencies which include major resources including physical. Human and technological resources and capabilities (Barney, 2014). The goal of this section of the report is to compare the key competitive advantages of Zalando and Asos. This report addresses each of their competitive advantages and highlights major similarities and differences.
Improving digital presence and integrated physical presence: When Zolando launched it was only in two countries, Germany and Austria. However, by 2013, they extended to over 15 countries. The customised localised service in each country with the sale of 1500 international brands including premium brands. As well as local brands increased its ability to reach out to its customers (Case Study, n.d). The launch of a physical store in Berlin and Frankfurt further created opportunities for the brand to engage with its customers (Garai, 2016).
An analysis of the Asos digital presence shows that while in comparison a similar repertoire of products are seen with its brand there are no physical stores. Hendriksz (2017) in their assessment conclude that there is a rise in need for omnichannel retail and the drive of e-commerce sales through directed and specific physical stores (Verhoef et al., 2015).
Improving its logistics set-up: Zalando代写
Key logistics are primary dilemmas for large internet based firms as their success is dependent on providing the right logistics service to reach the customers in the right time (Singh et al., 2017). Zalando was one of top e-commerce based companies in the UK which was able to achieve such effective logistics and infrastructure. The case study reported that 150 million euros were invested in logistics and technological infrastructure.
Furthermore, the organisation has also established multiple separate order fulfilment centres at strategic location across Europe (Smart Insights, 2016). Similar extended logistics set up is evident at Asos with every country of operation of Asos having major fulfilment centres (Kulach, 2017). Similar to Zalando there continues to remain contributing investment made in logistics.
Product Portfolio: Zalando代写
When Zalando launched it was an organisation which focused online footwear, women and men’s clothing. soon it expanded to include children’s wear, exclusive perfume brands. The presence of these products is unique as Zalando tailors its product offering to every country where both local and international brands are balanced (Case Study, n.d). Asos has an engaging brand presence with a similar product portfolio. Asos hosts over 2500 brands when compared to Zalando (Hendriksz, 2017). Another major success criteria at Asos is its ability to sell own brand products which is key to its success.
Shipping and Return Experience: Singh et al. (2017) contends that the major challenge most e-commerce players face is to get customers to return to their organisation and make repeat purchases. Though many online retailers offer free shipping. Zalando promises that all buyers across all categories will get free shipping with a guaranteed 2-4 day delivery time.
Similarly, the organisation also has a good policy of returns when compared to its competitors. There are between30-100 days of return guarantee with a pick-up service. Which further improves the overall engagement of the customers (Smart Insights, 2016). In comparison, it is argued that Asos has a similar strategy for delivery with most of its products being delivered free. However, the product return time is much lower than Zalando. And there are many complaints online on the delay in delivery and pick-up.
Cross sell: Zalando代写
Verhoef et al.(2015) argued that the success of fashion retail websites is linked to their ability to engage customers through curated looks and cross-sell capabilities. Zalando is able to get its customers interested in the product through shop the look and gift suggestion options (Case Study, n.d). A similar strategy or competency is relevant to Asos as well. The organisation focuses on creating the right brand mix with opportunities for cross-sell and all about brand mixes (Kulach, 2017). The goal is to create an engaged strategy where consumers can curate their own look from inputs of fashion experts.
Strategic Discounting: Hill et al.(2014) contends that pricing strategies can be considered a major competency which can position and organisation. Providing too much discounts can make an organisation less attractive to some demographics. An assessment of Zalando shows that are discounts but these are linked to specific durations (e.g. christmas, Black Friday). On the other hand, at Asos this type of discounting and strategic positioning is quite different. The organisation provides specific outlet section where there are constant items available on sale.
Product Portfolio: Zalando代写
Hill et al.(2014) contends that the strategic growth of any fashion brand or any retailer who operates in e-commerce with the focus on fashion products is through the launch of new products. The assessment of Zalando’s product offerings show that there are over 1500 brands of products sold. However, at Asos there is more engagement to provide consistently new products. Hendriksz (2017) reports that 41% of the fashion retailers product assortment arrived within the last three months and 10% of the products change every month.
Unique marketing: The organisation has taken efforts to improve its reach to customers by integrated its predominantly digital business with its physical business. For instance, the lead publication at Zalando, has reached a circulation of 1.5 million copies. This magazine strategically positions major brands and products which is a source of revenue for Zalando. At the same time, the brand provides this magazine for free to its customers to increase the overall reach of the magazine. The organisation also sought to approach its male shoppers through a separate category of book sales. Similarly, an assessment of the Asos marketing strategy shows that Asos was the first in launching such a lookbook which was made available to its customers at various times.
Improving Consumer Experience: Zalando代写
Hill et al. (2014) contends that understanding and improving the customer needs and customer experience is key to long term success. An analysis of the customer experience at Zalando indicates the organisational ability to provide a consistent and unique experience. The organisation has used technology to understand the differences in consumer purchase habits. Even though Zalando operates in over 15 counties globally. They were able to provide a unique experience to its customers in each country trough targeted marketing and payment options.
A comparison of the competitive advantage elements at Asos and Zalando show that both brands have been successful through the launch of an advanced logistics set-up. Improved product portfolio and quality, cross-selling of products, unique marketing and focusing on customer service experience. Zalando has been more effective in providing longer duration for customer engagement with the brand through unique options including Zalando club cards and a physical store space.
They also have taken efforts to address the independent needs of male and female shoppers. On the other hand, Asos has competitive advantage through the brand reputation of its own products and using strategic discounting. This report concludes that a potential reason for the rising profitability of Asos could be linked to its ability to use its own products and increase profit. And focus on both strategic discounting as well as exclusive products. Zalando on the other hand focuses on increasing its product range.
3.0. Market Selection Zalando代写
The purpose of this section of the report is to conduct market selection and identify areas where Zolando can expand its operations. The operation of Zalandos focuses predominantly on Europe. It is evident that while the organisation started its foray in Germany and Austria. It has expanded to other countries including Netherlands, France and six other countries.
Figure 1: Location of Zalando Operations
Source: Smart Insights (2016)
Schu and Morschett (2017) conclude that market selection could be based on two sets of factors including firm related factors and market related factors. This research will expand on both these elements to arrive at the right choice. Firstly, firm related factors are those which deal with firm level aspects. At the firm level, the goal is to understand what locations can be targeted where similar firm operations and ethos could be extended. A key firm level factor that can be addressed is similarity in operational requirements and legal frameworks. From a simple firm level perspective, keeping this in mind other locations in both Western and Eastern Europe can be targeted.
Eastern European countries Zalando代写
which could be within the EU would indicate similarities in operational goals and similarities in legal frameworks (Wallace et al., 2015). An analysis of the case study statistics shows that overall growth in Eastern Europe (e.g. Hungary, Estonia) is from 0.9 in 2006 to 2.2 by 2011. Similarly, Case Study (n.d) also shows that Eastern Europe has shown growth in overall apparel sales with the rising attraction of many Western European brands. This report concludes that the choice of Hungary or Estonia could be an ideal choice from a simple firm perspective. And ease of legal extension of operations (Nagy, 2016). Another aspect which may determine the firm level factors which drive inherent growth is objectives of growth. And the inherent growth potential of the market to aid in this growth.
An assessment of Zalando market growth requirements shows that the growth is on market expansion and slow organic growth to profitability. In line with this view, extension to similar product preference countries (e.g. Eastern European countries) could help in creating this increase in margin of sales. This extension could be easier to handle from an overall infrastructure perspective.
Nagy (2016) concludes that expansion and market selection is often immediately driven by the need for extensive analysis of available support and infrastructure (Schu and Morschett, 2017). From the following figure, the strategic location of the technology and distribution and packaging centres are seen. Therefore, the choice of Hungary or Estonia could help in reaching out to larger population base while having closer distribution and other infrastructure logistics already present.
Figure 2: Location of Physical and Technical Infrastructure Support
Source: Smart Insight (2016)
The next segment to be focused on is the market related factors.
Market related factors are considered as key elements which can create the final decisions. Over the years there are various factors which have been identified.Firstly, Mathews et al. (2016) contends that economic factors including economic stability. GDP growth trends and general availability of disposable income are key factors which can drive choice of markets. In line with this view, economic policies including government regulations. Taxation could also be considered as drivers of market selection (Cavusgil et al., 2014). This research contends that the choice of India is an ideal market. That could be considered based on economic factors and governmentpolicies. An analysis of the e-commerce retail market in India is expected to be worth $12 billion. Which is driven predominantly by the launch of 4G networks and rising consumer access to internet.
It is seen that there is a rise in consumer spending capability with more disposable income. And there are more Tier II and Tier III cities in India where e-commerce is becoming a major player to cater to individuals (IBEF, 2017). Given that India has one of the fastest rising youth population. This research contends that e-commerce focus should be on this region as it can create long term growth options for Zalando. Additionally, recent changes in government’s foreign direct investment policy further creates better fiscal. And legal policies which can create entry into this region.
Apart from these factors Zalando代写
culture is considered as a major determinant of choice which can drive the overall market selection decision (Cavusgil et al., 2014). It is argued in research that cultural differences can create major challenges. For organisations to expand to newer markets as significant differences. If left unaddressed can create major issues of operational failure and lack of customer base development. This could create challenges for an organisation to expand and become a major player in any new location.
As seen in the following figure, there is a definite impact of cultural differences on organisational growth in Zolando as there are major cultural differences between Germany and India. Therefore, the option of expansion from a market opportunity. Customer availability perspective is high but the associated risks are also high which need to be understood and attributed.
Finallythis report also suggests that Zalando can look at launching in the US.
This is linked to the booming e-commerce market in the country and rise in acceptance of pureplay e-commerce outlets. It is expected that the e-commerce growth in the US would e by 15% by the end of 2018. And more importantly the growth in North America is driven by mobile commerce and strategic positioning of products (IPC, 2018). The choice of expanding into the US can help provide two major market selection advantages including ease of bureaucracy and procedures.
Compared to the three other countries discussed as part of this report, US has much better procedures and establishment of operations and transparency in this region can be high. Additionally, it can also be argued that the US can act as a Market hub. Or a base from which Zalando can reach other North American markets including Canada and Mexico.Therefore, it is concluded that the choice of USA, India and Hungary (or Estonia) are the three primary options for Zalando to expand.
4.0. Pros and cons for Investment Zalando代写
The final section of this report aims at understanding the major implications for Anders HolchPovelson. He recently gained 10% of stake at Zalando from early investors. It is important to note that he also has a 27.5% stake in Asos, the direct competitor of Zalando. The investment by Povelson in Zalando can be considered as an Angel investment. The purpose of this section is to address the major advantages and disadvantages for Asos/Zalando through his investment. And expertise and the potential challenges that he may face with this investment.
Firstly, if one were to examine the pros and cons from the perspective of the angel investor. It is argued that the investor is presented an individual who can provide strategic management support, resource acquisition and mentoring. Given that he is in the industry and has experience with prior fashion retail. There could be opportunities that he could provide some advice for the organisation (Parhankangas and Ehrlich, 2014). Additionally, given that they are direct competitors there are some challenges of conflicts. And therefore greater role in everyday operations could not be provided which could work as a disadvantage for both organisations.
The major opportunity that Povelson has is the ability to invest in an industry that is growing.
There are evidences which show that Zalando has been extending its lead over the British rival, ASOS as one of the largest European online fashion brands.
Therefore, through an early acquisition into Zalando and AsosPoverson has the first opportunity to gain big through structured IPO (initial public offerings) (Reuters, 2017). The second advantage for Povelson is that the acquisition of stake in two major pureplay online retailers provides an opportunity for his brand. Bestseller to expand its market reach.
Given that Bestseller is the eight biggest retailer in the Asia-Pacific region, the stake acquisition in Asos and Zalando can provide Povelson with opportunities to network. And get a platform to integrate his offline product brand with the pureplay online retailer (Case Study, n.d).
From the investor perspective Zalando代写
investment in Zalando could have major challenges especially if there are no real support opportunities for the firms to grow. Currently, Zalando continues to operate with no profitability which indicates that there is a chance. That Povelson will lose his investment as well as his ability to gain profits through the investment (FT, 2017).
Therefore, there could be challenges of loss through any one of the businesses. Secondly, given that Povelson has invested in both companies there can be challenges linked to potential conflicts. And therefore information on the inherent operations and strategic directions or direct competitor directed strategies will not be disclosed to him. This can create challenges as he may not have direct information on how everyday operations are carried out. This can be potential disadvantage.
5.0. Conclusion Zalando代写
From the above analysis three major implications can be gained. Firstly, the competitive advantage of Zalandos over that of Asos is largely linked to its more effective customer engagement policy and ability to adapt to cross-cultural internet marketing. The organisation is also able to expand its presence quickly across Europe through established logistics. The focus on increasing margin of sales and revenue over profits however requires more directed assessment. Of own-brand products and potential expansion into other markets.
This report also suggests that as market choices Zalando could look at three countries including India, USA and Hungary (or Estonia) as potential opportunities for growth. The choice of these countries is based on firm level factors of ease of operations (e.g. Hungary), market factors of growing demand (e.g. India) and opportunities for market hub (e.g. USA). An analysis of the investment by Povelson shows that while investment in both Zalando and Asos provides him with opportunities. To be a part of a pureplay e-commerce sectors conflict of interest challenges will exist due to the direct competition between the two firms. Therefore, this report contends that understanding the major opportunities for future growth at Zalando requires a more targeted investment opportunity.