A new fee schedule will result in higher commissions for dealers in the future.
(Photo: Reuters)
Dusseldorf, Berlin With a new scale of fees for business partners who use the online fashion retailer’s platform, Zalando has drawn the displeasure of many partners. It has been in effect since the weekend.
Tried now Co-CEO David Schneider iIn a letter to defend the change: “We are aware that not all of our partners will be able to accompany us on our future path.” But there must be uniform competitive conditions for everyone, the letter says the Handelsblatt is available.
A few weeks ago, Zalando announced to retailers that it would standardize the fee structure. In fact, many traders, some of whom conduct a large part of their business via the platform, fear for their competitiveness. For the more than 7,000 partners who currently sell fashion and shoes via the platform, commissions of up to 25 percent are incurred as a result. For many, doing business on the platform is no longer economical.
The online retailer itself has recently said goodbye to its unbridled growth path and wants to place more value on returns. A few weeks ago, the company, which had only increased its workforce for years, announced that hundreds of jobs would be cut. At the turn of the year, Zalando had around 17,000 employees. The new fee model for the partners who offer and sell their goods via the Zalando platform should contribute to the savings efforts.
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The Handelsblatt says Schneider, man did not make these “decisions lightly”.
However, retailers’ options for reacting to the new fee model are limited: either they take their products from the largest European platform or they resell the goods they have already ordered there. Market participants say they would then pay more in many price categories. One even expects “bankruptcies”. Zalando apparently has nothing against a streamlining of the offer.
Zalando reviews brand portfolio
“Fashion is also about emotions. So far, this has not always been sufficiently taken into account in the customer experience,” said Schneider. He now wants to change that. Instead of an ever “bigger range”, the range should now – in his eyes – get better. Europe’s largest fashion portal wants to offer digitally savvy customers more experiences and stories. However, realignment costs money.
cutter currently sees the fashion industry as “at a crossroads”. We listened to the customers, they didn’t want “more” but “better”. Zalando will therefore invest a lot in customer convenience and artificial intelligence (AI), at the same time “revising the brand portfolio” and “connecting brands directly with their target groups”. The process should be completed by summer.
Schneider does not expect economic losses: “I am convinced that we can do more business with a smaller but more relevant range and more focus.”
The Zalando co-boss plans a better customer experience.
Zalando should only achieve its goals for the current year if this proves to be the case. Above all, the company wants to become more profitable. Adjusted operating profit (EBIT) is expected to increase by at least 50 percent in 2023, while hardly anything is likely to happen in terms of sales.
>> Read also: After a slump in profits – Zalando promises investors to focus on profitability
Just a few days ago, Schneider announced in Milan, along with the Street style magazine Highsnobiety wanting to push more into the luxury segment. The fashion retailer took over Highsnobiety in 2022. In the future, more brands are to be presented in a kind of digital luxury floor. Specifically, Schneider says: “We can do more business with fewer customers.”
However, Zalando is also advancing into the territory of smaller online luxury fashion providers such as MyTheresa or Farfetch, which have maintained close ties to companies such as Gucci and Balenciaga for years. So far, these luxury brands have generally avoided platforms like Zalando – also because they fear potential damage to their image. With regard to dealing with the dealers, Schneider says: “It has to work economically for all sides.”
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