"Good, because it's Polish". This is how we escape the standards of the e-commerce market

Daniel Rogiński, CEO of Zalando for the CEE region, talks to WNP.PL about Zalando's new strategy, the uniqueness and preferences of the Polish customer, the generational evolution of the purchasing process and tools to limit the negative impact of the biggest challenges in e-commerce.

• Poles are willing to pay more for a locally produced item from a Polish brand. This is a phenomenon on the scale of the European e-commerce market. - The fact that the brand is Polish is an argument for making a purchase for almost 1/3 of customers. We can say that the slogan "good, because Polish" is very relevant here - indicates Daniel Rogiński, CEO of Zalando for the CEE region, responsible for strategy and business development on the Polish, Czech, Slovak, Slovenian, Croatian, Romanian and Hungarian markets.
• Zalando is finalizing the acquisition of About You, and the primary goal of the acquisition is to increase its share in the overall fashion market, which currently stands at around 3%. - If we take into account the offer, Zalando and About You complement each other very well. The assortment of brands overlaps only by 30%, which is very little - says the CEO of Zalando for the CEE region.
• Zalando currently offers products from around 6,000 different brands to over 50 million customers in 25 markets. Zalando sold its first product in Poland in August 2012.

What is Zalando now? Is it still a platform where we can buy clothes or something more?

- Zalando's current strategy involves moving from a classic e-commerce platform, i.e. a traditional transactional model, to a developed ecosystem for the entire lifestyle, not just fashion. Our goal is to provide customers with not only a wide range of products, meeting their needs to the maximum, but also a lot of inspiration and personalized content.

While the wide assortment is understandable, the issue of shopping inspiration is a mystery to me. What is your goal with this?

- Through these activities, we want to provide customers with truly unique shopping experiences, which is in line with one of the key trends shaping the e-commerce market in Poland and Europe. Especially among younger generations of buyers, going beyond the area of ​​the offer and transaction is becoming increasingly important. These consumer groups, which were raised in the digital reality, expect shopping to be an engaging and inspiring experience for them - already 70% of Generation Z representatives make purchasing decisions while looking for inspiration.

Let me give you an example: we used to sell more cheaper products, but today 70% of the running shoes we sell are those that cost more than 100 euros. This is the result of our intensive investment in inspiring customers, which allows them to make more informed purchasing decisions.

Conscious, you mean?

- The meaning of the ecosystem, in B2C terms, is as follows: you buy one thing and come back for everything else you need. According to our research, as many as 76% of customers who buy products in the fashion category are also interested in buying a product from the beauty offer. Therefore, we look at the offered assortment more broadly, in line with what our customers expect.

How have customer expectations changed over the years?

- A few years ago, the customer expected primarily an efficient shopping process, fast delivery, etc. Today, they expect much more from us - inspiration, entertainment, and expectations regarding the customer experience we offer have also increased significantly. That is why we are intensively developing virtual assistant models so that using Zalando resembles a conversation with an advisor in a brick-and-mortar store. Today, we must be able to professionally answer almost every customer question, not only about size, but also questions such as "what should I wear?" and this takes into account the occasion, the customer's expectations, their financial possibilities, etc.

So is the recently announced acquisition - takeover of, after all, a competitor - of About You part of a broader, ecosystem strategy?

- Integration with About You fits perfectly into our strategy of building a pan-European ecosystem for fashion and lifestyle, around two growth vectors - B2B and B2C. In the consumer area, we want to maintain both brands. In the business area, our competences are very complementary. In this type of acquisition, the element of understanding and running the business is extremely important, and in the case of our integration with About You, both teams are characterized by a similar approach and flexibility or business efficiency.

If we take into account the offer, Zalando and About You complement each other very well. The assortment of brands overlaps only by 30%, which is very little.

So thanks to this acquisition you will expand your product range and take over a fairly large customer base?

- Zalando's primary goal, which will be significantly helped by integration with About You, among other things, is to increase our share in the overall fashion market, which currently stands at around 3%. The acquisition and the new strategy, focused on building a European ecosystem, are to strengthen our position on the continent, where the fashion market is worth 450 billion euros. I would like to point out, however, that this is a long-term ambition.

Zalando currently offers products from around 6,000 different brands to over 50 million customers in 25 markets, making our offer targeted at a wide group of fashion enthusiasts.

On the other hand, About You is an offer largely for young people, focused on expressing oneself through individual style. If we take into account active customers, About You can boast a truly impressive base - around 12 million at the end of 2024.

Increasing market share is one thing, but how will it affect profitability? Do you have any estimates?

- In March, we confirmed our long-term margin targets. After About You, subject to regulatory approvals, we continue to target an adjusted EBIT margin of 10-13% for the group as a whole, in both growth areas - B2C and B2B.

Let's move on to the domestic side. How important a market is Poland for Zalando?

- Poland is a very important market for Zalando. First of all, it is determined by its scale and the fact that we have been present there for 13 years. The fact is that we invest relatively much in Poland, both in the ecosystem itself and the logistics environment (Zalando has large warehouse and distribution centers in Poland). Our investments are determined by understanding the needs and requirements of the Polish customer.

And what are the requirements of the Polish customer? Do they differ in any way from the region? Do we, Poles, have something characteristic about us from the Zalando point of view?

What characterizes customers in our country is a unique attachment to Polish brands. Poles are willing to pay more for a product just because it is Polish.

The report "Polish Fashion on the European Catwalk" prepared by Zalando last year showed that our compatriots are willing to pay more for a locally produced item from a Polish brand . Such willingness was declared by as many as 30% of respondents. This is a lot and it is surprising - in a positive aspect - because Poles are very price-sensitive. The same study showed that as many as 47% of customers from Poland hunt for bargains, looking for promotions . So if we take into account that every third of them is willing to pay more just for the origin of the product, this shows how much customer loyalty Polish brands have built . This is very encouraging.

So the slogan "good, because it's Polish" has practical application here?

- Generally speaking, this kind of loyalty to domestic brands is the nature of the region, and Polish customers have a special fondness for domestic brands . They often prefer to buy something from a Polish brand than a foreign one, especially since products from domestic brands are highly valued for their high quality and design. The very fact that the brand is Polish is an argument for making a purchase for almost 1/3 of customers. We can say that the slogan "good, because Polish" is very relevant here.

And what about the positioning of Polish brands among the most recognizable ones?

- There are currently around 100 Polish brands available on Zalando, and we are very active in promoting and supporting their development. The access of Polish brands to various tools and the know-how support from Zalando mean that many of them are developing much more effectively on Western European markets. A great example is Kazar and their way of using our data and logistics tools, which means that 45% of Kazar's sales on Zalando are purchases on the German market. This shows the effectiveness of developing foreign sales thanks to Zalando's cooperation with a given manufacturer.

When it comes to online sales and purchases, it’s impossible to ignore the issue of returns. How much does it cost you and how do you approach reducing their number?

- We are constantly working on reducing avoidable returns. The customer doesn't like them, we don't like them, our partners don't like them. But no matter how you look at it, it's a permanent element in the fashion industry. From the beginning, we wanted to give customers the opportunity for a comfortable shopping process, i.e. the freedom to try on clothes at home and return those items that for various reasons don't suit them.

Recently, we have shortened the period in which a customer can return purchased products - from 100 to 30 days - a change dictated not so much by costs, but by increasing the availability of products. Additionally, our research has shown that over 90 percent of customers return goods within 30 days of purchase.

And what is the reason for the returns? I assume it's size issues. You recently presented an assistant model - how is it supposed to measurably influence better purchasing decisions of customers?

- The most important factor in determining the frequency of returns is of course size. We have created an internal team that works solely on improving this issue, which is unique in the European e-commerce industry. Zalando's tools recommend the right clothing sizes and other factors to customers based on returns data. Since implementing this team, the size-related returns rate has dropped by 10%, which is a significant improvement.

We have also launched a body measurement function. All it takes is two photos taken with a phone and after entering them in the app, customers can receive size advice based on their own measurements. We are also working on a virtual fitting room, which will be a milestone in this regard . We are currently running a pilot to better understand how customers respond to this solution, improve it and scale it in the future.

However, we can already see that the virtual fitting room has the potential to provide us with a reduction in returns several times higher than just size advice. This is a huge potential in terms of cost reduction and even greater customer satisfaction.

DID YOU LIKE IT? SHARE ON FACEBOOK