Looking back on the 2023/2024 financial year, it is clear that even industry leaders such as Zalando and About You were not immune to the general economic challenges that shook online retail. Both companies reported slight declines in sales, but showed a strategic focus on healthy growth. Profitability at Zalando and AboutYou is a necessity in today’s competitive environment.
Marketplace Share Insights:
Zalando maintained a significant portion of its business in marketplace operations, reporting a 39% marketplace share under its old segmentation, which adjusted to 34% after changing their reporting strategy. Despite not meeting their initial target of 50% marketplace share for 2024/25, Zalando now aims for 40-50% by 2028.
About You, still in its growth phase, reported a marketplace share of 20.6% from its online store revenue. As About You shifts focus towards expanding its third-party (3P) services and enhancing its Fulfillment by About You (FbAy), it marks a pivotal transition from aggressive growth to prioritizing profitability after a decade, achieving break-even.
Revenue and Customer Base:
In terms of scale, Zalando’s €12.6 bn. fashion store GMV towers over About You’s €1.811 billion from online sales. Customer engagement metrics similarly show Zalando leading with 49.6 million active customers compared to About You’s 12.3 million, both experiencing slight year-on-year declines.
Strategic Shifts towards profitability:
Both Zalando and About You are refining their approaches, emphasizing profitability over the explosive growth rates of the past. Zalando’s rollout of ZEOS, its new multi-channel-fulfillment solution, exemplifies its commitment to operational efficiency and adaptability.
About You, too, is doubling down on its marketplace services, particularly in fulfillment solutions for third-party vendors.
What does that mean:
These shifts signal a matured approach in an industry that once celebrated double-digit growth as the norm. Profitability at Zalando and AboutYou becomes more and more important. For brands, the appeal of marketplace business remains high, bolstered by the increasing array of services, particularly in fulfillment, offered by platforms like Zalando and About You. However, this also introduces complexities regarding profitability for sellers. The landscape is evolving, and with it, our strategies must adapt.
You can usually tell a company’s strategy by how hard or easy it is to get approval to sell a brand on their platform. Last year, Zalando made it really hard to get that approval, which could mean they are more careful about who they work with. With About You, on the other hand, it seems to be a bit easier, but that might only be for a short time.