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Fashion Bombshell: Why Zalando acquires About You by Ingrid Lommer Zalando, Europe’s largest online fashion retailer, has announced its acquisition of competitor About You, marking a major shakeup in the European fashion e-commerce and marketplace industry. The deal, valued at €1.13 billion, includes a purchase price of €6.50 per About You share—a 107% premium on the stock’s three-month average price. The acquisition comes as Zalando and other European e-commerce fashion players face mounting pressure from rapidly growing Chinese competitor Shein, whose innovative “on-demand” production model and ultra-low pricing has disrupted the market and taken Europe by storm. A Deal Years in the Making Hamburg-based About You was launched in 2014 by Tarek Müller, Sebastian Betz, and Hannes Wiese as a subsidiary of the Otto Group. Despite an initial IPO share price of €23, the company has struggled to maintain investor confidence, with shares trading near €4 before the announcement. The economic challenges of 2023 hit Otto Group and About You hard. Once a flagship of Otto’s digital transformation, About You has struggled with exploding costs, shrinking user numbers and a more pressing need for profitability. Now, Otto Group, which held 64.7% of About You through the Michael Otto Foundation, has committed to selling its stake, along with About You’s co-founders and other major shareholders, bringing Zalando’s secured control to 73%. Zalando plans to maintain About You as an independent brand under a dual-brand strategy. While Zalando appeals to over 50 million customers across 25 countries, About You is supposed to continue catering to a younger, style-driven audience through its trend-setting and influencer-heavy platform. SCAYLE: A Key Asset in the Deal A significant component of the takeover is SCAYLE, About You’s B2B e-commerce software platform, which has established itself as a fast-growing and profitable SaaS solution in the fashion and lifestyle segment. SCAYLE provides tailored e-commerce infrastructure for over 200 online shops in Europe and North America. As part of the deal, SCAYLE will be integrated into Zalando’s existing software environment, complementing its ZEOS platform. Together, these systems are supposed to form a unified multichannel ecosystem designed to streamline operations for brands and retailers, offering a seamless platform for logistics, payments, and e-commerce services. Synergies and Strategic Alignment Zalando expects long-term annual synergies of approximately €100 million, leveraging About You’s strengths in both the B2C and B2B sectors. The integration of SCAYLE alongside ZEOS represents a pivotal part of this strategy, providing brands and retailers with a unified platform to optimize their multichannel operations. The Co-CEOs of About You—Müller, Betz, and Wiese—will retain their leadership roles. “This partnership creates something truly unique: two distinct B2C brands tailored to specific customer needs while combining our strengths in B2B to offer comprehensive solutions,” said Tarek Müller. What the deal will mean for the marketplaces of both Zalando and About You, if selling partners will benefit from it, and how the platforms will change due to the merger, is yet unknown. We have asked both Zalando and About You for comments and will update this article as soon as we learn more. Market Response The announcement sent About You’s stock soaring by 64%, nearing the offered price of €6.50 per share. However, Zalando’s shares fell by 7.5%, reflecting investor caution over the significant investment amid a challenging retail landscape. Navigating a Changing Market The acquisition underscores Zalando’s determination to strengthen its foothold in the €450 billion European fashion and lifestyle market. While the entire fashion industry has struggled in 2023 due to economic uncertainties and Shein’s meteoric rise, this deal signals Zalando’s commitment to scaling its operations. Especially SCAYLE could be the crown jewel of the deal for Zalando’s future as a e-commerce tech company. For Otto Group on the other hand, the sale of About You and SCAYLE represents a difficult yet pragmatic decision. By cutting off About You, it rids itself of a struggling sub-company and the huge investments it would need to stay competitive in a difficult market. But with SCAYLE it loses an important and very promising tech component which might have turned out to be vital for Otto’s future success. As the transaction progresses, expected to close by summer 2025 pending regulatory approval, the European fashion e-commerce sector braces for further disruption. Whether this strategic consolidation will be enough to fend off competition from agile newcomers like Shein remains to be seen, but it marks a bold step forward for Zalando in a turbulent industry landscape.