Zalando Launches Prime Competitor As Growth Slows

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Zalando logistics fulfillment center

It’s not just traditional retailers that are feeling pressured by Amazon’s push into apparel. Online fashion resource Zalando is keeping an eye on the mega retailer as well.

The Berlin-based company, which is the largest e-commerce fashion site in Europe, has just announced its own version of Prime. Dubbed Zalando Zet, the new membership program offers shoppers a slew of services including return pick-ups on demand, early access to sales, access to stylists and faster delivery.

The program has debuted in four cities in Germany and costs consumers 19 euros ($22) per year.

“Service is key to our customers. Zalando Zet combines the best of both online and offline shopping: Customers receive orders faster and return items easier. Furthermore, Zalando Zet adds a personal experience, as customers can ask Zalando about the latest trends or if they are unsure how to combine the shirt they just ordered,” says Lisa Schöner, head of Zalando Zet.

It’s not the first idea Zalando has adapted from the Amazon playbook. The company has had a marketplace feature that allows brands to create shops on the retailer’s platform for a number of years. This June, the etailer added Zalando Fulfillment Solutions, which handles order fulfillment on behalf of sellers.

Rubin Ritter, Zalando’s co-chief executive acknowledged Amazon’s aspirations in an interview with the Financial Times in May. “Amazon is trying to steal everybody’s lunch,” he said. But, Ritter says his company is differentiated in that it doesn’t pit marketplace sellers against one another based on price and it’s more suited to apparel, offering better brands and trendier merchandise.

[Read more about Amazon’s push into apparel: Private Label, Amazon’s Secret Fashion Weapon]

“The Amazon model is — you can get everything, and get it cheaply and conveniently,” he says. “But it’s very transactional. It’s not the best proposition for fashion.”

According to Cowen & Company data, Zalando commands 7.4 percent of the European market, while Amazon has 5.9 percent of market share there.

News of Zet comes as the company announces preliminary results for the first half of 2017. Revenue grew by approximately 19% to 21% to about 2.1 billion euros. And while that’s sizable, for the German retailer, it falls at the low end of the retailer’s 20% to 25% projections and represents slowing growth. Full year revenue grew by 23% in 2016.

Zalando was founded in 2008. In 2016, the company’s customer base grew by 11% to 20 million. It operates in 15 markets and is ramping up its fulfillment centers to total eight in five countries.

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