Zalando – A CRM Success Story

Zalando GmbH, was founded by David Schneider, and Robert Gentz, in 2008. The company engages in the online retail of apparel and shoes and is based in Berlin, Germany.  It is one of the most conspicuous and likewise mysterious start-ups in Germany.

Founded only three years ago, Zalando has become the market leader, mainly due to operational excellence; and partly thanks to fancy television advertising in the online shoe retail market. Revenues in 2010 were 160 Million Euros and are expected to increase at least threefold in 2011.

Recently, Yuri Milner’s DST Digital Sky Technologies (DST) joined the Samwer brothers as an investor in Zalando, due to the fact that the company has a professional management team an impressive growth record and great potential to capitalise on the fast-growing European e-commerce market.  As a matter of fact, the Samwers and Mr. Milner were both early investors in the social media giant Facebook.

Zalando builds relationships with its final consumers whom are the actual people who goes on the webpage and order products. The end consumer is the target for the CRM service teams. There are no intermediaries, as it is a direct sales channel. Hence, Zalando “only” needs to focus on the relationship between the company and the actual consumer. To manage this vital relationship Zalando hired an expert in this particular field, SHS VIVEON.

As a matter of fact, the best-known examples of customer relationship management technology come from businesses that sell services to consumers in large volumes.  A perfect example is the Zalando GmbH, which is a customer-orientated company advised by SHS VIVEON a provider of holistic, customised and integrated solutions for customer management. SHS VIVEON  provides the online retailer with both conceptual and technological support in order to optimise the customer management process. The declared goal is to offer Zalando-customers more individual and exclusive services.   Zalando therefore, tries to create an exclusive, customer-orientated shopping experience, which is executed throughout all customer contact points (e.g. registration  of new customer, shipping, complaint management).

For Zalando it is vital to obtain a holistic view of their customers during all stages of the customer life cycle: from acquisition to loyalty measures. The company takes into account that communication requirements between the customer and the company, as they continually increase, develop and above all, change. As a consequence, the relevant internal processes are becoming considerably more complex; in order to manage the quality of customer management and customer service, the CRM strategy relies on the underlying processes and IT systems; whilst continuing to bear in mind the importance of the service quality dimensions (consistency, access, liability, tangibles, empathy, and responsiveness).

Zalando is a young, innovative and promising start-up with high revenue growth rates. After three years, the market leader in Germany is about to conquer other European markets. Youthful, driven, and creative managers work for Zalando; enabled through the most famous investors in this sector, the Samwer brothers (and DST). Besides the above-mentioned competitive advantages, this is the mother soil for every fruitful future business in the e-commerce sector. In particular, the enormous creative potential of its employees is a major strategic success factor.

On the 1st of March 2012, Zalando launched a new business concept and went “offline” for just three days. Right inside a trendy hotspot in Berlin (Hackesche Markt) Zalando started to sell its own brand, named after the label itself, and designed by Bernadett Penkov. The selling in a physical store “Pop-up-Store” is the kick-off event for their home brand and is perceived as freshness in its pure essence, as no other e-commerce platform ever launched its own fashion brand.

What is more Zalando is using social media to present information to their potential customers and to interact with them. For example, Zalando has currently over 200.000 “likes” on Facebook “fanpages”, is using twitter, and all the other smart forward-looking social media concepts to illustrate itself perfectly.

A major barrier to success might be that they are growing too fast (overtrading) and might face a natural bottleneck. Suppliers may not be able to deliver on time or their parcel delivery service partners may go on strike, due to work overload. Warehouses and labour force (implemented a “Job-Striker” on facebook to acquire new employees ) cannot be increased in time and thus they might lose important customers, or cannot attract new customers, thanks to the self-created image problem, after those incidents. Zalando is currently about to build a new centre of distribution in Erfurt (70.000m²), located in the East of Germany and according to the experts this warehouse will be over allocated, within two to three years.

Photos by Michael Panse & LiLauraLu

Posted on March 11, 2012, in BizDev, Champions & Spoilers, CRM, Marketing, Strategy and tagged , , . Bookmark the permalink. 3 Comments.

  1. Stefan Keinert

    Yes, Zalando is a marketing success. And it’s a planed one given the funds and expertise of successful internet entrepreneurs. But in a fiercely competitive environment it remains to be seen, if and when the company turns a profit the first time, let aside the impressive sales growth rate.

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  1. Pingback: How Top European Clothing Giants Overpowered Search Marketing

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