Zalando recorded strong growth in both its growth vectors Business-to-Consumer (B2C) and Business-to-Business (B2B) in the third quarter, driven by increasing consumer demand amid an industry-wide strong start to the autumn/winter season. To capture further growth opportunities, the company is investing in key areas of its ecosystem strategy, such as driving customer loyalty, expanding lifestyle propositions, making fashion discovery more entertaining, and further strengthening its European logistics network.
Zalando’s third-quarter gross merchandise volume (GMV) rose 7.8% to 3.5 billion euros compared with a year ago, revenue increased 5.0% to 2.4 billion euros and adjusted earnings before interest and taxes (adjusted EBIT) climbed from 23 million euros to 93 million euros. The adjusted EBIT margin increased by 2.9 percentage points to 3.9%. The number of active customers increased by about half a million quarter on quarter, bringing the total number of active customers to 50.3 million in the third quarter.
“Consumers love the quality brands we are adding, spend time with our exciting digital experiences, and embrace our expanding lifestyle offerings in areas such as Sports, Beauty and Kids & Family,” said Dr. Sandra Dembeck, Chief Financial Officer. “To capture further growth opportunities, we are investing into initiatives such as evolving our Plus loyalty program, offering more inspiring content, ramping up our tech hub in China and driving localised convenience for customers via our European logistics network.”
B2C: new brands, rewarding loyalty and lifestyle growth
For Zalando’s first B2C growth pillar, aiming to differentiate itself through quality and offer the best possible shopping experience, the company added new brands like Remain, A-COLD-WALL, and Marine Serre to its curated lineup. Zalando also evolved its Plus program from a paid membership to a free, points- based system designed to reward customer loyalty.
In France, Zalando’s new fulfilment centre near Paris shipped its first parcel at the start of October. This latest addition to Zalando’s logistic network helps to provide customers across France and neighbouring countries with even more localised offerings and convenience.
Zalando’s second B2C growth pillar around making Zalando a lifestyle destination saw strong growth in Sports, Beauty, and Kids & Family. The company is working to elevate these categories into powerful lifestyle propositions with comprehensive assortments, personalised inspiration, and seamless convenience. Zalando’s partners continued to increase their own sales generated via the company’s platform, with the partner business recording double-digit growth in the third quarter.
For the third B2C growth pillar – introducing new content formats into commerce and offering personalised inspiration and entertainment – the company further evolved Stories on Zalando, the content hub that engages customers around exciting fashion and culture trends. Fashion influencers like Caro Daur, Linda Tol, and Jordan Anderson are now offering exclusive content and showcasing their curated fashion selections.
In line with its commitment to enhance customer experiences, Zalando continued to invest in technologies such as the Zalando Assistant that has been rolled out to all 25 markets recently. Zalando’s AI assistant, powered by Zalando’s own models and OpenAI’s large language models, offers logged-in customers personalised fashion advice in local languages, enabling customers to navigate Zalando’s extensive assortment with intuitive queries such as “What should I wear to my dad’s 60th birthday in November in Barcelona?” The assistant understands context – such as location, weather, and occasion – to make informed recommendations.
Revenue in the B2C growth vector rose 4.3% to 2.2 billion euros in the third quarter compared with the same period a year ago. Adjusted EBIT rose to 86.7 million euros, representing an adjusted EBIT margin of 4.0% in the quarter compared to 0.5% a year prior, driven by improved gross margins and lower fulfilment costs.
B2B: expanding value proposition for partners
In B2B, Zalando is opening up its logistics infrastructure, software, and service capabilities to be a key enabler for brands’ and retailers’ e-commerce transactions, regardless of whether they take place on or off the Zalando platform.
In the third quarter, ZEOS added ASOS as a new sales channel, expanding the value proposition for Zalando’s partners. In total, ZEOS can now fulfil orders that were placed via 9 major e-commerce platforms and brands’ own webshops.
In the third quarter, revenue in the B2B growth vector continued to outgrow group revenues and increased 11.1% to 239.7 million euros compared with a year ago. Adjusted EBIT fell from 12.6 million euros a year ago to 6.7 million euros, representing an adjusted EBIT margin of 2.8%, compared to 5.8% a year prior. The decrease was mainly caused by frontloaded investments to support future growth.
Outlook
Today, Zalando confirmed its guidance, which was upgraded on 10 October 2024, for the financial year 2024. The company expects gross merchandise volume (GMV) to grow between 3% and 5%, revenue to increase between 2% and 5% and adjusted EBIT to grow to between 440 million euros and 480 million euros.
The third-quarter 2024 financial report, as well as the earnings presentation for analysts and investors, is available on the Zalando Investor Relations website. Zalando will report the results for the full year 2024 on 6 March 2025.
