Zalando has expanded its same-day delivery service to more German regions and officially opened its fulfillment center in Szczecin, Poland, as it expects to grow revenues by 20-25% in the fourth quarter of 2018 after a financially challenging third quarter.
Same-day delivery is part of the subscription-based ‘Zalando Plus’ service which also enables customers to have their returns picked up at their preferred location and includes personal style advice.
Since its launch in 2017, Zalando has steadily expanded the service and now offers same-day deliveries to customers in twelve German regions on weekdays in cooperation with local logistics partners such as "Liefery" and "ANGEL bringt's". They provide fast deliveries and pick up return shipments in Frankfurt, the Ruhr area, Cologne/Düsseldorf, Hamburg and Dresden.
In addition, Zalando Plus members in Rhineland, the Ruhr area, Frankfurt and Berlin can use the same-day delivery service on Saturdays: selected products can be ordered on Saturday morning before Christmas until 10 am and delivered the same evening.
In Berlin, for example, Zalando cooperates with “tiramizoo” for same-day deliveries. "We are very pleased to be able to map premium delivery services from Zalando Plus using the new tiramizoo SAAS solution. Our technology quickly optimises the complex delivery and returns processes for each delivery over the last mile," Philipp Walz, Director of Product Development at tiramizoo GmbH, said.
Lisa Schöner, Head of Zalando Loyalty, added: "Thanks to the expanded cooperation with regional delivery companies, we are now able to offer more customers same or next evening deliveries. As a special pre-Christmas service, we want to make shopping even more convenient for our members with Saturday delivery.”
Zalando Plus customers in other regions can place their orders until 20 December by 10 am so that deliveries can be made in time for Christmas.
Meanwhile, Zalando officially opened its fulfillment center in Szczecin, Poland, which will serve the retailer’s growing customer base that currently counts over 25 million across the 17 European markets Zalando operates in, including Poland, Germany and Nordic countries. It is one of three Zalando fulfillment centers in Poland.
Covering 130,000 sqm, the fulfillment center in Szczecin is one of the biggest sites in Poland, featuring cutting-edge intralogistics solutions such as two five-story high “pick towers” that store several million items at once. The center is managed by the external logistics provider Fiege, which already employs around 1,000 people for the operational work of the center. The site will be handling orders mainly from Poland, Germany, Austria, Switzerland, the Netherlands and Nordic countries.
The construction work on the fulfillment center started in August 2016, with the first parcel being sent from the site at the end of last year. The fulfillment center supported Zalando’s operations during the record-breaking Black Friday event last month.
“We concluded one of the most important commercial retail events with record-breaking results of around two million orders. At peak times, orders were in excess of 4,200 per minute, breaking last year’s milestone of 2,000. On Black Friday alone, Zalando acquired over 220,000 new customers; more than doubling customer acquisition compared to 2017,” the company commented.
Zalando’s logistics network continues to grow in line with the overall company growth which will soon count eleven fulfillment centers in five countries. Two further fulfillment centers near Lodz and Olsztynek for Zalando Lounge are planned to start operations in 2019.
For the fourth quarter, Zalando expects revenues growth of 20-25%, and for the full year – around the low end of its 20-25% target growth corridor and an adjusted EBIT of €150-190 million. Capital expenditure will stay on elevated levels due to continued strong logistics and technology investments. Zalando expects to spend around €300 million in 2018, which is slightly less than initially expected (around €350 million) as it is further optimizing its logistics footprint and projects will be spread over a longer period of time.
In the third quarter, the company’s revenues increased by 11.7% to €1.20 billion, with an adjusted EBIT of € -38.9 million, corresponding to a margin of -3.2%. The margin decrease was driven by slower revenue growth and missing profit contribution, a decrease in gross margin and higher fulfillment costs.
Gross margin decreased mainly “as a result of the slow season start as well as higher cost due to inefficient reconditioning of returns, caused by operational faults that have been addressed and resolved in the meantime”. Fulfillment costs increased due to high investments in logistic infrastructure, further decreasing basket economics and increased transport costs.
Zalando Co-CEO Rubin Ritter said last month: “We are clearly not happy with our financial results in the third quarter. Our eyes are set on building the ecosystem for European fashion at full speed and our 2020 target of doubling the business to €10 billion in gross merchandise volume. For the fourth quarter, the team’s full focus is now on pulling off a strong finish to the year.”
