Posted on Wednesday, Oct 21st 2015
According to a recent study on e-commerce sales conducted by RetailMeNot, the e-commerce retail industry in Europe is expected to grow 18% in 2015 to €185.39 billion (~$210.3 billion). Strong growth is expected across the continent with the United Kingdom projected to grow 16% this year. Even Germany which is a much mature market is expected to see 23% growth this year. Billion Dollar Unicorn player Zalando is benefiting from this strong growth in the market.
Berlin-based Zalando was founded in 2008 by David Schneider, Daniel Glasner, and Robert Gentz and is promoted by the Rocket Internet group. Zalando was set up with the mission to create the world’s best online fashion experience. They are a fashion-focused retailer that sells shoes, clothing, and accessories online. Since their inception, Zalando has expanded internationally. What began in Germany is now a household name in over 15 European countries including Austria, Belgium, Denmark, Finland, France, Germany, Italy, Luxembourg, Netherlands, Norway, Spain, Sweden, Switzerland, Poland, and the United Kingdom. They are now Europe’s largest online-only retailer.
Zalando has invested in a purpose-built, fully integrated, and scalable fulfillment infrastructure that they manage through an in-house developed, proprietary fulfillment IT system ZALOS. Additionally, they also own most of the fashion inventory on their website that enables them to ship goods immediately on receipt of a customer order. Through their network of dedicated fulfillment centers, Zalando is able to ship products across Europe. They are thus able to offer their customers features such as free and fast delivery, free and easy returns, and free customer support.
Zalando’s strong operational growth has also transformed into strong financial growth for them. They ended fiscal 2014 with revenues of €2 billion (~$2.27 billion). For the six-month period ending June 2014, revenues reported a 30% increase to €1.05 billion (~$1.19 billion). They also reported their first break-even period last year. They ended the previous year with revenues of €3 billion (~$3.4 billion) and are projecting a growth of 33%-35% during the current year. For the fourth quarter, Zalando saw revenues of $805 million with losses of $36 million. The high losses for the quarter were attributed to significant investments on mobile apps and a €18.5 million (~$21 million) charge on fraudulent purchases on their website.
Zalando has raised $243.4 million in investments from venture funds including Commerzbank, DST Global, HV Holtzbrinck Ventures, JPMorgan, KfW Bankengruppe, Ontario Teachers’ Pension Plan, Quadrant Capital Advisors, TH Lee Putnam Ventures, and Tengelmann E-Commerce Beteiligungs. Last year, Zalando went public on the German stock exchange by raising €605 million (~$686 million) at a valuation of $6.8 billion.
Their stock is currently trading at €29.58 (~$33.55) with a market capitalization of €7.28 billion (~$8.26 billion). The stock touched a 52-week high of €33.74 (~$38.28) earlier this year.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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