zalando overview 2014

23
Zalando – Europe’s leading online fashion destination May 22, 2014 Zalando AG

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Zalando Overview 2014

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Page 1: Zalando Overview 2014

Zalando –Europe’s leading

online fashion destination

May 22, 2014

Zalando AG

Page 2: Zalando Overview 2014

1

Why are we here?

Customer value: We believe online technology offers superior ways to the customers

to shop fashion in terms of convenience, selection, personalization and inspiration.

Proven model: When we started, our friends asked us: “Who would buy shoes

online?” Today they ask us: “Can I get another friendship-voucher?”

Mega trend: Almost everyone growing up in Europe today is a “digital native”. In the

future, the majority of fashion purchases will be inspired and made online.

Disruptive company: Over the last five years we have changed the way Europeans

shop fashion. But when we look at Zalando today we think it still is small compared to

what it could be. We are still at the beginning of our journey!

Great team: We are a group of young, entrepreneurial and ambitious people. We want

to continue to disrupt and shape the fashion industry, and to offer our customers the

world’s best online fashion experience.

Page 3: Zalando Overview 2014

2

€2.0bnrun-rate revenue (1)

at record

breaking speed

332mvisits in Q1’14

~38% from

mobile devices

at end of Q1’14

13.5mactive customers (2)

~89% brand

awareness (3)

150,000+ styles

1,500+ brands

Zalando at a glance

(1) Annualised Q1 2014 revenue.

(2) Active customers have shopped at Zalando at least once during the past 12 months.

(3) Countries with Zalando shop launched before 2012. Zalando survey March 2014.

Page 4: Zalando Overview 2014

Zalando’s key milestones

3

2008/09

Building Germany’s online

leader in shoes

• Broad product selection

(no discount model),

convenient shopping

• Fast brand building

2010

Category expansion

• Expansion into other

fashion categories

(clothing, sports,

accessories)

• Expansion into private

label

2011/12

Geographic expansion

• Presence in 15 markets

reaching more than 400m

people (1)

• Market leader in online

fashion retail in majority of

served countries

2013/14

Operational excellence

and innovation

• Growth investments in

technology and logistics to

support future growth

• Front-end innovation to

drive customer activity

(1) Luxembourg followed as 15th countryy in 2013.

Page 5: Zalando Overview 2014

4

Unwrapping Zalando – what’s inside

Online fashion is a massive and highly attractive market opportunity1

Zalando is in the pole position to win the online fashion market in Europe2

Significant top-line growth at scale with history of profitability in core DACH region3

Visionary founder-led team with proven track record of scaling at speed4

Page 6: Zalando Overview 2014

5

e-Commerce

fashion

Europe

• Largest online consumer

product category with highly

attractive margin profile

• Early on the curve of online

adaption

• Europeans have high fashion

spending per capita and high

density of fashion spending

• Early on the curve of online

penetration

• Intersection of attractive

category and geographic

market

• Targeting very sizable market

opportunity for long-term

growth

Zalando’s

sweet spot

Online fashion is a massive and highly attractive market opportunity

1

Page 7: Zalando Overview 2014

6

Unwrapping Zalando – what’s inside

Online fashion is a massive and highly attractive market opportunity1

Zalando is in the pole position to win the online fashion market in Europe2

Significant top-line growth at scale with history of profitability in core DACH region3

Visionary founder-led team with proven track record of scaling at speed4

Zalando is the online fashion leader in Europe by brand awareness and website visitors

Scale enables us to deliver the best value to customers and brands

Highly localised operations in 15 regional businesses

Integration of fashion, technology and operations creates disruptive business model

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Page 8: Zalando Overview 2014

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7

Zalando is the online fashion leader in Europe by brand awareness and website visitors

(Relative position by un-aided brand awareness (1))

Strong brand driving top-of-mind awarenessMost visited fashion website outside China

2

Source: Zalando survey March 2013 (right), ComScore (left).

(1) Relative position relative to following competitor. Simple average of relative positions across markets assumed.

(2) Poland and Netherlands (survey not conducted for UK and Belgium on an ongoing basis).

1.4x

(Global Online Retail Websites Worldwide Unique Visitors, 2013)

2.4x 2.3x

1.6x

1.2x

SouthernEurope

DACH Nordics Europe –Other

(2)

Page 9: Zalando Overview 2014

8

• Broad selection of brands

and styles

• Inspiration and emotional

engagement

• Fast delivery and customer

support

• Mobile experience

• Significant economies of scale

• More data leading to better

insight

• Leverage in key areas:

‒ Marketing bidding

‒ Purchasing

‒ Logistics

• Access to 400 million

Europeans

• Zalando as strategic partner

to lead brands in online age

• Trusted brand experience

• Not a discount model

Customers(>13.5m active customers)

Brands(>1,500 brands)

Scale enables us to deliver the best value to customers and brands

Creating a compelling

customer experience

Helping brands

to win online

2

Generating scale driven

network effects

(1) Annualised Q1 2014 revenue.

Zalando Scale(€2bn run-rate revenue (1))

Page 10: Zalando Overview 2014

Local

payment

methods:

InvoicePrepayment

Highly localised operations in 15 regional businesses

Multi-lingual:

Multi-currency:

Local

logistics

partners:

12 Languages

7 Currencies

2

Local

brands:����

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Hundreds of

local brands

Over 20 methods

Over 12 partners����

Multi-country: 15 Countries����

GermanyFrance ItalyAustria Belgium Denmark Finland Luxembourg

Netherlands UKSwitzerlandSwedenSpainPolandNorway

9

Page 11: Zalando Overview 2014

10

Zalando dimensions

Customer experience

Successful integration of fashion, technology and operations creates disruptive business model

2

Brand &

Customer

Base

Online &

Mobile

Operations Fashion

Technology

& Big Data

Page 12: Zalando Overview 2014

11

89%Zalando brand awareness in

countries with Zalando shop

launched before 2012

74%Zalando brand awareness in

countries with Zalando shop

launched in 2012

High brand awareness across markets (1)

(1) Zalando March 2014 survey.

(2) Excluding U.K (survey not conducted on an ongoing basis).

(3) Excluding Belgium (survey not conducted on an ongoing basis).

(4) Active customers have shopped at Zalando at least once during the past 12 months.

Rapid growth in visitors

Zalando is the go-to online fashion destination in Europe

Rapid growth in active customers (4)

73

332

Q1'11 Q1'14

2.5

13.5

Q1'11 Q1'14

4.5x

5.4x

(2)

(3)

In millions

In millions

Brand &

Customer

Base

Online &

Mobile

Operations Fashion

Technology

& Big Data

Page 13: Zalando Overview 2014

12Source: Webtrekk.

(1) Mobile is defined as tablets, mobile site and apps.

(2) Textilwirtschaft (5.9.2014): „Mobile-Studie: Zalando bei Tablets vorn“

Mobile is critical for driving:

� Anywhere, anytime access

� Incremental engagement &

transactions

� In store comparison

#2 lifestyle appon iOS store in Germany

“Best tablet site amongst

fashion sites”TextilWirtschaft (2)

4-Star user ratingon iOS store in Germany

Zalando is successfully riding the mobile wave

Mobile share of Zalando traffic (1)

App 1.0

Zalando.de

first m.site

App 3.0

201320122011 2014

End of

Q1’14

38%

Brand &

Customer

Base

Online &

Mobile

Operations Fashion

Technology

& Big Data

Page 14: Zalando Overview 2014

13

150,000+

styles

Local relevant brands

Large global brands

Zalando has created a go-to fashion destination with a broad and compelling offer

Brand &

Customer

Base

Online &

Mobile

Operations Fashion

Technology

& Big Data

Private labels

Fast fashion brands1,500+

brands

Partner program

• Higher availability

• Better selection

Page 15: Zalando Overview 2014

B

MG EF

Erfurt

120,000 sq.m.

14Note: Brieselang, Erfurt and Mönchengladbach represent Zalando’s in-house operations, another warehouse in Großbeeren is operated by a service provider and not displayed. Großbeeren is

expected to ramp-down / close by year-end.

� Centralised distribution from the center of Europe

� Total >250,000 sq.m. combined capacity

� Custom-tailored and semi-automated warehouses

� Capital-light investments through leasing of building

Recent investments in logistic infrastructure are starting to pay off

>50% of population and >80% of customers within radius of 750km (= 9 hour drive) from Erfurt

Brieselang

30,000 sq.m.

Mönchengladbach

75,000 sq.m.

(+45,000 sq.m.

expansion ongoing)

Brand &

Customer

Base

Online &

Mobile

Operations Fashion

Technology

& Big Data

Page 16: Zalando Overview 2014

15

Demand model

Marketing vs.

discount

Cross-sell

recommen-

dation

Payment option

steering

Return forecast

Order forecast

All business processes supported by best in class in-house technology and big data solutions

Strategic ownership of technology platform Consistent use of big data

Brand &

Customer

Base

Online &

Mobile

Operations Fashion

Technology

& Big Data

Examples

400+ IT professionals Plus 60+ data scientists

Page 17: Zalando Overview 2014

16

Unwrapping Zalando – what’s inside

Online fashion is a massive and highly attractive market opportunity1

Zalando is in the pole position to win the online fashion market in Europe2

3

Visionary founder-led team with proven track record of scaling at speed4

Significant top-line growth at scale with history of profitability in core DACH region

Page 18: Zalando Overview 2014

17

Zalando has shown strong growth, reaching €2bn run-rate (1) after 5 years

142

377

773

1,056

6

2009

1 country

2010

3 countries

2011

7 countries

(2) DACH = Germany, Austria, Switzerland.

2009: Only Germany.

2010: Added Netherlands and France.

223284

Q1’14

15 countries

2012

14 countries

2013

15 countries

Q1’13

14 countries

2011 Added Italy, U.K., Austria and Switzerland.

2012 Added Finland, Norway, Sweden, Belgium, Spain, Poland and Denmark.

2013 Launch of Zalando Luxembourg in November 2013 operated through Zalando Belgium.

3

1,159

510

154

6

372

+35%+€129m

501

+28%

+€61m

+45%

+€68m

(1) Annualised Q1 2014 revenue.

DACH (2)

€ in millions

Revenue development

1,762

Page 19: Zalando Overview 2014

18

20122011

(1) DACH = Germany, Austria, Switzerland.

2010

-15.0%

-11.7%

-7.2%-6.5%

2013Q1 2014A

and 2014E

Track record of profitability in core DACH region with significant margin upside

3

percent

Group EBIT margin development

Group EBIT margin

improved significantly

year-on-year in Q1’14

� Higher fulfillment

productivity

� Increased marketing

efficiency

� Good start into

spring/summer

season

Q1’ 14 trends underline

our plan to take a

significant step toward,

but not quite reach, EBIT

break even at Group

level in FY2014Negative margins in DACH(1) due

to fast brand building & scaling

DACH breakeven as

business model matures

Page 20: Zalando Overview 2014

19

Unwrapping Zalando – what’s inside

Online fashion is a massive and highly attractive market opportunity1

Zalando is in the pole position to win the online fashion market in Europe2

Significant top-line growth at scale with history of profitability in core DACH region3

Visionary founder-led team with proven track record of scaling at speed4

Page 21: Zalando Overview 2014

20

Management Board

David Schneider

“Zalando as a

fashion company”

Robert Gentz

“Zalando as

an online

company”

Rubin Ritter

“Zalando as a

process machine”

Management Board

supported by strong

second and third

level management

team

Visionary founder-led team with proven track record and well capitalised business

Anders Holch

Povlsen

Equity shareholder base (1)

(1) Shareholder structure includes: Investment AB Kinnevik: 36.5%, European Founders Found: 17%, Anders Holch Povlsen: 10%.

4

Zalando is well

capitalized:

Net cash position

>€350m at the end

of 2013

Page 22: Zalando Overview 2014

21

We want to provide the best online fashion experience

Customer want more

Innovate the customer experience

Win in all contexts

Thinking in usage situations

Strategic brand partnerships

Storytelling, Smart Data, etc.

Desktop

during the day

Tablet

in the evening

Smartphone

in the morning

Advice and inspiration

Process innovations

Social shopping experience

Relevant recommendations

Page 23: Zalando Overview 2014

22

Disclaimer

This presentation and its contents may not, in whole or in part, be reproduced, redistributed,

published or passed on to any other person by the recipient.

The information in this presentation has not been independently verified. No representation

or warranty, express or implied, is made as to the accuracy or completeness of the

presentation and the information contained herein and no reliance should be placed on such

information. No responsibility is accepted for any liability for any loss howsoever arising,

directly or indirectly, from this presentation or its contents.