BERLIN (Reuters) – Online fashion retailer Zalando (ZALG.DE) has launched a pilot to deliver orders placed by customers in Paris on the website of Adidas (ADSGn.DE) as it extends moves to allow brands to use the logistics network it has built for its own ecommerce business.
An employee places parcels of online mail order company Zalando on a conveyor at the parcel distribution center of Schweizerische Post (Swiss Post) in Frauenfeld, Switzerland, June 3, 2019. REUTERS/Arnd Wiegmann/
The pilot is the first time the German firm is delivering goods not ordered on its own site and marks an expansion of its platform strategy under which it charges brands a commission to list on its website rather than selling the products itself.
“It is a win-win situation for us,” Jan Bartels, Zalando senior vice president for customer fulfillment, told Reuters. “It increases the density of deliveries if you combine and bundle volumes from different channels.”
Under the pilot, Adidas is storing sneakers at a Zalando warehouse close to Paris and using the Zalando network to deliver orders placed on its site the same or next day.
The scheme comes as Adidas is rapidly expanding ecommerce, seeking to double online sales in two years to 4 billion euros ($4.44 billion) by 2020.
Zalando is not worried that helping brands like Adidas with their own ecommerce operations will draw customers away from its site because it believes most shoppers want to buy a range of brands, Bartels said.
“We are not afraid of cannibalisation. We have a very strong proposition in multibrand retailing,” he said. “We don’t want to become a third party logistics provider. We are still a fashion platform.”
Zalando, Europe’s biggest online-only fashion retailer, is working to counter a squeeze on profitability as it has invested heavily in logistics to speed delivery as Amazon and other players have expanded rapidly in online fashion.
It forecasts that its margins should improve as its “partner program” expands because the sales commission business, and providing logistics and advertising services, is more profitable than its core online retailing operations.
Bartels said offering same-day delivery should increase how often Adidas customers order and push down return rates, a major issue for Zalando given that half of orders are sent back.
“It will help them deepen their relationship with customers,” he said.
Zalando shares jumped earlier this month after it raised its profit guidance following a big jump in visits to its website as it offered more speedy delivery options.
Zalando doubled the number of parcels delivered on the same or next day in Germany, its biggest market, from the previous quarter and said it is testing same-day evening delivery in the Zurich region.
Last month British rival ASOS (ASOS.L) issued its third profit warning since December, saying problems at warehouses in the United States and Germany had restricted product availability, hitting sales and raising costs.
Reporting by Emma Thomasson; Editing by Alexandra Hudson