First of all, Zalando's expansion strategy will be monitored from a geographical point of view, i.e. the development of its activities outside Europe. Its presence in emerging markets will undoubtedly be the most important in the coming years.
The diversification of the products marketed by the group will also be an important element for its future growth. We will therefore keep a close eye on this.
Of course, before buying or selling Zalando shares, it will be important to keep a close eye on the company's financial and economic publications, particularly its growth and profitability figures.
Any change in consumer habits could also positively or negatively influence Zalando's share price.
Of course, it will be important to keep a close eye on competition in this sector, both from large groups in direct competition and from local competition, which is proving increasingly threatening.
Zalando's pricing policy is at the heart of its marketing strategy. It goes without saying, therefore, that the slightest change in price will influence its profitability and sales.
Finally, the Zalando Group, like many others, is subject to the regulations and legislation of the countries in which it markets its products. Any change in these regulations could therefore have a significant impact on the evolution of its share price.
We would now like to take a detailed look at Zalando. Before buying or selling Zalando shares, it is essential to understand the company's precise activities and sources of revenue, so that you can better anticipate future challenges. Here is some information you need to know about this group.
Zalando SE is a German company specialising in fashion and online sales. More specifically, Zalando is currently the European leader in online shoe sales, as well as in the online sale of clothing and fashion accessories for men, women and children.
To better understand the company's activities, they can be broken down into different divisions according to the proportion of sales they generate:
According to the financial and economic results published by the group at the end of 2019, Zalando has no fewer than 31 million active customers worldwide.
It is also interesting to know the geographical distribution of the Zalando group's activities. The company generates most of its sales in Germany, Austria and Switzerland, accounting for 45.9% of total sales. The rest of Europe generates 54.1% of its sales.
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The Zalando group is a major player in online sales, more specifically in the field of ready-to-wear and accessories in Europe. It is the European leader in this sector but is facing increasingly tough competition from a few companies operating in the same field.
This is notably the case of the Sarenza online sales site or Spartoo, which operate on an equivalent and almost strictly identical model to that of Zalando.
We must also take into account the giants of online ready-to-wear clothing, 3Suisses and La Redoute, which also overshadow Zalando.
Finally, although it has more diversified activities, including the sale of different ranges of products not found on Zalando, the e-commerce giant Amazon can also be considered as a direct competitor of Zalando.
In 2016, Zalando and his partner, Google, launched a new project called "Project Muze" which is actually an artificial intelligence solution to create a clothing style according to one's personality and thus boost the e-merchant's sales.
In 2017, Zalando has also partnered with Danish fashion company Bestseller to create an online platform for shops to shop for clothing and accessories. Bestseller has sold half of its shares to Zalando, which will invest in the online platform to open up shopping to other fashion retailers. The amount of this exchange is still unknown.
Zalando's positioning in its preferred market, which is the sale of ready-to-wear and online accessories and shoes, is of course an undeniable asset of this company. Indeed, Zalando remains the current leader in this field in terms of sales, despite the recent appearance of several major competitors.
The rapid growth of this company in just a few years is of course also one of the strengths of this group. Zalando has been able to improve its results and significantly increase its turnover for several years in a row. This is of course very reassuring for shareholders and stock market investors.
The Zalando Group's highly diversified brand portfolio is, of course, another of its main assets. Today, the company offers no less than 1500 different brands, which enables it to respond to strong demand and to reach different targets.
The fact that Zalando operates throughout Europe is also an undeniable advantage as it allows it to protect itself against the risks associated with a single geographical sector in the event of a consumer crisis.
Finally, the very structure of this company, which is relatively small compared to those of some of its competitors, notably thanks to 100% online activities, is of course also appreciable as it allows for numerous savings.
Let's find out the major disadvantages of Zalando and its main weaknesses:
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