How Zalando wants to reimagine fashion by selling eCommerce infrastructure

Zalando is in the middle of changing its business to provide eCommerce infrastructure to retailers.

The successful eCommerce platform decided at the beginning of 2015 to add infrastructure and systems services to its skillset and in doing so has to increase its software developers from 500 to over 2,000.

"Zalando wants to provide an operating system for the entire fashion world. Everybody needs fashion every single day. Over the next ten years, I'm not sure if we will still have a car or a mobile phone, but I'm pretty sure you won't be naked," said Robert Gentz, co-founder, Zalando.

Speaking at the Wired Retail event in London this week, Gentz described how a trip to China caused the e-tailer to rethink its business to become a fashion-technology company. He described how in the Chinese retail market, both online and offline shopping is deeply connected and 90% of online orders are fulfilled on the same day. He also explained how retailers use WeChat to become a customer's personal stylist by suggesting fashion items they might like to buy.

Seven-year-old e-tailer Zalando is now active in 50 countries and boasts €3 billion in revenues and 16 million customers, while being one of the biggest employers in Berlin with a 9,000-strong workforce. Late last year, the company floated on the German Stock Exchange in one of the biggest technology IPOs in decades.

"After the hangover of the IPO, the next day we started to think about the tough questions – what is happening around Europe and what can we learn from China?"

Gentz said Zalando realised Europe needed to improve its retail ecosystem. "If the brands are connected to the consumers and the retailers are connected to the logistic networks – if all these things are connected, the ecosystem can deliver far better experiences."

He used a photo of Pharrell Williams wearing a yellow pair of sneakers posted onto Instagram as an example of how the ecosystem might work; explaining that Zalando's visual recognition software and team of stylists would identify the shoe upon a consumer's request, then offer various colours and reserve the item in store for customer pick-up, or offer courier delivery.

This overarching ecosystem would require all the different retail elements including local inventory, last mile delivery, visual recognition, stylists and POS systems to be plugged into a centralised piece of software, which Zalando has the ambition of providing, in a similar move to Ocado, which is in the process of securing a deal to provide its grocery eCommerce services internationally.

Gentz said Zalando is piloting various efforts in Berlin, including three hour delivery and a stylist platform which uses Whatsapp and telephone calls to connect with customers and send outfits, if the consumer keeps the items, the stylist gets a commission.  

In order to get the technology up to scratch, the e-tailer has had to change its internal ways of working to attract the additional engineers it requires. Zalando currently has 1,000, but hopes to increase this number to 1,800 by the end of 2016.

Gentz called its new way of working 'radical agility', which is based on lean working and small teams working on autonomous development. The engineers also use open platforms which allows them to use whatever tools they need to get the job done swiftly.

"We trust the engineers to make the right judgement calls," he said, noting Zalando used to receive around 200 engineer applications a month, and is now receiving 1,000.

"Our ultimate goal is to match people with fashion and go through all the friction to improve and make this fashion sector so much more efficient, both for consumers and businesses," added Gentz.