Zalando tests free same-day delivery from Adidas store

BERLIN (Reuters) – Europe’s largest online fashion retailer, Zalando, facing growing threat from rival Amazon moving into its territory, has teamed up with Adidas to offer free same-day deliveries since one of its sports shops.

A Zalando label can be found on a garment in a showroom of the fashion retailer Zalando in Berlin, October 14, 2014. REUTERS / Hannibal Hanschke / File Photo

Berlin-based Zalando, which sells 1,500 fashion brands from warehouse stock, says the project will improve delivery speed and product availability and hopefully increase profits, just as Amazon is investing in its ever more convenient clothing labels and delivery options.

“Generation Y wants to have it on demand. They don’t want to wait. They don’t want to go to the store, ”Harm Ohlmeyer, head of digital commerce at Adidas, told Reuters in an interview.

“We must not forget about Amazon. They invest a lot … We can wait and see or we can act on it.

Zalando’s pilot project with Adidas in Berlin will make it the first major dedicated online retailer to tap into the inventory held in the brands own stores.

Supermarkets have struggled to make a profit by filling online orders from store shelves without charging extra for this convenience, although food delivery is much more expensive than clothes, especially if refrigerated. or frozen.

Zalando says the new service will initially be free. He did not disclose the cost of the pilot, but said he plans to invest € 200 million ($ 228 million) this year in technology and logistics.

Board member David Schneider believes that linking store stock to that held in warehouses will ultimately make the system more efficient.

“If you have a customer in Berlin and an item is still available in Hamburg, why not ship it from there rather than leaving the customer without the item? He told Reuters.

“The more the network grows, the more interesting it becomes from an economic point of view.”

British start-up Farfetch offers premium clothing from luxury brands and independent stores around the world, but Zalando’s free same-day delivery goes even further.

Zalando said, for example, that football fans ordering a jersey before 3 p.m., for Germany’s European Championship game against Poland next Thursday, could have it delivered from the Adidas store in time for the kickoff. ‘dispatch at 9 p.m.

BIGGER NETWORK, BETTER ECONOMY?

Zalando hopes to expand the trial to other stores in the future.

“The benefits are better inventory, better visibility and better management across the channel, which in theory should reduce working capital requirements for the entire system and increase selling at full price,” Jamie said. Merriman, analyst at Bernstein.

Zalando says he’s not unduly worried about Amazon as it has more expertise in fashion, but has invested in its technology nonetheless, which has dented its profits and stocks.

Germany is Amazon’s second-largest market outside of the United States.

The benefits for Adidas of partnering with Zalando, Ohlmeyer said, are that it will be able to better cope with peaks in demand. He said some of the company’s own sites are currently overcrowded, with popular items out of stock.

“I know there is enough volume in the market. I just can’t connect it, ”he said. “Sharing or digitizing inventory would make us all more efficient and able to better read actual consumer demand, buy better in the future, and have less clearance. “

A major challenge for Zalando is that many brands lack real-time data on the inventory available in their stores and warehouses, one of the reasons it has partnered with Adidas, which claims to have an inventory accuracy of 97 to 98% in its stores in Europe.

Zalando announced last month the acquisition of Tradebyte Software GmbH to help it digitize inventory in brand warehouses.

Reporting by Emma Thomasson; Editing by Elaine Hardcastle

James T. Quintero