How to Build a Marketplace Like Zalando

The online fashion industry has grown significantly due to customers’ increasing demand for the latest fashion trends, the low cost of fast fashion manufacturing, and the increasing purchasing power of youth. According to a recent report by Statista, the market size of the global eCommerce fashion industry will reach $1.2 trillion by 2027 from $821 billion in 2023. One of the key players riding this wave of eCommerce fashion is Zalando, which is gaining traction amongst the youth. 

What is Zalando?

Zalando is one of the leading lifestyle and fashion eCommerce marketplaces in Europe. It provides a wide range of products catering to audiences of all age groups. Through its partnership program, Zalando offers a platform for local stores to sell their products to its large customer base. It has also partnered with renowned fashion brands like Adidas, Puma, Ray-Ban, and more, providing customers with the convenience of shopping from these popular brands via a single platform.

Reasons Behind Zalando’s Popularity

Zalando always focuses on its customers’ requirements and tries to enhance their shopping experience. It also helps its partner brands and sellers to expand their customer base. Due to these approaches, Zalando gained immense popularity and currently has over 50 million active customers. Let us see how it achieved this:-

1. Wide Range of Products – Zalando offers a wide variety of products from brands under a single platform. It collaborates with luxury brands as well as emerging designers to cater to the needs of all its customers. This makes Zalando an ideal place for all the fashion enthusiasts. 

2. Ecosystem Development – One of the best strategies to retain customers is to develop an ecosystem around your core product. Zalando followed this strategy and built an ecosystem around its marketplace platform. Apart from its main platform, it has “Zalando Lounge”, an online outlet that offers frequent discounts to its registered members. 

3. Marketing Assistance – In order to assist its partner brands and sellers in achieving their various marketing objectives, Zalando has launched “Zalando Marketing Services”, a platform to help fashion brands in marketing-related activities. 

4. Logistics Network – To ensure quick and effective delivery to its customers, Zalando has created a well-connected logistics network that spreads across the entire Europe. Zalando also allows brick-and-mortar fashion stores to register on its “Connected Retail” platform and ship their products through its distribution network without enrolling in the partner program. 

How Does Zalando Make Money?

While building a successful marketplace like Zalando, you must incorporate different revenue streams to keep your platform up and running. Let us understand what income streams it uses to generate revenue:-

1. Retailing – The first source of income for Zalando is retailing. Zalando purchases huge quantities of products from famous brands at a lower cost than the market price. Then it sells those products through its website at a higher price, generating profit from each sale. 

2. Product Commisions – Zalando also provides a platform for other brands and sellers to sell their products directly to Zalando’s customer base. Zalando makes money by deducting its commission from the purchase amount. 

3. Fulfillment Services – For partners that don’t have their own logistics and delivery network, Zalando offers fulfillment services at an additional cost. It ships the products on the partners’ behalf and charges a certain amount for each delivery. 

4. Subscription Model – Zalando offers a subscription model for its customers, Zalando Plus, charging € 15 for 1 year of subscription. This subscription comes with additional benefits such as free and fast delivery and priority access to the latest products. 

5. Marketing Solutions – Zalando provides marketing services to other brands via its dedicated marketing platform – Zalando Marketing Services. It has a dedicated marketing team that launches various social media marketing campaigns on the client’s behalf. Zalando also highlights its clients’ products on its website with a sponsored tag. Clients pay a fixed amount to Zalando for its marketing services. 

6. Styling Service – Apart from subscriptions, Zalando also generates recurring revenue through Zalon, its styling service. Every month, Zalon provides customized boxes to its customers, containing one or two outfits handpicked by professional stylists. To receive these boxes, customers must fill out a survey form stating their preferences and pay a styling fee of €9.95. 

Steps To Build A Marketplace Like Zalando

Since we have now analyzed the growth strategy as well as the revenue model of Zalando, let us discuss how you can create your eCommerce fashion marketplace:-

1. Market Research – Before planning to create your eCommerce marketplace like Zalando, you must conduct market research to understand the requirements of the industry as well as any gaps in the market. This can help you to make informed decisions. 

2. Choose a Sub-Niche – The eCommerce fashion industry is quite huge, thus selecting one sub-niche or a combination of a few sub-niches will provide you a competitive edge. Zalando operates in some of the major sub-niches of the eCommerce fashion industry including clothing and apparel, shoes, and jewelry. 

3. Define your USP – Every successful business has some unique selling proposition (USP), that makes it special. Therefore, you must decide what USPs you will offer in your marketplace. Some of the key USPs that Zalando provides are:- 

• Affordable prices
• Convenience and Efficiency
• Large Seller Base
• Intuitive User Interface

4. Identify Essential Features – After choosing the USPs, you must decide on the key features you want to provide in your eCommerce fashion marketplace like Zalando. Some of the important features that can help you streamline your eCommerce are:- 

• Product Catalog
• Reports and Analytics
• Buyer-seller Communication Channel
• Inventory Tracking

5. Launch the Platform – The next step in the process is to build and deploy your eCommerce fashion marketplace. There are two different methods to achieve this:- 

• The Traditional Method – This method involves hiring a team of developers to create the marketplace or outsourcing this task to an eCommerce development company. 
• The Modern Method – Instead of developing your software, you can also purchase an already created software and personalize it according to your needs. This is the most cost-efficient and time-efficient way to launch your marketplace.

How Yo!Kart Can help

Yo!Kart is a multi-vendor eCommerce software created to assist aspiring entrepreneurs launch their successful fashion marketplace like Zalando. Its Intuitive user interface makes it easier for you to manage your eCommerce platform. To help you build a robust marketplace similar to Zalando, Yo!Kart is well equipped with multiple pre-built features and functionalities. Some of the key features of Yo!Kart include:-

• Product Catalog System
• Import/Export Features
• Tax Management
• Inventory Tracking
• Product Reviews & Ratings
• Advanced Search Module
• Behavior Analytics via HotJar
• Invoicing Module

As opposed to other SaaS-based software in the market, Yo!Kart is a self-hosted eCommerce marketplace solution that can be purchased at a one-time cost.  It comes with up to 12 months of free technical support.

Conclusion

The eCommerce fashion marketplace industry has witnessed significant growth in recent years. Zalando has emerged as one of the leading online fashion Marketplaces that is constantly growing. If you want to create a successful eCommerce fashion marketplace like Zalando, you can consider purchasing a scalable eCommerce platform solution to save your valuable time and money.