Zalando is now fending off intense competition from Amazon

In business, imitation means rivalry not flattery. Zalando drew inspiration from Amazon-owned Zappos to become Europe’s top online fashion retailer. It is now fending off intense competition from the US behemoth. Berlin-based Zalando is more vulnerable to Amazon’s expansion of its fashion arm than online rivals Asos or Boohoo, which sell more own-label garments. But for now, the German retailer is holding its own. Zalando’s 10 per cent share of Europe’s online fashion market is two points ahead of Amazon’s. It is on track to grow its sales by between a fifth and a quarter this year, significantly faster than the online fashion market. Zalando’s edge over Amazon might come from its ability to attract top labels through its fast-growing partner programme. That allows brands such as Nike to create their own pages on the Zalando website in return for a commission… Like Amazon, Zalando prioritises expansion over profits. The need to invest in new distribution centres and faster deliveries is hitting operating margins… In the first quarter, Zalando edged into loss as cold weather deterred customers from buying spring clothes. That has not put off investors. Zalando shares rose 3 per cent yesterday. They trade on a multiple of 67 times next year’s earnings, one of the sector’s highest. That rating reflects confidence in Zalando’s ability to grow… While the price tag is high, it is a good fit for growth-oriented investors too.
 
Lex.

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