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17 facts you might not know about Zalora Malaysia

September 09, 2015 Adrian Oh Category : , , , , , ,



[UPDATED 9th Oct 2015] - Giulio Xiloyannis, Zalora Malaysia Managing Director emailed us to dispute and clarify the 17 points about Zalora Malaysia as shared by Firdaus Yasin. We put up his unedited reply to each point as it is.

What's up with Zalora lately? Zalora has been a bit quiet (in relative), as compared to their sister company - Lazada! One of the latest news is that they are re-entering Taiwan market.

As most of you might know, Zalora mainly operates on 2 models at the moment. Firstly, the "B2C model" where Zalora will directly source and buy products from the brands (it could be buy-off, consignment or drop-ship). Another model is the marketplace model, where merchants register and upload products by themselves, Zalora will take a commission for every sales transacted.

Here, we breakdown to 17 facts you might not know about Zalora Malaysia, a piece summarized and translated from the sharing by Firdaus Yasin (we thank him for the permission to share with our readers).

#1. Zalora is yet to break-even


Zalora Malaysia has been operating for 3 years now, but it has yet to break-even as they claim that the local market is not matured enough. Zalora welcomes more competitions as this could help accelarate e-commerce uptake among local consumers.

ZALORA’s quarterly and half-year financials are a matter of public knowledge. Our financial performance is transparent as recorded in Rocket Internet’s annual report and is readily available. It reflects both the group’s growth curve as its financials. We have a clear path to profitability that will be reached as our e-commerce platform reaches scale.

#2. 90-days shelf life, everything must go


Zalora set a SOP (Standard Operating Procedure) that every single product on the shelves has to be turned over in 90 days. Promotions will be triggered if there is still huge stock balance left after 60 days, pass 90 days will trigger big clearance promotions (clear the rack, turn it into cash).

ZALORA does not adopt a simple 90 day shelf life approach, since we work with a multitude of local and international brands and respect their pricing and discounting policies we adopt a different shelf life and discounting strategy for each of our partner brands based on their internal decisions. This is the only way to ensure a win-win situation between the brands that we work with and ourselves.

#3. How product validation is being done at Zalora?


If any product can be sold more than 35% of its inventory level within the first 30 days, it is considered "Sellable", production will be increased to push for more sales. Anything below 35% they will find out the reason behind and try rectifying it. If the revised sales plan still doesn't work, then they will do stock clearance and stop production immediately (they did not specify whether this approach is for all, or for self-produced brands only).

As mentioned above, pricing and discounting decisions are taken hand in hand with our brand partners, discounting never as simple as stated above, they change brand by brand and product by product based on decisions taken together with the brands.

#4. It is about market share for now


In the 2 hours talk, Zalora always talk about "customer acquisition" and rarely mention sales. It appears that they emphasize on number of customers instead of sales (think market share).

Saying that ZALORA focuses merely on customer acquisition is way too simplistic again, we are a growing company and we are very aware that this is a combination of a lot of factors that we constantly work on improving. Part of that is customer acquisition, but an ever greater one is our focus on our current customer base, giving them a faster shipping service, better pricing, more products, the best customer service experience and so on, fighting to improve on each and every one of these points every day. By innovating and constantly improving, ZALORA remains to be at the forefront of fashion e-commerce in the region.

#5. Customer base grows 200% YoY


Even without breaking even, Zalora declares its customer base growth is 200% yearly.

ZALORA’s quarterly and half-year financials are a matter of public knowledge.Information on our yearly performance is readily available. Depicting both the group’s growth curve as its financials.

#6. Exploring offline marketing


Zalora think they have pushed their Facebook and Google advertising to the limit. While maintaining the same marketing budget, they have noticed that their advertising effectiveness in bringing new customers declining.

For offline presence, they are still exploring their options gradually. For example, they might be doing fashion show, having booth at the centre court of a big shopping mall or even having their own outlet (like the one in Singapore).

On offline marketing, they are actively partnering with companies like Samsung, 7-Eleven etc in giving away coupons to acquire new customers.

Zalora cash voucher

As every retailer nowadays we believe in an omni-channel approach to our marketing and sales strategy, we bring the online experience offline with our pop-up stores and our outlet in the Mitsui Outlet Park while at the same time constantly improving the speed and shopping experience of our website and mobile app.

#7. More profitable private label


Zalora produces own private label / brand (like EZRA, ZALORA) which provides better margin. They are produced in in China, Vietnam and a few other countries.

Read also: Will eCommerce players introduce private labels?

Yes we do have our own private labels, Zalia was presented at last year’s KLFW and at this year’s SGFW. We just presented the latest collection from our eponymous label, ZALORA at this year’s KLFW.

#8. What items are sellable at Zalora?


The best sellers at Zalora are mostly international brands. Most of the products are bought wholesale and kept in their warehouse in Shah Alam, Selangor.

Photo credit: Lipstiq

The top brands list changes across the year and country by country, depending on seasonality, success of the individual brand’s new collection, local festivities and more, pinning it down to a generic “international brands” would be simplistic. As the region’s online fashion destination, we strive to regularly add more exciting brands to our assortment so that consumers can have more choices on the brands and fashion style they want.

#9. Which area generates the most sales?


33% of total sales in Zalora is coming from Klang Valley.

Our sales are quite spread out across the country, often reflecting the actual population concentrations.

#10. Is private label sellable?


Private labels are selling fast as they tend to create products which look similar to branded products.

I doubt this was ever said. ZALORA’s private labels and designer collaborations were showcased in more than one fashion week across the South East Asian region, see below as an example ZALORA’s exclusive Malaysian designer Fizi Woo and ZALORA’s in house brand Zalia showcased in Singapore’s Fashion Week 2015: http://wardrobetrendsfashion.com/2015-singapore-fashion-week-zalora-fiziwoo-zalia/ ZALORA also has an in-house design team that creates the designs for the ZALORA label from the clothes to the accessories and shoes. We also have a print designer who produces unique prints for the ZALORA clothes – you can find this unique prints in the Lunar New Year and Zalia collections.

#11. How much traffic does Zalora have?


According to Zalora, there are 3.5 million unique visitors to Zalora every month.

As our investors are publicly listed companies, we do not release our official traffic figures if not through our investor annual reports.

#12. What is the average time spent on Zalora?


It's 8 minutes average time on site, which is considered one of the longest in comparison to other e-commerce sites.

As our investors are publicly listed companies, we do not release our official traffic figures if not through our investor annual reports.

#13. When is the best sales season?


For Zalora (or most of the e-commerce sites), they enjoy highest sales during festive seasons.

I believe this would be the same answer for every fashion retailer, of course sales seasons and festive seasons are the hottest months of the year in the fashion arena, both in terms of price changes as well as in terms of the releases of new collections, particularly during the Raya period with the release of our yearly Zalia collection and during Lunar New Year with the release of our ZALORA Lunar New Year collections.

#14. What are the online shopping peak hours?


Malaysians shop from Zalora (or generally online) most within 9am to 4pm which is during working hours.

We see shopping trends changing rapidly, particularly with the advent of mobile sales and app usage, the above is incorrect as people are now can shop anytime and anywhere through the ZALORA app.

Read also: Understanding online shoppers in Malaysia (eCommerce Infographic)

#15. Telephone sales is on the rise


30% of total orders are being made via phone calls, and this is on the upward trend.

The above is incorrect, ZALORA does not encourage phone orders, rather we leverage on our ZALORA app usage, More consumers are now turning into mobile consumers and with a ZALORA app on their 1q2mobile, it’s like having the whole fashion store in your pocket, with access to our brands 24/7. We continuously improved user experience with our app and believe me, it’s a great (and convenient) shopping experience through our apps ;)

#16. When does Zalora run promotions?


Usually, Zalora run promotions during specific time, mostly on weekends, public holiday or during afternoon hours.

We align our sales seasons with those of the brands that we work with so it would be very difficult to pin down a specific time or day for promotions as these change rather radically from brand to brand and category to category.

#17. What is the buyers demographic of Zalora?


As you would have expected, it is 70% female and 30% male.

We keep bringing more brands and more added services to our customers and potential customers, the above split is never stable but it always depends on what it the latest brand launched or new service (same day shipping or COD etc) offered.

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