Zalando: try first, pay later

Zalando
09 Jan 2019

Zalando, the online fashion platform with 25 million active customers across Europe, is offering its Italian customers new payment methods.

The German company (€4.5 billion revenue in 2017) is focusing on its pay later services. If “how to pay” has become one of the musts of digital commerce, then “when to pay” could represent a serious competitive advantage.

Personalised purchasing

The goal is clear for Zalando: an ever-bigger online store where the purchase journey is personalised in three stages. Select your items, choose your preferred delivery method, and pay after you have tried on the clothes at home. Customers can receive their ordered items, try them on and only pay for what they like.

Zalando is the first merchant to offer this final step in Italy. Lorenzo Pretti, manager for Southern Europe, is clear, “We’re excited about offering Italian consumers a level of convenience like they have never experienced before.”

Precedents

The pay later service is nothing new for Europe. This payment option has already been very well received in France, where it was introduced two years ago. Consequently approximately a third of customers in France now use this method of payment regularly.

Furthermore, there is the precedent set by the Swedish bank Klarna, which has offered the same formula for more or less six years. But Klarna acts as an intermediary between the seller and consumer, whereas Zalando is in direct contact with the customer.

Options

The available options are credit card (Visa or Mastercard) and bank transfer, designed for consumers who are still wary of digital transactions.

The first option enables customers to order and try on items and return the ones they do not want within two to five working days. They are billed within the following two weeks only for the items that they kept (there is no charge if the entire order is returned).

The second option is to pay for the order by bank transfer within eighteen days from the date of dispatch.

Competition

This means that customer services set the new bar even more markedly for competition in global retail.

According to a survey by Boston Consulting for Zalando, 25% of purchases will be completed online in 2020. And those which stand to benefit most are the ecommerce platforms, such as Zalando.

The explicit goal of Rubin Ritter, CEO of the company, is to quickly reach ten billion euros in turnover, more than double the current volume.