Zalando Enters Beauty
The company is launching beauty in Germany today, following the soft online launch, with a boutique opening in Berlin in June.
BERLIN — Zalando intends to get physical when it comes to beauty.
The Berlin-based e-tail giant and Europe’s leading online fashion platform moved into the beauty category today with a soft launch of Zalando Beauty online in Germany. The accompanying campaign on the Zalando shop site, as well as its newsletters, online marketing vehicles, social media plus an own beauty Instagram channel, will go live on Monday. However, stepping outside its usual strategy, Zalando also plans to open a dedicated beauty concept store on Weinmeisterstrasse in Berlin Mitte in June.
The Zalando Beauty offensive is starting with more than 120 brands and more than 4,000 products in a women’s assortment covering color cosmetics, skin and body care, fragrances, hair care, tools and accessories. However, this is just the beginning, according to Claudia Reth, vice president of Category Beauty. “Many more are going to be launched in the next months, and we’re working with or are in talks with all the major groups. But there are so many
more beauty brands than fashion — and more and more are popping up every week, especially in the U.S. and Asia,” she said.
The assortment is anything but basic, with a price range that goes from high to low, premium to fast-fashion beauty. “It really mirrors our fashion proposition,” she noted. Mass market contenders include L’Oréal Paris, Maybelline and Essie; trendy labels 3INA and Lixir Skin; premium names such as Ellis Faas, Sachajuan, Goutal and Rodial; science-driven skin- care brands Dr. Dennis Gross, Peter Thomas Roth and Perricone MD; natural makers Weleda, Pai, Stop the Water, Fine and Bybi; South Korean brand Missha, Dr. G, It’s Skin and Nügg, the latter a Zalando German exclusive, as is Hylamide, and Haute Custom Beauty.
“Our approach to beauty is about completing the look,” Reth said. With Zalando now combining fashion and beauty in one destination, leading to a new beauty-inclusive breed of “Shop the Looks,” the most natural emphasis falls on color cosmetics. “But also skin care,” she quickly added. “Our customer is trend-oriented, and there are so many exciting things happening with Korean brands, natural organic lines, ath-leisure beauty.”
The Zalando buying team determines which products are featured, and own beauty brands are not on the agenda at present. Moreover, in line with its fashion approach, Reth said the aim is for 10 percent to 20 percent of the assortment to be local.
Men will be invited to get into the Zalando beauty act come fall, with the focus on grooming, skin care and then fragrance in the run-up to Christmas. Thereafter, step by step in the first half of 2019, she said Zalando will start rolling out Zalando Beauty to other markets in its current 15 European country network.
As is the company’s wont when venturing into new categories or territory, Zalando executives have not specified financial goals in relation to beauty. Now entering its tenth year, Zalando broke the 4 billion euro sales barrier in 2017 and is looking to hit 5 billion euros in 2018.
According to cochief executive officer Rubin Ritter, Zalando currently has a 1.3 percent share of the European fashion industry and, in the long-term, is looking to grow this to 5 percent.
“The beauty market is a sizeable opportunity for us, with attractive market trends that enable us to leverage our strengths in technology and logistics, and our understanding of brands and customers,” he said.
Talking to analysts last month about the company’s entrance into beauty, he said he expects “a period of important optimization and learning will follow… For 2018, I expect a smooth launch and enthusiastic adoption by our customers.”
As for the size of Zalando’s potential slice of the beauty pie, Reth said the total Western European market for beauty and personal care products is 83 billion euros, “but the online share is roughly 5 percent,” she pointed out. “It is a totally under-explored market.”
Not that Zalando hasn’t ventured into beauty before. The first attempt in 2010 to 2014 flopped, but always a start-up at heart, Zalando firmly adheres to the learning through failing philosophy. So what went wrong?
“Back then, the company didn’t have a focus on beauty, and we weren’t ready logistically,” Reth responded. “We first wanted to get the basics right for our fashion business. You need a separate space in the warehouse, different ventilation, different contracts with carriers to cover things like flammable goods.
And we didn’t get support on the digital experience end. For customers to choose the right product, you need filters to deal with what kind of skin, what kind of hair, what kind of problems a customer has.”
These aspects have been or are in the process of being dealt with. Reth pointed to the challenges of replicating online the sampling and testing aspect of the traditional beauty retail experience, and said Zalando will start adding samples to targeted customers’ fashion shipments, and consumers will also be able to pick samples at checkout. The site’s beauty products have descriptions, unlike the fashion assortment, and she added much work has been put into tagging the product with the right attributes.
Nonetheless, there’s still a learning curve, which is where the Zalando Beauty Station concept store kicks in. The store, which will be about 1,700 square feet, will offer a selection of beauty products, services such as a nail bar and express makeup. The space will also be used for brand presentations, special pop-ups, collaborations, exclusive launches and tutorials.
The store is “also a marketing tool, a way to create content and engage customers, and we’ll be trying out digital features we could then possibly integrate online,” Reth said. One example: a skin recognition tool or mirror that identifies skin type and color, and recommends appropriate products, or mirrors that really measure improvements on skin.
“At the moment, this German launch is about getting the basics right: logistic processes, the right product descriptions, translating sampling, testing and advice to the online experience, and also understanding what our customer needs with beauty and how to leverage our cross-selling potential,” she stated.
As for what Zalando brings to the table, with 23 million active customers and more than 200 million visits a month, “we have the reach and the customer base. And we believe we have exactly the right base for beauty,” she concluded.