It has been a tough year for many retailers in Europe, but those able to provide a compelling e-commerce experience to the legions of bored and frustrated homeworkers have stood out as clear winners.
Berlin-based Zalando is one of those that is destined for a podium finish, with the online fashion retailer on course to grow its revenue by more than 20% in 2020, following “exceptionally strong” trading during the third quarter.
In order to support this growth, the company announced this week that it had selected AWS as its “preferred cloud partner,” and that it would run all of its machine learning workloads in the vendor’s public cloud.
The move represents an expansion of an existing relationship between the two companies that dates back several years. Zalando already uses a broad spread of AWS services, including analytics, compute, database, networking, serverless and storage. The two companies stated that the focus of the expanded pact will be to help Zalando become a more data-driven organization, optimizing areas such as supply chain management, pricing, marketing and customer care.
The move comes at an interesting time for Zalando, which despite its success, is making a major strategic shift after its experience during the first period of widespread lockdown.
Like many retailers, it simply wasn’t prepared for the surge in demand, and it is now pivoting its business from a traditional wholesale approach to a platform model, where it enables direct-to-consumer sales by fashion brands including Adidas, Benetton and Nike, and handles order fulfilment.
Zalando finance chief David Schroder has said that under the wholesale model, it had to source inventory by as much as a year in advance. This platform approach is one adopted by another of the year’s major retail success stories, high-end fashion specialist Farfetch, which recorded an 87% increase in profitability and a 74% surge in revenue during its most recent quarter.
Zalando is a really interesting account for AWS in Germany, as it started small via the conventional route of cloud infrastructure, but is now running a complex SAP landscape on AWS, that is highly integrated with dozens of AWS’ cloud native services. PAC has explored its journey in a recent White Paper.