Starting a marketplace business is: complex, digital, uncomfortable (because new), intangible and you may go through a lot of resistance until the first products are live and sold online through the platform.

In the following we would like to compare the opening of a "normal" retail store with the opening of a marketplace channel. To make it more specific:

What is the difference between opening a 100 m² store in Munich and a new marketplace presence through Zalando's Partner Program for Germany?

It's the same, same but different.

You need the following for both the Retail Store Opening and the Marketplace Opening

Employees

Whether they're setting up your retail store, stocking the products or advising your customers, you need employees right away. This is also the case for the marketplace business. Here, your employees don't put products on shelves and serve customers in the shop, but they have to create all the structures so that the products can go online first of all. They have to set up and integrate data structures, processes and software. Marketplace managers have an incredibly broad range of tasks, especially at the beginning.

Merchandise

In the retail store, you need merchandise that you show to the customer on site so that they can try it on and buy it. In the marketplace business, you need the goods physically in a B2C warehouse to be able to send them to your customers and you need the appropriate online content for it. This means the right images have to be created (they have to be in accordance with the guidelines of the respective marketplace) and all product data should be set up properly. Only then can the goods be presented online.

Equipment

What the shop fittings are in the retail store, i.e. shelves, mannequins, clothes rails etc., the software is in the marketplace business. Software ensures that the goods are visible online.

IT & Software

Without cash register systems nothing works in a retail store and without marketplace software you will never put an article online. IT & software, as different as they are in scope, without them nothing works. And in the marketplace business software is very extensive. You have to deal with different interfaces and providers until you have found the right strategy and the right partner for you.

Marketing

If no one knows that you are opening a retail store, then no one will come to the opening. This is why you will most likely place different ads, distribute flyers or the like. In the marketplace business, too, customers won't know automatically that you are selling via e.g. the Zalando marketplace from now. In order to present yourself online among the wide range of online shops in your category, you can take various online marketing measures to become more visible. In both cases, the more visibility the better.

Conclusion: This is where the marketplace opening scores points

Everything you need to open either a retail store or a marketplace business is different, but similar in many ways. 

For both, it takes about 4-6 months in the best case scenario until you can "open" the business. 

However, the costs differ considerably: for a retail store of 100 m², costs of approx. 100,000-180,000 € arise. The costs for starting a marketplace business, on the other hand, are more manageable: approx. 10,000 - 25,000 € for onboarding, integration of software and other service providers. In addition, you can easily expand the marketplace business to include other marketplaces without high additional costs.  

The difference in customer reach is even greater: if we reach an approximate number of 2 million customers with our retail store in Munich, we can reach 46.3 million customers in Europe through Zalando.

So a retail store opening compared with a marketplace opening are "same, same but different". The conditions are different and yet somehow similar. However, when it comes to the costs and the potential customers you reach, the retail store doesn't stand a chance against the marketplace business.

If you want to learn more about how to make your opening in the marketplace business a success, check out our Marketplace Uni courses .

Request more information or send us a message. We will be happy to help you!

Der Beitrag Marktplatz Opening vs. Retail Store Opening erschien zuerst auf Marketplace Manager Training.

Do you remember the famous Zalando slogan "scream for joy or send it back"? It first hit the screens in 2012 and brought Zalando a lot of attention. In recent years, not only the iconic slogan has changed, but also Zalando and its business model. The company has evolved from being an online shoe seller to being the biggest fashion destination in Europe and step by step from a pure e-commerce retailer to an online marketplace. For the latter, Zalando has developed its Partner Program as well as its Connected Retail Program. Through the Partner Program, you can not only connect your fashion brand directly to the marketplace, but also use additional services such as Zalando Fulfillment Solutions (ZFS) or Zalando Marketing Services (ZMS).

If you sell your brand on Zalando, you are also well positioned internationally, because Zalando is already online in many European countries and is still expanding.

In the following, you will find out in detail what other advantages the Zalando Partner Program has for brands and manufacturers. One thing first: the sooner you start, the sooner you'll be on the winning side with your brand - Europe-wide!

What is the Zalando Partner Program?

Zalando sees itself more and more as an online marketplace and is innovatively planning ahead in this direction. As the first point of contact for everyone interested in fashion, Zalando is already nowadays unbeatable and will become even stronger through new strategies. With its Partner Program, the internet marketplace enables fashion brands to reach their end customers the easiest way possible. This means that not only well-known brands from the fashion industry will benefit, but also new labels. The currently more than 48 million active Zalando customers are a guarantee of success. In addition, there are 23 European markets that Zalando serves up to now. In order to keep a cool head in view of this large reach, Zalando offers you as a brand numerous analysis tools with the help of which you can monitor and continuously optimise your performance on the platform. Last but not least, the Zalando Partner Program gives you control over your pricing at all times, but more on that later.

Difference between Zalando's Partner Program and the Connected Retail Program

While the Zalando Partner Program is aimed directly at you as a brand, Zalando's Connected Retail Program is primarily geared towards fashion retailers. In other words, retailers who also sell your brand to the end customer. That is the biggest difference between the two program types. Both programs are certainly interesting for the fashion sector. Connected Retail, as the name implies, is primarily intended for stationary retailers so that they can connect their shops to Zalando's online marketplace and increase their sales. Although the Connected Retail Program can also be used directly by brands, they always need a retail shop, which not all brands have. In addition, the Zalando Partner Program offers brands and manufacturers another decisive advantage: they can manage their business centrally from one warehouse and do not have to manage different warehouses at the same time. Therefore, the Zalando Partner Program is the better solution for them.

Advantages of working as a brand with Zalando's Partner Program

There are five striking reasons why you, as a brand, should work with the Zalando Partner Program. The large reach and the established structure of the Zalando Partner Program offer you the ideal basis for more sales, marketing and international awareness.

1st advantage: make up for lost turnover from the wholesale sector

Zalando is focusing on expanding its marketplace business and is therefore strengthening its Partner and Connected Retail Program. For example, Zalando wants to double its gross merchandise volume (GMV) to 30 billion Euros by 2025. The share of the platform business in the GMV is expected to grow from currently 32 per cent to 50 per cent during this time.

At the same time Zalando wants to reduce its wholesale business. Therefore, it is better to start with Zalando's Partner Program sooner rather than later. The earlier you join, the further ahead you are of your competitors. But of course that's not the only advantage you get for your brand at Zalando.

2nd advantage: Outstanding brand positioning on Zalando

To present your brand in the best possible way, Zalando supports you using its own concept for success. More than 45 million customers use Zalando internationally in 23 European countries, and the number is growing. With your brand, you are entering a pool of customers who are just waiting to discover something new at Zalando. Right from the start, you will find customers who are active and willing to buy, and you will work together with the biggest fashion player in Europe. Your brand is where your customers are: They don't first have to find their way to you through costly marketing strategies. This not only saves you money, but also an enormous amount of time.

3rd advantage: Keep control over your brands at Zalando

Zalando's Partner Program allows you to be your own boss. You decide which of your products are sold on the marketplace, how you price them and in what way you want to present the products and your brand. You control your marketplace business yourself and thus retain control over your brand positioning. You will most likely find retailers on Zalando who offer your brands. They do not use the Partner Program, but the Connected Retail Program, as mentioned earlier. You cannot influence the retailer presentation of your brand. However, if you are at the forefront of the Zalando Partner Program, you keep control over the products you offer.

In addition, you can also sell products through Zalando's partner program that were not covered by wholesale. For example, you have the possibility to offer long-tail products that were not previously ordered by the Zalando buyers, but could be interesting for your customers.

4th advantage: Determine your own price on the online marketplace

The price sovereignty is entirely in your hands, i.e. you can determine the price at which you sell your items. Of course, you should consider the competition. Especially if other retailers offer products of yours, you want to avoid competing with your own brand. Ultimately, however, it is you who determines the price of your products and on Zalando you can be sure to not be subject to any restrictions or limitations in this regard, as can be the case with other marketplaces.

5th advantage: Usage of Zalando Fulfillment Solutions

To get a clear overview of the benefits of Zalando Fulfillment Solutions, it is important to understand what Zalando Fulfillment Solutions (ZFS) are in the first place. With ZFS, the Zalando logistics network and its services are at your disposal. Whether you want to ensure that your products reach your customers on time or that returns are handled quickly and easily, you want to reduce your logistics costs or internationalise your business, with Zalando Fulfillment Solutions (ZFS), Zalando Shipping Solutions (ZSS) and Zalando Return Solutions (ZRS) you will always find the right solution.

It is entirely up to you whether you want to use all of the services 100%, partially or not at all. Of course, you are also free to use your own logistics to deliver your goods to the end customer. Nevertheless, ZFS offer enormous advantages that turn the original five reasons to join the Zalando Partner Program into eleven beneficial reasons that speak for the marketplace.

Your advantages thanks to Zalando Fulfillment Solutions

#1: Save logistics costs

With ZFS, Zalando has the best price/performance ratio in terms of logistics costs compared to most marketplace logistics providers we have seen so far. The prices are usually better than the prices you get from DHL and Co. as a brand. This is simply due to the large volume that Zalando handles day after day. This also applies to the prices for delivery to other countries. In addition, the pricing is very transparent, as almost all contents are combined in one price. This makes the service easy to compare and the business case easy to calculate.

And the best part of it for you is not only the cost and time savings, but the fact that you can also use it to cover the logistics for other marketplaces if necessary.

In addition, Zalando takes over your B2C logistics, which is especially interesting if you don't yet have B2C logistics yourself and would have to build it up first. Most brands have B2B logistics in place and can easily serve their wholesale partners, but there is a significant difference between sending 100 large shipments per year and sending 100 small packages to end customers every day.

In addition to shipping to the customer, ZFS also handles all customer returns through ZRS and ensures that they are processed properly and to the satisfaction of all parties involved.

#2: Promote sustainability with Zalando Fulfillment Solutions

ZFS are also a benefit for the environment, because the customer's orders are collected and packed into one shipment, so that no more parcels than necessary are sent on the journey to him. This means greater convenience for the customer, because he is served by one carrier and does not have to visit different parcel centres to get his order in case of doubt. The returns system is handled in the same way by Zalando. Both services are not only good for the environment, but also convenient for your customers.

#3: On-time comfort for your customers

Zalando is also very concerned about keeping fast delivery times so that customers can enjoy the full comfort of the online marketplace. That's why Zalando ensures that your brand's products arrive on time and are delivered properly. If you, as a brand, fail to meet the Zalando Guidelines in terms of delivery speed, Zalando will rigorously punish you. In the worst case, the penalty can lead to your products no longer being available on Zalando.

#4: Recognition & visibility

As a result of ZFS, your product is more likely to win the Buy Box on Zalando, which makes it stand out yet again. In other words, your product will be displayed in a prioritised way on Zalando, especially if there are multiple sellers of the same product. The functionality is similar to Amazon's Prime Badge. This increased visibility puts your product in the customer's focus more quickly and makes it more likely to be bought.

#5: Easy internationalisation

As of October 2022, ZFS makes it possible for you to have your brand's products delivered to 17 countries without any problems. Zalando has already connected all relevant carriers per country to its platform. This means you don't have to deal with contract negotiations and technical interface development yourself.

Moreover, this way you can test markets such as Switzerland or Norway. These are countries that are either not part of the European Union or have high customs duties. Please note that you may have to take into account additional costs when trying out these countries. Still, it is a great way to test an expansion for your brand without taking any risks.

#6: Sale - sell-off via Zalando

Zalando Fulfillment Solutions also offer you the opportunity to automatically participate in the Zalando Lounge program. This is an exclusive and closed Zalando shopping club where customers can purchase products at reduced prices and thus also buy your brand at a discount. If, for example, you were not able to sell your assortment for the season, it will automatically be moved to Zalando Lounge and offered there at a discount, if you wish. In this way, you limit the amount of old stock in the ZFS warehouse and have an easy way to re-market your items without having to relocate them. By doing so, the risk of having to dispose of old stock is reduced.

By the way, ...

... if the above-mentioned advantages have not convinced you of ZFS, perhaps this one will: From our expert network we know that it is necessary to reduce the price of one's products by about 5 per cent in order to win the Buy Box if one does not use ZFS.

Conclusion: The best opportunities with Zalando

Convinced? The Zalando Partner Program coupled with ZFS offers you as a fashion brand the great opportunity to sell more profitably by increasing your sales and reducing your cost. In addition, Zalando enables you to expand the awareness of your brand. Get started now and your brand will benefit over-proportionally. The advantages are obvious. So don't waste any time. If you don't know HOW to get started or are unsure about the specific steps to take, our Marketplace Uni courses will help you. Here you will learn everything you need to know to successfully join the Zalando Partner Program or various other marketplaces to boost your sales.

Der Beitrag Zalando Partnerprogramm: 5 Gründe als Marke jetzt damit zu starten erschien zuerst auf Marketplace Manager Training.

"We don't want to sell online because we want to protect our brick-and-mortar retailers." I've heard this sentence over and over again in the last 9 years since I started selling online. However, I hear it less and less in the fashion industry. But just look at another industry and we're back to the same starting point. It seems that only the fashion industry started a process of change towards online marketplaces for fashion a few years ago. I would say that this is a brave attitude, considering that we are talking about brick-and-mortar retailers. And have you ever thought about what's best for your end customer? I mean, after all, they are buying your products. Can the end customer get your products where they prefer and where they normally shop?

I would like to share my knowledge from the last 9 years in online sales with you. In a "real, in-depth conversation" about exactly this topic and at the same time give you more insights and expertise along the way. I have seen all the sites Amazon internally, the brand sites internally and the own online shops externally and now have this 360 degree view. I have also noticed that online sales no longer pose such big questions. It's now more about the business with online marketplaces, which always poses difficulties for brands because there is a huge lack of knowledge here. Why? Because it's a relatively new topic and also complex.

"The question with online sales is no longer "if", but rather "when and how?". Especially when it comes to online marketplaces."

So it's time to take a brief look at the world of online fashion marketplaces.

Two options for online sales channels with online shops such as Amazon, Zalando & Co.

Online marketplaces for fashion are different sales channels for brands and retailers to sell their products online via large online shops, e.g. Amazon. There is the wholesale business, which is still a B2B business. You have a buyer who pre-orders your items and sells them on behalf of the online shop. At Amazon this is called Amazon Vendors, for Zalando it is the normal wholesale business.

In addition to wholesale, you can also sell your products as a brand via the marketplace itself - you use the online shop for this. You have to stock the product yourself and sell it via the online shop, e.g. as a seller on Amazon, and also send it to your end customer. The good thing for you as a brand is that you can decide where you want to sell your products and at what retail price. If you sell via the wholesale business, the online shop itself decides on the retail price and sells your products.

In Germany and Europe, there are several online marketplaces for fashion, which are also known as partner programmes of online shops such as Amazon, Zalando, About you, Otto, Klingel, Ebay, Sportscheck, Mytoys, Limango, Mirapodo, Galeria, La Redoute, Douglas, BOL and Allegro and many more. This small selection focuses mainly on fashion and lifestyle products.

What online marketplaces for fashion tell us about future growth

Marketplaces have become growth engines for large online shops. Zalando therefore declared in its 2019 annual report that it would increase its GMV share of the partner programme (marketplace) from 10% in 2018 to 40% in 2023/24, and to 50% in the long term. In 2019, they already increased the share of their 2019 annual report from 10% to 15% and in 2020 even to 24%. According to estimates, Amazon's sellers already generated 60% of total sales in 2019. These examples show that sales via online marketplaces for fashion will become significant in the near future.

"Marketplaces where you can sell all the products you want, depending on your selection"

I would like to use the graphic above to explain a case study in more detail. You are a retail brand that already sells its products via the wholesale buyer on Zalando (marked in dark blue).

 

• Your wholesale buyer orders 12 of your 20 bestselling models -> marked dark blue
• You add your 20 bestsellers via the marketplace / affiliate programme and sell them yourself 

• • • 8 out of 20 bestsellers that have not yet been ordered are now available at Zalando -> marked green
    • 12 of your 20 bestsellers were ordered via wholesale and you also sell them as soon as they are no longer in stock at Zalando due to high demand, lack of repeat orders or off-season -> marked light blue

This hybrid model offers you the opportunity to generate additional sales through items that have not yet been ordered wholesale or are out of stock. This gives you the opportunity to expand your online sales business by selling your products via the marketplace model.

The past has already shown that sales via the partner programme and the wholesale business benefit from each other. It helps you as a brand to sell new categories and styles that the wholesale buyer didn't want or misjudged in terms of demand for the pieces ordered. In my experience, you can usually achieve a market turnover of at least +10% if you are already selling a large selection of your range through wholesale. I have also seen market growth rates of +30% within 3 months of selling an additional category through the market. This was a test case for the buyer and afterwards they started to order this category in wholesale as well. If you still want to sell your products via wholesale and you are already selling via a marketplace at the same time, this is slightly different. In my experience, wholesale and marketplace benefit from each other.

Not all marketplaces are the same - two ways to open and close online marketplaces for fashion

Not all marketplaces are the same. Within the marketplaces there are differences in how they are set up.

Open marketplaces are open to everything and everyone

Open marketplaces are those that are open to any product without restrictions or pre-selection. This means that anyone can sell anything on these marketplaces. Amazon is a pretty good example here. There are many offers from all over the world, especially from Asia. At the same time, a single product (with the same EAN code) can be offered by multiple sellers. This leads to price competition for the same product. At the same time, you have no barriers to entry, so you can theoretically start selling tomorrow. You don't even have to have a well-known brand. On these online marketplaces for fashion, you can easily enter the market and start your business. Good examples of open marketplaces are Amazon, ebay, BOL (NL) and Real/Kaufland.

Closed marketplaces are more exclusive and less competitive

Closed marketplaces are subject to restrictions and are more exclusive. You need a sales permit to sell your products on these online fashion marketplaces for each brand from the marketplace teams or buyers. After this one-time permission, you are allowed to sell all products of your brand on these marketplaces. You can decide which product you sell. Not "everyone" sells there, so you can have a good brand experience. At the same time, there is also less competition, as only one EAN is (usually) offered by one seller at a time. This means that your recommended retail price is also more stable compared to open marketplaces. The barrier to entry for fashion is also slightly higher than when selling via open marketplaces. Good examples of closed online marketplaces for fashion are Zalando, About you, Klingel, Sportscheck, Mytoys and Mirapodo.

Which online fashion marketplaces are better for my brand?

This depends a lot on your brand, products, prices and strategy. I have already started the fashion marketplace business with several brands and opened this business with a well-known underwear brand. With this underwear brand, we had several challenges in terms of marketplace business. We were already a wholesale partner of all major online shops and now we wanted to start with the marketplace. We wanted to expand our selection and be our own backup when the products are out of stock.

 

• The number one challenge was our logistics headquarters in Hungary, which focussed mainly on B2B orders.
• Challenge number two was a lack of capacity in the e-commerce team.

 

It took us a long time to get an overview of the market. I was the only person responsible for the online business in Sales (without our own online shop). We made several decisions:

 

• Initially with online marketplaces for fashion at Amazon, Zalando, About you, Klingel and Otto, where we also had permission to sell our brand.
• We do not want and cannot ship B2C from Eastern Europe and we need a partner who can do this for us in Germany with a consignment stock
• We need a full-service partner who manages the main processes to save our team capacity and who is an expert in the marketplace business

 

Once we had made these decisions and selected a full-service partner, we launched on all five marketplaces four months later and increased online sales for our brand. We benefited from the mix of wholesale and marketplace business. On the one hand, this gave us the opportunity to expand our selection, secure our own stock and increase sales. I would recommend starting on a marketplace soon, as this is an important sales channel in the near future.

Do you need help setting up your marketplace business?

We from the Marketplace Uni are specialised in the marketplace business and offer various marketplace courses depending on the current state of development. In these courses, we teach you and your team in a practical way what you need to do to sell successfully on Europe's most interesting online marketplaces and thus increase your turnover. To the current Course overview.

Der Beitrag Online Marktplätze für Mode: Auf was du als Marke achten solltest erschien zuerst auf Marketplace Manager Training.