BERLIN, Germany — German online fashion retailer Zalando stumbled in its breakneck expansion across Europe in the second quarter due to capacity constraints at new warehouses, sending its shares down 7 percent.

Europe's biggest online-only fashion retailer needs to scale up quickly to compete with e-commerce giant Amazon but preliminary quarterly sales growth of 19-21 percent undershot the Berlin-based company's annual target.

In a nod to Amazon's popular Prime service, Zalando on Tuesday announced its own membership scheme. For €19 (£16.76) per year, members will get faster delivery, pick-up of returns on demand and personal fashion advice.

The "Zet" loyalty programme will start in four German cities. Co-chief executive Rubin Ritter said it will then be rolled out to other countries and Zalando hopes to sign up the most active third of its customers.

Zalando has always offered free deliveries and returns and has been trialling free home pick-ups of returns since last year, driven by the belief that this will encourage customers to order more even if higher courier costs might squeeze profits.

The company has said heavy investment would keep its earnings before interest and taxation (EBIT) margin this year to 5-6 percent, below original analyst expectations.

Zalando, founded in 2008, now delivers 2,000 brands in 15 countries and is expanding deliveries from distribution centres in Germany and France. New warehouses in Poland and Sweden are set to come on stream later this year.

Zalando said preliminary second-quarter sales were between €1.091 billion and €1.109 billion, compared with an average analyst forecast of €1.1 billion, according to Thomson Reuters SmartEstimates.

That marks a slowdown from 23 percent growth in the previous quarter and 26 percent in the fourth quarter of 2016 and is below the 20 to 25 percent growth that Zalando aims to reach on an annual basis.

Ritter told Reuters growth in the quarter was also dented by the timing of public holidays and Easter.

Zalando shares, which had already taken a hit last month after Amazon launched its push into fashion, were down 7 percent at 0917 GMT, making them the biggest faller on the European retail index.

Ritter said the company aimed to meet the sales growth target in the full year as a whole.

Britain's ASOS trades at a premium to Zalando as it is seen as better insulated from Amazon as it is more focused on a target audience and sells more own-label clothes. Last week ASOS forecast sales growth for the full 2016-17 year at the upper end of its 30 to 35 percent guided range.

Zalando last month set a target to double in size by 2020 as it announced new partnerships that underline its ambition to shift from just selling clothes and accessories to providing logistics, technology and marketing services to fashion brands.

Ritter said "gross merchandise value", which includes the use of the Zalando site to sell stock owned by others, would become more relevant as a measure of the company's success over time and should grow faster than direct revenue.

Adjusted earnings before interest and taxation (EBIT) were at €80 to 86 million, compared with average analyst forecasts for €85 million, to give a margin of 7.3 to 7.8 percent.

Amazon last month launched a test programme called Prime Wardrobe to allow selected members of its shopping club to order three or more items without paying for them up front, with a week to decide which to keep.

Amazon offers a limited home collection service in Britain but charges for each return. Luxury site Net-a-Porter offers a free home pick up service, but it can more easily absorb courier costs with an average order value of over €300 — five times that at Zalando.

By Emma Thomasson; editors: Tom Sims and Louise Heavens.