AMSTERDAM, NETHERLANDS — Zalando plans to boost delivery of goods direct from partner fashion stores, in a bid to capture more than 1 billion euros ($1.12 billion) in sales that are missed annually when stock is not available in warehouses.
Europe's biggest online fashion retailer already sells items from more than 1,000 German stores on its website, but wants to add up to 70,000 stores in the next three to five years, said Carsten Keller, head of "connected retail" at Zalando.
"It is a massive stock pool we are tapping into," Keller told Reuters on the sidelines of the World Retail Congress, an annual meeting of the industry in Amsterdam, noting that connecting offline to online retail was a big trend in China.
Zalando estimates it misses out on 20 to 30 million transactions per year because items shoppers are searching for are unavailable. An average order size of 50 euros means that translates into more than 1 billion euros in lost sales.
Germany's biggest department store chain Karstadt Kaufhof announced last week that it was teaming up with Zalando to offer its entire fashion range on its site.
Keller said the project would start with Karstadt Kaufhof's eight department stores in Berlin, a move he said should help increase productivity at the chain, which was formed out of the merger of struggling groups Karstadt and Kaufhof last year.
While some downtown stores had initially resisted partnering with the online giant as ecommerce has eroded their sales so much in recent years, Keller said many had realised that teaming up can boost sales and should help support profitability.
Zalando charges stores a commission for goods ordered via its site and the offline retailer picks and packs from the store and bears the cost of delivery to the customer.
Stores carry costs of rent and staff who are often underutilised and a slow churn of stock. Working with Zalando speeds stock turnover, helping draw more shoppers into the store, Keller said.
Zalando has just partnered with its first store outside of Germany - a Marco Polo store in the Netherlands - and plans to expand to other countries this year, eventually covering stores in most major European cities.
It is also trying to speed up delivery from the stores, so they can offer the same or even faster service as from its warehouses. It also plans to trial click-and-collect of orders from stores in the next 12 to 18 months, Keller said.
By Emma Thomasson; editor: Emelia Sithole-Matarise