Imagine you’re browsing through your favorite online fashion store, and you come across a fantastic discount on a pair of shoes you’ve been eyeing. But, have you ever stopped to think if that discount is really as good as it seems? This is a problem that Zalando, a major European online fashion retailer, faced recently. The Belgian Economic Inspectorate, FPS Economy, investigated Zalando for misleading pricing practices, which dated back to 2020.
The issue was that Zalando wasn’t showing the correct reference price for items on sale, and instead, calculated discounts based on the original price, not the lowest price before the sale. This meant that customers might have been misled into thinking they were getting a better deal than they actually were. To make matters worse, Zalando also used banners with the word “offer” on products that didn’t have a real discount. According to the authority, this was a clear violation of consumer protection laws.
But how did this happen? Let’s take a step back and look at the numbers. In 2022, the FPS Economy detected these pricing irregularities during the summer sales. The investigation led to around 180 complaints against Zalando, not just about pricing, but also about delivery issues, refunds, poor customer service, and unsolicited invoices. The Belgian authorities urged their German counterparts to take action, but it wasn’t until the European Court of Justice backed Belgium’s interpretation in September last year that things started to change.
Now, Zalando has revamped its website to comply with the law. Lien Meurisse, spokesperson for the Belgian authority, confirmed that Zalando now calculates discounts correctly, based on the reference price, and only shows real discounts to customers. This is a big win for consumers, who can now trust that they’re getting a fair deal.
On a different note, Zalando has announced its financial results for 2024, and they’re looking good. The company posted a net profit of €251.1 million, up from €83 million the previous year. This growth is attributed to the successful execution of its strategy to build a leading European e-commerce ecosystem for fashion and lifestyle. The numbers are impressive, with a 4.5% increase in Gross Merchandise Volume (GMV) to €15.3 billion, and a 4.2% rise in revenues to €10.6 billion.
Zalando’s Future Plans
As for the future, Zalando expects its GMV and revenues to grow between 4% and 9% in 2025, compared to 2024. The company also predicts its adjusted EBIT (Earnings Before Interest and Taxes) to reach between €530 and €590 million. Robert Gentz, co-CEO of Zalando, stated that the company’s ecosystem strategy is progressing well and has contributed to a solid financial performance in 2024. With these plans in place, it’s clear that Zalando is committed to providing a better experience for its customers, while also driving growth and profitability.
In conclusion, the story of Zalando’s pricing issues and its subsequent revamp is a reminder that transparency and fairness are essential in e-commerce. As consumers, we deserve to know that we’re getting a fair deal, and companies like Zalando must ensure that their pricing practices are clear and compliant with the law. With its new and improved website, Zalando is taking a step in the right direction, and its future plans look promising.
