Zalando’s service revenue skyrocketed 40% in 2022

Zalando closed the financial year 2022 with a collapse of its net profit of 92.8%, up to 16.8 million euros, compared to 234.5 million euros in 2021. It was the first drop in the history of the German marketplace. However, despite closing in red, the company’s service revenue soared 40% reaching 1,736 million euros, mainly due to the partner program. As specified by the company, “Other services revenue includes mainly revenue from the partner program, our Zalando payment services, our Zalando marketing services, our Zalando fulfillment solutions, Highsnobiety and shipping costs”.

For his part, according to Exiting Commercethe marketing revenue were estimated at approximately 260 million euros. However, “this is not enough to offset the marketing costs”. Another positive fact for the company is that it recorded a increase in the number of active users. Zalando closed last year with 51.2 million active customers, 5.7% more compared to the 48.5 million of the previous year. The number of orders also grew by 3.5% to reach 261.1 million orders. “The fact that we have been able to continue to grow our customer base in the current economic environment shows that our core strategy is working”declared Robert Gentz, co-CEO of Zalando after the publication of the annual report. “We want our customers to love Zalando and that is why we are deepening our relationships with them. Understanding their needs and tastes is crucial”the executive asserted.

Looking ahead to this year, the Zalando’s ambition remains to continue outpacing the growth of the online fashion segmentincluding a GMV increase of between 1% and 7%, while revenue is expected to be in the range of -1% to 4% compared to last year.

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Similarly, Zalando expects adjusted EBIT to be between €280 million and €350 million this yearup from 184.6 million in the prior year, and is confident of approaching the upper end of its adjusted EBIT margin target of 3-6% by 2025 and achieving double-digit margins in the long term. “Our long-term ambition remains unchanged”pointed Gentzwho trusts that will return to double-digit GMV growth in the medium termfurther executing his vision and strategy.

Third party logistics

Zalando also announced last March that it will begin offering logistics services to any company sell or not in the marketplace German. To the company, “This new service is another opportunity for long-term growth” and assumes “a key transition in its strategic plan”. The marketplace launched a pilot project in October of last year as part of its new multi-channel fulfillment offering. Previously, the company only offered logistics services to brands that sell their products on the German marketplace through Zalando logistics services. (Zalando Fulfillment Solutions) and marketing (Zalando Marketing Services). In addition, the company has a program aimed at digitizing the offer of physical stores (Partner Program).

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