Zara to Go Online
Zara is known as a leader among the fast fashion retail set
but it has been downright slow when it comes to developing a selling presence
online.
The chain, according to The Wall Street
Journal, has stayed away from going the e-commerce
route even as rivals set up virtual shops because it was concerned about “the
complexity of managing and selling its fast-changing collections online.”
All that appears to be changing with the announcement that Zara
would sell items from its Autumn/Winter collections next year from its website.
The site will initially launch in France, Germany, Italy, Portugal, Spain
and the U.K. A progressive rollout of the site to other markets served by
Zara will follow.
Pablo Isla, CEO and deputy chairman of Zara parent Inditex,
called the move "an important strategic step” in
his company’s “constant daily search to offer the best service to clients
worldwide.”
Discussion Questions:
What will selling online mean for Zara’s business? What specific challenges
and opportunities do you see facing Zara as it goes to a multi-channel
approach?
Because of Zara’s “fast fashion” approach to the apparel business, managing inventories online in a nimble fashion will be a key to the website. Forecasting demand–and, more importantly, running out of product “just-in-time” instead of too early or too late–will go a long way toward a profitable business model for Zara. But if H&M can figure this out, so should Zara, especially with its more limited footprint in big markets like the U.S. A viable website gives Zara a lot of cross-marketing opportunity as it works toward higher brand recognition in new markets.
Zara has been in the forefront of delivering affordable fashion to an adoring customer base for some time now. Reminiscent of yesterday’s discussion on Blockbuster, they must continue to evolve,or risk losing portions of their customer base or dominance or both.
I know of many, including my wife and children, who are avid shoppers of both brick and click venues.
Dealing with a fast fashion assortment in an online atmosphere will be more challenging than those whose lines change less frequently, but there are other retailers who deal with shortened selling windows and do so competently. Online sales of seasonal products, for instance, are routinely managed. Zara must adopt a “seasonal” approach to online sales and marketing.
Impossible? No. Challenging? Yes. Necessary? Absolutely.
Zara is on route to pass Gap and become the #1 specialty chain because of their ability to rapidly translate the latest runway fashions to wearable affordable product and get it to their stores in 6-10 weeks. Speed to market seems to be their strength. Expanding channels could put added pressure on their current model. That said, if they can walk and chew gum they should do it–very carefully.
Zara will face the same issues that all four-wall retailers face in opening a new internet channel–unpredictability of demand in product planning, a new distribution model, different marketing model,shorter life cycle, etc, etc. Ironically, these will be particularly challenging for Zara, which arguably has the best product cycle time management in the retail world. Zara measures cycle time (from design to store delivery) in weeks instead of months. This is enabled by world-class demand forecasting processes. Injecting the unpredictability of the internet channel into this forecasting will put a lot of stress on these processes.
Having said that, I expect that the management of Zara, which has set new standards in four-wall retailing will very quickly do the same for internet retailing.
Zara’s new web presence will drive more people to their stores. And it will drive their in-store customers to their web site. Zara’s customers will buy more and visit more frequently. The new web site will introduce the excitement of Zara to customers that don’t live or work near stores. It will complement their business buy offering shoppers a chance to acquire items in their size and color when they might be out of stock in stores. Early web results should help their buyers anticipate in store success by a few days. And it should provide a vehicle to clear out last seasons items.
In these times, a retailer can’t claim to be meeting the needs of its customers unless it provides a vital web presence. It’s not about making money. It’s about competitive positioning and customer service.
Selling online will allow Zara to reach more current and potential customers and allow those customers to shop at their leisure. This is no different than other retailers that offer a multi-channel approach. Consumers expect no less.
Zara will have to adapt their fast fashion approach to the web, but this is a relatively easy hurdle to overcome. Overall, I see this as a win-win proposition for consumers and Zara.
One can only assume that Zara’s late entry into online sales had to do with refining the model. In fact, Zara has to see that online selling not only enhances their fast fashion position, but gives them a better read into what fashions are working and what are not.
Like RuLaLa has trained their customers to check out their wares daily, Zara will have the ability to do the same. And, this ability is a matter of creating online sales. This ability will tune their shoppers in to the fastest fashion and prompt response either there online or in a trip to the store.
The key to Zara’s online success will be that same as with any other retailer. Their online business must be fully integrated into their brick and mortar business. They must carry the same lines. Customers must be able to buy and return across channels. Customers must be able purchase online and pick-up in the store if they desire. Customers must be able to purchase in the store, and online when that store doesn’t have the item they are looking for.
I’m glad to hear that Zara is finally jumping in online and it would really rock if they were to stay true to the fast fashion premise by offering free shipping and selective shipping upgrades. For Zara, an online presence shouldn’t just be about opening up a new sales channel; it’s an invaluable opportunity to stay connected with customers, to create community and remedy any jumping off points that may be occurring with shoppers. Currently, H&M doesn’t offer online shopping in the U.S. so Zara isn’t that late to the party after all.
Zara has an intense following, so if done right, this will only widen their reach. This is the right thing to do, and with a multi-faceted approach, utilizing a number of media outlets, Zara can capture share from other online retailers, as well as organically grow their own business.
This is the right thing to do, but the challenges should not be understated. They operate on a very short product life-cycle. Turnover is exceptionally high. Sales have the potential to be more volatile online than at retail, complicating forecasting and inventory management. Sell-throughs could vary greatly.
That said, the deliberateness with which they’ve developed this initiative makes clear that they’ve fully studied all that’s involved in bringing their business model to the internet.
Based on Zara’s past track record of fast turn, loyal fans and a global footprint, I assume they are ready to launch the website. Zara’s fast pace should be a great fit for the web.