Convenience: Frictionless services tailored to fashion - Capital Markets Day 2018
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Convenience:
Frictionless
services
tailored to fashion
Capital Markets
Day 2018
David Schröder
Jan Bartels
June 5, 2018
Table of Contents
1. Where we want to go
2. How we make it happen
2.1 Deep dive payments
2.2 Deep dive delivery
2.3 Deep dive returns
3. Q&A
2
Our mission is to offer our customers an unmatched level of convenience,
tailored to fashion
Customer centricity Sustainable growth Operational excellence
3
Zalando Convenience delivers five key services to our customers
Transactional Core Payments Logistics Customer Care
• Cart • Payment processing • Warehouse logistics • Mail & phone support
• Check-Out • Risk management & (inbound, storage, • Chat
fraud prevention parcel outbound)
• Return Flow • Social Media
• Receivables • Returns handling
• Transaction Handling • Self-help / Smart FAQ
accounting • Transportation &
• Dunning & collection shipping
• Network planning
• Warehouse
engineering
4
Clear customer centricity focus leads to NPS +13
points
significant increase in customer satisfaction (2014 to 2017)
Payment Logistics Customer Care
+6% +7%
+4%
2014 2017 2014 2017 2014 2017
C AG R
5 Note: Customer satisfaction in percent of customers evaluating service as 1 or 2 on a scale of 1 to 5 with 1 = very satisfied , 5 = not satisfied.
Accelerated capacity expansion in logistics enables business growth
Logistics
+28%
2014 2017
Number of shipments in m
C AG R
6
Continuous improvement culture drives quality up
Quality Costs
+3%
-13%
2014 2017 2014 2017
Contact rate in % of orders Adj. fulfillment costs per order in €
C AG R
7
We have strongly invested into building our
European logistics network to create a strategic asset…
Brieselang STOCKHOLM (Brunna)
Start in 2011 Start in 2018
Erfurt Szczecin (Gryfino)
Start in 2012 Start in 2017
Mönchengladbach Lodz (Gluchow)
Start in 2013 Start in 2018
Lahr Verona (Nogarole Rocca)
Start in 2016 Start in 2019
Paris (Moissy-Cramayel) Milano (Stradella)
Start in 2017 Start in 2016
8
…and Zalando Fulfillment Solutions now enables our brand partners
to directly benefit from our unique fashion logistics capabilities
Enable partners internationally & ensure
consistent customer experience
• 8 international warehouses
• 17 domestic carrier integrations, 2 express
carrier, 14 same day destinations
• Economies of scale and “unfair” order
economics
9
Table of Contents 1. Where we want to go 2. How we make it happen 2.1 Deep dive payments 2.2 Deep dive delivery 2.3 Deep dive returns 3. Q&A 10
Illustrative
Payments, delivery and returns are the main friction points
in today’s customer journey
Browse & shop Check-out & pay Await delivery Unpack & try on Return
A C
B
11Considering payments, there are two leading A
satisfaction drivers that are of importance for our customers
1
Local payment options
Payment options to tailor to individual
customer preferences
Frictionless ‘Try now, pay
2 Ease of payment later’ payment experience
for our customers
12Payment
Ease ofoptions
payment
A
We offer a broad range of payment methods to satisfy local customer preferences
Countries Payment Methods Deferred Payments
INVOICE
PREPAYMENT
Our presence in 17 countries 22 different payment methods >60% deferred payment share
requires localization
13Payment
Ease ofoptions
payment
We recently turned every living room into a personal fitting room A
with ‘try now, pay later’
Traditional e-commerce customer flow
New Zalando Pay Later experience
14 *One week to try at home and only the amount of the articles kept is captured on the cardPayment
Ease ofoptions
payment
‘Try now, pay later’ has led to rapid adoption and very high satisfaction A
among our French customers…
Retention Rate
+9% (existing customers)
Adoption Increase in
~35% Rate +3% Basket Size
Retention Rate
+3% (new customers)
A very strong NPS for ‘Try Now, Pay Later’ 81%
Customer would use this payment method again 96%
The value proposition is appealing for our customers 93%
15Payment
Ease ofoptions
payment
A
…and more customers across Europe have the opportunity to enjoy it!
‘Try Now, Pay Later’ was launched in Italy and Denmark,
and we are once again first movers in those countries.
In addition invoice as a very popular deferred payment
option is already live and widely used in eight more markets.
16 Invoice offered as a payment methodConsidering delivery, there are three leading B
satisfaction drivers that are of importance for our customers
1 Delivery options
Premium delivery options to
tailor to individual needs
2
Precise delivery time
On time delivery prediction to increase
reliability
3 Delivery time
Expansion of our European
network to increase speed
17Delivery
Ease
Ease
ofoptions
of
payment
payment
We piloted and analysed premium delivery B
and see positive impact on loyalty and order behaviour
More loyal customers More valuable customers
Lifetime value
+25%
NPS
+13 Basket size
+16%
Return rate
-2%
Customer satisfaction survey Berlin
18 Customer insights analysis, top 3 customer segmentsDelivery
Ease
Ease
ofoptions
of
payment
payment
B
We optimized it – technology driven delivery platform
ORDER PLACED
AT ZALANDO
SAME DAY DELIVERY
LINE HAUL
ZALANDO URBAN PARCEL HUB
LOGISTICS CENTER
ON DEMAND DELIVERY
NEXT DAY DELIVERY
Asset free – orchestrated via technology
19Delivery
Ease
Ease
ofoptions
of
payment
payment
Now we are scaling it as part of B
our premium membership program Zalando Plus
Premium delivery for Zalando Plus 13 cities, more to come
Hamburg
Bremen
Hannover
Brunswick Berlin
Gelsenkirchen
Essen Dortmund Magdeburg
Duisburg Bochum Leipzig
Duesseldorf Dresden
Cologne Bonn
Frankfurt a.M.
Aachen
Mainz/ Nuremberg
Wiesbaden
Stuttgart Munich
Network active
Planned network
20Delivery
OnEase
timeoptions
of
delivery
payment
We are leveraging the power of AI for precise dynamic delivery promises B
for individual customer orders
Italy (from Sicily to Milan) Me, 30.05. – Lu, 04.06.
From fixed
2-5 working days for every Consegna standard
window order
Me, 30.05.
Milan
Consegna standard
1 day window
To Naples Me, 30.05. – Gi, 31.05.
personalized outskirts Consegna standard
window 2 day window
Sicily Ve, 01.06. – Lu, 04.06.
4 day window Consegna standard
(working days)
Enabled by AI
21Delivery
OnDelivery
timeoptions
delivery
time
We are building a truly European network to get closer to our customers and B
reduce delivery lead times
Achieved delivery speed increase
Stockholm (Brunna)
Start in 2017 Italy
Szczecin (Gryfino) -30%
Start in 2017
France
Mönchengladbach Brieselang -21%
Start in 2013 Start in 2011
Hub Spoke
Lodz
Start in 2018
Lahr
Erfurt
Effect on NPS
Start in 2016
Start in 2012
Italy
+4
Verona
Paris (Moissy-Cramayel) Start in 2019
Start in 2017
France
+5
Milan (Stradella)
Hub Spoke
Start in 2016
2011 2016 2018
22Delivery
OnDelivery
timeoptions
delivery
time
B
We continue to focus on warehouse automation to reduce lead time and costs
Generation III (testing)
Generation II (live)
Generation I (live)
Conveyor, linesorter,
Bag sorter Warehouse robotics
outbound sorterConsidering returns, there are two leading C
satisfaction drivers that are of importance for our customers
1
First–mile convenience to
Ease of return make returns as easy as
calling a cab
2 Reimbursement time
Network optimization to
speed up reimbursement time
24Ease
Easeofof
return
payment
C
We have come a long way…
Free returns &
Easy return parcel Return label in parcel
100 day return policy
25Ease
Easeofof
return
payment
…and continue to innovate by offering home pick-ups C
within 15 minutes in major French metropolitan areas
1 2 3
7 min
pick-up record!
Click a button Wait 10-15 min and Handover to driver
in your Zalando App prepare your return at your door step
26Ease
Reimbursement
of return time
C
And we are also making reimbursement even faster
International return network Direct reimbursement
2013
2015
2017
27Illustrative
Making complex things simple
Browse & shop Check-out & pay Await delivery Unpack & try on Return
A B C
28At Zalando Convenience we are delivering frictionless services
tailored to fashion to make our customers smileDISCLAIM ER Certain statements in this communication may constitute forward looking statements. These statements are based on assumptions that are believed to be reasonable at the time they are made, and are subject to significant risks and uncertainties. You should not rely on these forward-looking statements as predictions of future events and we undertake no obligation to update or revise these statements. Our actual results may differ materially and adversely from any forward-looking statements discussed in this presentation due to a number of factors, including without limitation, risks from macroeconomic developments, external fraud, inefficient processes at fulfillment centers, inaccurate personnel and capacity forecasts for fulfillment centers, hazardous material / conditions in production with regard to private labels, lack of innovation capabilities, inadequate data security, lack of market knowledge, risk of strike and changes in competition levels. 30
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