MOVing forward – Introducing the Minimum Order Value

Zalando SE 2019

And why this is a key driver for customer satisfaction and sustainable growth

We want to become the Starting Point for Fashion by delivering a best-in-class shopping experience that is tailored to our customers’ individual needs. A key driver in achieving this goal is our convenience proposition which deepens our relationships with our customers. We see them not only as shoppers but as individuals with busy schedules, changing priorities and shifting demands. Our purpose is to act on and anticipate these needs.

As our customers evolve, so does our business

Having doubled the share of orders placed in the mobile app between 2016 and 2019, we are seeing strong proof points that Zalando is quickly becoming the top-of-mind fashion platform for customers. Today, mobile is an increasingly important channel, where our more than 28 million active customers can shop and find inspiration at one stop. The share of site visits via mobile devices is more than 80 percent, while we receive around 70 percent of all orders through mobile commerce. This is transforming the way that customers shop on Zalando, and will continue to significantly impact the way we drive business moving forward.

On the go mobile shopping continues to change our customers’ purchase behavior. Today, customers increasingly tend to make several quick and low-cost purchases, rather than gathering items in their baskets and buying all at once. This has lead to a decline in basket sizes, with customers shopping more often, yet ordering fewer items per order. On the other hand, customers’ expectations have stepped up. Today, 25 percent of our customers expect fast and convenient delivery options such as same day, next day or return on demand. This means that the entire delivery process from tracking, through making changes in delivery addresses and choosing preferred delivery timeframes, to successful receipt of goods needs to happen rapidly to ensure customer satisfaction.

From “one size fits all” to “made-to-measure”

In the past, our broad assortment and exceptional customer convenience standards – offering free delivery and returns – helped to drive growth and attract millions of customers. Back then, the “one size fits all” approach proved to be both simple and successful. We then began improving on our convenience proposition even more in order to meet evolving customer demands. We did this by offering more customer-centric delivery and payment options which were made widely available to all customers, resulting in an all-time high in measurable customer satisfaction rates. We believe it is about time for a “made-to-measure” customer experience instead of a “one size fits all” approach, since the cookie-cutter concept will be insufficient in driving sustainable business moving forward. Therefore, we’re adapting our offering to enable increasingly differentiated service propositions, which will allow us to focus our investments on committed customers. Thus, we are giving them even more control in tailoring the experience they want to have with us.

Deepening our customer relationships

Looking ahead, we will continue to strive to offer a service which is tailored to each customer individually, in order to live up to our customer promises. We want to stay ahead of changes in our customers’ behavior in order to meet their expectations and ensure sustainable growth. For this reason, we are introducing a Minimum Order Value (MOV) for free shipping on all customer orders in selected markets to enable meaningful investment in our customers’ shopping experience.

In all countries, the MOV for free shipping is significantly below the market average and the MOV of local competitors. To date, we have rolled out a Minimum Order Value in nine markets (Italy, Great Britain, Ireland, Spain, the Nordics and most recently France), and are already seeing promising results with basket sizes, profit contribution and customer satisfaction increasing across the board. Since the introduction of the MOV in Italy in November 2018, we are observing a positive impact on the net basket size by an increase of 9 percent YoY.

These first outcomes prove to us that we are on the right track in anticipating customer demands, and that we are tailoring our offerings to provide maximum customer-centricity going forward.
 

The first outcomes prove to us that we are on the right track in anticipating customer demands."

While the majority of our customers are not affected by the introduction of MOV, this is a necessary measure that we are taking to ensure the continued healthy and sustainable growth of our business. With this measure, we can keep investing in driving customer satisfaction and deepening customer relationships.

In order to deepen the relationship we have to our customers and to enhance the experience of our most loyal customers, we have introduced our membership program Zalando Plus. The program is currently available all over Germany, is being tested in Switzerland, and will be available in France and Italy by the end of 2019. We see the introduction of MOV and the roll-out of Zalando Plus as important steps in improving the customer experience. These new measures will enable us to shift our focus from a one size fits all approach, to deepening our relationships with committed customers.

Reimbursement solution for Partner Program brands

We are currently working on a solution to reimburse Partner Program brands for the MOV charged on orders coming solely from Partner Program brands, as well as on mixed orders. Our aim is to have a solution in place by Q1/2020, which will include a defined process for refunding MOV fees charged before this date.

MOV in the respective markets

MOV markets MOV in the respective markets Delivery fee
below MOV
     
France 24.90 EUR 3.50 EUR
Italy 24.90 EUR 3.50 EUR
Great Britain 19.90 GBP 3.00 GBP
Ireland 24.90 EUR 3.00 EUR
Spain 24.90 EUR 2.90 EUR
Sweden 229 SEK 39 SEK
Norway 229 NOK 39 NOK
Denmark 189 DKK 29 DKK
Finland 24.95 EUR 3.95 EUR

 

 


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