Zalora has 31% of the marketplace share of NVM. It has an active customer base of 16.3 million users. It is one of Asia’s leading fashion destinations. Thus this makes us keen to know the business model of Zalora.
In this blog, we will be looking at the in-dept business model of Zalora which includes its value proposition, key activities, key partners, target audience, cost structure, revenue model, etc. But before we start with its business model let us know about Zalora as a company.
Zalora is an online retailer that sells luxurious high-end clothing from both local and global brands. It was founded in 2012 by Rocket Internet (Neubodi, Kitschen, Adidas, Casio, &, etc).
Despite its main focus is on selling all things that are luxurious fashion; ranging from accessories, bags, clothes, and even grooming supplies and footwear, Zalora now accepts third-party retailers to sell their products on a platform
The headquarters of Zalora is located in Singapore. They have many localized sites in places like Indonesia, Malaysia, Hongkong, Vietnam, Philippines, Thailand, etc.
Let us now start with the detailed business model of Zalora.
BUSINESS MODEL OF ZALORA
The business model is used to determine a company’s plan for generating revenue. It determines the products or services the business plans to sell, its identified target market, and any anticipated expenses.
Let us now look at the elements of Zalora’s business model, starting with the value proposition of Zalora.
1. Value proposition of Zalora
- It provides its customers with different products which give its customers the facility of a one-stop-shop for high-end fashion.
- The products sold by Zalora are of the best quality and it also provides a cheaper price than the prices in the offline stores.
- It provides its customers with two payment methods which are online payment byways of debit card, credit card, online banking, etc, or by cash on delivery. This makes it convenient for the customers to choose from whatever they want.
- It gives its customers the privilege to enjoy free shipping under its terms and conditions.
- It also gives its customers a 30-day return policymaking the customers relaxed while buying any products.
Let us now see the key activities of Zalora.
2. Key Activities of Zalora
- Its main activities are marketing the products and creating sales for the products sold on the platform.
- One of the crucial responsibilities of Zalora is customer retention and acquisition.
- Procurement of new brands and popular items
- They try and find out what are the different requirements of the customers on the platform and provide them with the required service or items.
- Operations in the warehouse and logistics
- Zalora sees that all its customers are happy and engages with different products being advertised to them at all times and manages its customer service.
Let us now see the key [partners of Zalora.
3. Key Partners of Zalora
- Zalora has partnered with different suppliers from local and international brands so that it can provide its customers with different types of products making it convenient for them to choose from many different choices.
- They have also partnered with delivery services to provide fast delivery services to its customers in all different locations over the world.
- Rocket Internet
- Collaborated firms
- The latest partner of Zalora is Asia’s top next model.
Let us now see the customer relationship of Zalora.
4. Customer relationship of Zalora
- Email marketing – Zalora keeps its customers updated with all new items available on their site. They also sent them emails if they have kept something in the cart for some days. They remind them about the product in their cart to buy it. They also sent them emails about special offers for them from the company.
- Optional customer service hotline in different languages
- Social media – It uses its social media accounts like Facebook, Instagram, Twitter to interact with its customers and provide them updates on different topics.
- Zalora app
They send push notifications to the customers which have kept a reminder for the arrival of new products or to notify them when the product comes back in stock.
Let us now see the target audience of Zalora.
5. Target audience of Zalora
- Zalora provides products for both male and female customers on its platform.
- Age between 16 – 44 years old is the target audience of Zalora because of their interest in new fashion products and the changing need of items.
- Low to big spenders
- Fashion enthusiasts are the main target audience for Zalora as these customers are going to buy their products more often them the other customers. So, Zalora has a deeper interest in this type of target audience.
Let us now see the cost structure of Zalora.
6. Costs Structure of Zalora
- Operating costs for offices and warehouses- These are the costs incurred on the storage of products and creating a workplace for its workers and providing them with all facilities in it.
- Costs of marketing
- Advertising and other forms of promotion – Zalora has to market its products and brand on different platforms like Facebook, Instagram, Google, etc, to gain new customers and increasing the brand value.
- Affiliation is a program that allows you to join a group of people
Let us now see the revenue model of Zalora
7. Revenue model of Zalora
Zalora warns its revenue mainly from the Advertising done on its platform, the commission of third-party sellers, and transaction fees.
Advertising can be used in a variety of ways to generate cash. In Zalora’s situation, advertisements are mostly displayed on their mobile and desktop platforms. Even so, advertising money can still be generated through click-through rate (CTR), cost per click (CPC), and cost per impression (CPI) (CPM).
- Transaction fees-
It earns from the transaction fees paid by the sellers. Zalora charges its sellers a commission when their products are sold from its platform.
With this, we come to the end of the Business Model of Zalora. Let’s conclude the case study in the section below.
On the analysis of the business model of Zalora, we have seen that it has implemented its business model in the best possible way in the market. It still has a larger potential to grow in the international market which it needs to acquire.
In its value proposition, it offers its customers a one-stop-shop, lower prices, different payment modes, free shipping, etc. Some of its key activities are marketing and sales, customer retention, management of customer service, etc. Its main target audience is fashion enthusiasts and people of the age group of 16-44. The main revenue streams of Zalora are the advertising done by its sellers and the transaction fees.
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