More than ten years of success. And the end of this love story between the empire of Amancio Ortega and its digital expansion is still to be written. In view of the results, the online future of the Inditex group looks promising, revolutionary for consumer purchasing habits and essential for the company’s business.
The textile giant was late to the online sales game but with steady steps, without grandiose displays or a single mistake, convinced of its omnichannel strategy from the start, in perfect harmony with its offline experience. It has been a little over a decade and they have managed to integrate the online channel into the group’s main markets. Slow but steady.
The beginnings of Inditex’s eCommerce history
Inditex debuts in e-commerce with Zara Home, one of the youngest chains, specialized in textiles, home, and decoration. It was the forerunner. It launched its online sales platform in 13 European markets and for three years served as a test for all subsequent openings planned by the company. Today, Zara Home is the fifth brand of the group with the best turnover and has just opened its own eCommerce in South Korea, thus being present in 37 online markets.
Zara’s debut. 35 years after the opening of the first physical store in A Coruña, the largest chain in the Inditex group by business volume begins selling online in September. At the end of the year, it operates online in 16 European markets.
Pablo Isla takes over as president of the Inditex group after six years as CEO. Pull & Bear, Bershka, Massimo Dutti, Stradivarius, Oysho, and Uterqüe join the online channel in different European markets, meaning that all the company’s brands, except Lefties, were already selling online. The commitment to e-commerce is definitive. From this moment on, the international expansion of its eCommerce platforms will be progressive and will advance at the same rate as the commercial surface area increases, with new establishments in classic and emerging markets. Zara starts selling online in the United States and Japan.
China, an attractive and strategic market for Inditex online
Inditex continues with its growth plans in the digital environment and once again focuses on a emerging market, a commerce giant with over 1.3 billion inhabitants and more than 200 million online shoppers.
On September 5, 2012, zara.cn begins operating in China, the country with record-breaking online sales, a market that will not stop growing in terms of customers, operations, and platforms.
This is a strategic decision by the Inditex group that seeks to reinforce its presence in the Asian market and expand its business in China, where it will close the year with 450 physical stores in addition to the recently launched eCommerce, making it the second market with the most points of sale behind Spain.
But not everything was focused on China: that year, Zara Home and Massimo Dutti present their online platforms in the United States. And Oysho becomes the first chain of the company to reach an agreement with the British ASOS, one of the largest European distributors online, to sell part of its collection online in the United Kingdom.
The flagship of the Inditex group continues to be unstoppable: it keeps growing and adding new online markets. In February, Zara opens its online store in Canada (along with Massimo Dutti and Zara Home), a country where the Galician company has been selling since 1999. In October, Zara launches its own eCommerce in Russia with the aim of strengthening its multichannel strategy, gaining sales potential and exposure. With the Russian market, Zara already has 25 online stores.
The Inditex group partners with Alibaba to open a new sales channel and boost its presence in China. In October, Zara opens its own store on the Tmall platform, the largest eCommerce site in the Asian giant with more than 400 million buyers, 50,000 stores and millions of products from more than 70,000 different brands.
As had already happened on ASOS with the entry of Oysho and Pull & Bear, Inditex begins to sell its fashion items in third-party stores to boost its online sales, in this case, on the Alibaba marketplace, where Bershka and Pull & Bear opened the way in 2013 for the main fashion chain of the Inditex group. China, the country with the highest online turnover in the world, remains a strategic market for the Arteixo company.
In addition, Inditex strengthens its presence in Mexico and South Korea, with the opening of the Zara online platform in the Asian country and Zara, Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho and Zara Home in Mexico.
The success in sales drives the various brands of the Inditex group to continue with their plans for international expansion and eCommerce growth. The Galician company includes Taiwan, Hong Kong, and Macao on its eCommerce map, adding three new markets in the valuable Asian region, for a total of 30 digital markets.
And although the fashion giant resists sharing its online business figures, it is the results from its eCommerce that lift Amancio Ortega to the top of the billionaire rankings. On October 23 of this year, the founder and main shareholder of Inditex was the richest man in the world for three hours according to Forbes magazine, with a personal fortune of more than 78 billion euros.
In Europe alone, 5% of the company’s global revenue comes from online sales. Outside of Europe, the bet on eCommerce continues. Oysho, Massimo Dutti, and Stradivarius begin their particular third phase of expansion in China by combining their online stores with physical stores and sales through Tmall. Inditex ends the year with the opening of Zara Home’s eCommerce in Australia and Japan.
The Inditex group continues to grow. They open physical stores for the first time in five new markets and begin operating online in eight more. In spring, they complete the online conquest of all European Union countries. In practice, all of the fashion chains of the Galician company have their own eCommerce in the 28 states and Turkey.
Inditex reaches 40 online markets worldwide, offering its customers the same products through the web that they can find in their physical stores, at the same price and with the same offer replenishment system that they use in commercial establishments.
The group’s online strategy works. Each year they inaugurate new eCommerce, sober and adapted to each country they bet on, taking care of every detail and imitating the offline shopping experience in an accredited functional environment for established brands. It is the triumph of omnichannel, the sum of synergies, the integration of online/offline services for customers, a model that allows them to see online collections, buy through the Internet, and pick up or return items in any physical store.
Integration, value-added services and new horizons in a new stage of Inditex’s online history.
E-commerce becomes the “strategic axis” of the company, according to Pablo Isla, and the Galician giant’s commitment to e-commerce increases as it gains importance within the group.
Following the example of Amazon and El Corte Inglés, it will end the year with Same Day Delivery services in six cities: Madrid, London, Paris, Istanbul, Taipei, and Shanghai; and Next Day Delivery in six other countries: Spain, France, the United Kingdom, Poland, China, and South Korea; strategic markets by turnover, eCommerce penetration, or number of stores.
In addition, the Inditex group has 16 logistics platforms distributed worldwide exclusively dedicated to supporting its online activity, and plans to build new warehouses to supply the demand for orders through the Internet.
The global expansion of the integrated model of physical stores and online sales is advancing. Markets where it already has a physical presence are beginning to operate online. India, Malaysia, Singapore, Thailand, and Vietnam launch zara.com; Bershka opens in the United States, Japan, and South Korea, where Oysho also begins sales through its own website.
And one more example of the value of omnichannel and integral management of the business model: Zara inaugurates in A Coruña a fully automated online order pick-up system in-store. A pilot test that avoids the customer going through the checkout, with the capacity to manage 700 packages at once and an optical QR code reader for instant collection of an order within 30 days.
Goodbye mystery. The Inditex group finally reveals how much it sells with a click. “It was the right time, since online is an element that contributes significantly to the company’s growth,” recognized Pablo Isla.
In 2017, the company’s global sales reached 25.336 billion euros, 9% more than the previous year. Online sales grew 41%, reaching 10% of the total. But there are more figures that explain Inditex’s eCommerce growth during the past year: 2.418 billion visits to the group’s web pages with peaks of up to 249,000 orders in an hour.
2018 meant good results for the Galician fashion company, with the opening of Zara online in Australia and New Zealand, Massimo Dutti’s alliance with Zalando to strengthen the chain’s online distribution, and with new digital moves that prioritize its omnichannel shopping experience integration strategy.
In its online channel during 2018, Inditex’s sales increased by 27% compared to the figures shown the previous year, achieving an online turnover of 3.2 billion euros. Although this is a less substantial growth than what it has presented over the last 5 years, it still shows the great potential of this fashion eCommerce giant.
2020: Coronavirus Boosts Inditex’s Online Growth
This has been a challenging year for the fashion industry, including Inditex, which saw losses for the first time in the company’s history during the first half. However, even with 5% of physical stores closed and capacity and schedule restrictions in 88% of the Group’s stores, Inditex’s online sales continued to grow at a high rate, reaching 75% year-on-year during the first nine months of the year and 76% during the third quarter.
Between August and October, Inditex managed to record a profit of €866 million. However, this figure is far from the company’s best moment, representing a 26% decrease from the same period the previous year.
The goal for this year was to increase Inditex’s online sales to more than 25% of the total by 2022, a percentage that the company could easily surpass this year due to the boost its online channel received during the pandemic. In fact, the same group’s forecast is that by the end of this year, Inditex’s online sales will reach around €6.5 billion, representing around 30% of total sales, according to Bloomberg’s estimates.
2021: Inditex accelerates its growth
Inditex has surpassed itself by increasing sales by almost 50% compared to the first quarter of 2020. Taking into account that at the beginning of the pandemic it had suffered losses of 409 million euros, we are talking about an enormous capacity for resilience and adaptability to new online sales channels.
In fact, online sales explain much of the success, as it grew 67% in the first quarter of the year (which Inditex counts from February to April), an even greater percentage than what it experienced in the same period in 2020, when lockdowns boosted demand for this service by 50%.
One of the most important data reflected in the report is that gross margin grew to 59.9%, “as a result of the execution of the business model and the efficiency resulting from the full implementation of the digital transformation strategy,” the statement said.
2022: Profits Increase Despite Decrease in Online Sales
During its first fiscal quarter of 2022 (from February to April), the Spanish giant of the textile industry earned €760 million. This represented an increase in net profit of 80% compared to the same period last year.
The group’s total sales played a large part in these positive results, as they reached €6.742 billion (a 36% increase from a year ago). However, another factor to consider is the effect of the sale and closure of physical stores and the benefits this brings, as Inditex closed 335 stores in one year, leaving a total of 6,423 worldwide.
On the other hand, the online channel was hit hard, with eCommerce sales decreasing by 6%. These figures differ from those reported during the equivalent period of 2021, when online sales experienced a 67% growth. Inditex linked the return to “normality” with the decrease in demand and announced its intentions to make the group’s online sales account for more than 30% of its total sales in 2024.
Changes: a new era for Inditex
In a 2021 loaded with management changes and brand renewals, the Inditex Group joined the wave announcing a strong internal restructuring of positions. After presiding over the company for 17 years, Pablo Isla handed over his position to Marta Ortega, who assumed the presidency on April 1, 2022. On the other hand, Óscar García Maceiras -until now General Secretary and Secretary of the Board- became director Inditex delegate, and Carlos Crespo, who held that position, went on to lead the area of operations, sustainable and digital transformation (which includes the operation of the Group’s eCommerce).
«The board of directors thanks Pablo Isla for his leadership and vision during the 17 years in which he has led the company, first as vice president and CEO since 2005 and, starting in 2011, as president. During this period, Inditex has become the leading company in its sector worldwide and a benchmark in terms of sustainability and digital transformation,” announced the company’s official statement.
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