Online fashion giant Zalando has presented its third-quarter results, although those results were not the most eye-catching part of the announcement. The German company has officially unveiled Zalando Extended, a new shopping concept based on agentic AI that appears poised to reinvent the marketplace model as we have known it until now.
Until now, a marketplace such as Zalando depended on the various integrations of sellers and their catalogs into the sales platform. In that way, visitors to Zalando.es, for example, could browse and discover those products and purchase them, either separately or alongside items from other sellers, without leaving Zalando’s website.
In short, it was essentially the online version of a physical shopping mall.
This was the most basic marketplace model, but also the most common. And that is what is now changing.
With the launch of Zalando Extended, the German company’s customers will be able to buy products from other online stores outside Zalando, whose catalogs are not integrated into the platform and which Zalando does not sell directly, without leaving the app. To make this possible, an AI agent will purchase these products securely on their behalf.
As Zalando explains, “because the AI agent does the work, retailers can reach Zalando customers and generate new sales without complex technical integrations or changes to their logistics. In addition, they will be able to advertise their products on Zalando through its retail media business, creating an additional revenue stream for Zalando.”
In other words, beyond changing how customers shop, what the company is introducing is a shift in what it means for sellers to have a presence on its marketplace, saving them from having to integrate catalogs and make logistics decisions.
To launch this new model, Zalando has partnered with home décor and furniture company Westwing. According to Zalando spokespersons, starting next year, Zalando’s AI agents will be able to browse Westwing’s catalog on behalf of customers, without requiring them to leave the Zalando app to navigate Westwing’s. “Over time, an ever-wider range of products from online stores will be added, all within the secure environment of the Zalando app,” they explain.
Of course, the “shopping mall” effect still benefits third parties that collaborate with Zalando, such as Westwing: they will be able to tap into the massive customer base of a giant like Zalando to increase visibility for their products and make purchasing easier in an environment customers already know.
According to the figures presented by Zalando, active customers reached a new high of 63.2 million, up 2.9% from a year earlier. In addition, its Zalando Plus loyalty program now has more than 22 million members and has added new benefits thanks to partners Spotify and Duolingo. Average customer spending rose 2.9% to €308, “because customers shopped across more categories,” Zalando explains.
You may remember that some time ago we told you about an initiative that has many similarities with Zalando Extended, and it came from another major global eCommerce benchmark: Amazon. In that case, the company founded by Jeff Bezos called it Buy for Me, and it also relied on agentic AI to make it easier for customers to shop outside its platform.
For eligible products, the Buy for Me AI feature (which is available to marketplace customers in the United States) handles the entire purchase on the customer’s behalf using their primary address and credit card, outside Amazon. “When customers search for branded items in the Amazon Shopping app search bar, they will see relevant results from Amazon and third-party sellers in our store, and in some cases, additional relevant products from other stores in a separate section of search results called ‘Shop brand sites directly,’” the company explained at the time.
As you can see, it works in an extraordinarily similar way to what Zalando is proposing:
And now, yes, let us turn to the company’s quarterly results, which, I am afraid, contain a not-so-pleasant surprise for investors and shareholders: a loss of €18 million. And this is despite the fact that the German company increased revenue by 5.1% year over year to €3.1747 billion. In addition, the value of merchandise sold on its platform, its GMV, grew 7.5% year over year to €4.5367 billion.
Its adjusted EBIT also increased 10.6% year over year to €106.5 million.
So… where do those losses come from?
If we take a look at the full quarterly results document, we will see that Zalando recorded €58.1 million in “restructuring expenses” during the quarter, something the company places in the context of reorganizing its logistics network and other efficiency measures. On top of that, there were €21.7 million in acquisition-related expenses and €22.6 million in share-based payments, partially offset by other positive extraordinary effects. These are major burdens that ultimately led to a reduction in reported EBIT and, subsequently, to a net loss once taxes and negative financial results were included.
Otherwise, if we analyze its business by division, the contrast is striking. On one hand, B2C generated €2.829 billion in revenue, up 2.8%, while its adjusted EBIT fell from €76.6 million to €64.4 million. On the other, Zalando’s B2B division generated €354.4 million in revenue, up 27.9%. Its adjusted EBIT surged from €19.6 million to €42.2 million. B2B accounts for approximately 11% of the group’s consolidated revenue, but contributes nearly 40% of its adjusted EBIT.
It is worth remembering that this B2B segment includes tools and services that Zalando offers to other retailers and that we have already discussed on other occasions: logistics and fulfillment (ZEOS), marketplace connections (Tradebyte), and technology for online stores (SCAYLE).
Image: ChatGPT
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