Zola: Proving Even The Wedding Industry Isn’t Pandemic-Proof
With the 2020 wedding season largely postponed, Zola – a wedding registry site – is experiencing first hand that the wedding industry is far from pandemic-proof
The wedding industry has long been considered an industry that recession proof (A). After all, even an economic downturn can’t get in the way of love, right? The global pandemic of this year has proved otherwise with weddings around the world being cancelled in light of social distancing mandates. The crash of the 2020 wedding season has proven to be challenging to Zola – an online retailer that helps couples personalize their wedding registry lists- as the company recently laid off 20% of their staff (A).
Why the Wedding Industry Has Been So Hard Hit
Traditionally, weddings are a time for friends and family to come together in person and celebrate the marriage of the bride and groom. In many cases, loved ones might travel from other countries for the occasion. But with measures such as travel bans, shelter in place and social distancing implemented, traveling to attending large gatherings is essentially impossible.
In particular, the CDC has recommended that gatherings of 10 or more people be held virtually. This has resulted in both weddings and wedding related events like showers and bachelor / bachelorette parties being postponed or cancelled (2). As such, the 2020 wedding season has come to a halt and tens of thousands of weddings have been called off for this spring (1).
How This Impacts Zola’s Business
Zola operates in the $70 billion wedding industry and has built on online platform that allows couples to create a customized wedding registry that friends and family can purchase gifts from (3). The goal of the company, according to founder Shan-Lyn Ma, is to be the “go-to wedding destination to plan every step of the wedding, from the engagement to the very first year of marriage.” (3)
Prior to COVID-19, Zola was positioned to have tremendous growth over 2020 according to the company (1). The platform has already served 600,000 couples since its launch and has an estimated annual revenue of $120 million (3). However, given that their entire business model is directly linked to weddings and wedding related events, the company has been experiencing difficulties amidst the pandemic (1).
Zola makes money primarily through its registry product. When couples list their registry on Zola, their friends and family are able to directly purchase the gift through the site. Over 70,000 products are available through the platform including traditional wedding registry presents and unique gifts that can’t be found at other traditional retailers (3). Like other e-commerce companies, Zola takes a cut of all purchases made through the site (3). When a customer buys a product or experience (think wine tour or guided trip) on the registry, Zola can keep up to 40% and 20% respectively (3).
However, due to the cancellation of weddings and wedding related events, Zola has noted that couples aren’t using their site to place orders for gifts on a registry or buy thank-you cards (1). Given that these are the primary revenue generating services that the company offers, their cash flows have been hard hit.
What is Zola Doing
Zola’s business has come under immense pressure very suddenly. In response, the focused on reducing their overhead costs. This has manifested itself in the company laying off 20% of their employees and cutting the salaries of those who are remaining (1).
To help support their customers, Zola has created a lot of content discussing how to handle cancelling or postponing a wedding. This includes blog posts providing guidance about how to notify your guests that your wedding date has changed and how to navigate requesting refunds from vendors (4). In addition, they are offering free save the date cards for couples who have previously purchased invitations or save the dates from Zola. Further, they have created a Facebook community allowing users to connect with other couples facing similar challenges. These are great initiatives for the company to take on. After all, these are unprecedented times and couples are looking for help to navigating the logistics and etiquette around moving or cancelling their wedding.
As for additional steps they could take to mitigate their sudden lack of business, I believe offering discounts on registry items would be a great step. Zola, like other e-commerce companies, takes a large margin on sales from their site. As such, it is likely there is room for the company to offer discounts on registry items for weddings happening in the future.
This would help stabilize their cash flows, which is evidently needed given their recent layoffs. It’s better to have some money coming in at this point even if items are not sold at full price. Further, most weddings and events that have been cancelled for this spring will be rescheduled. This means it’s not a matter of if customers will buy products on Zola but when. Offering discounts now can serve to benefit both Zola and the customers and help both parties weather the storm of the pandemic.
Looking Ahead
Fortunately for Zola, the business is positioned well to bounce back from these unprecedented circumstances. After the threat of the pandemic subsides, weddings and wedding related events will be rescheduled and people will once again need to buy items on Zola off the couple’s registry. According to a spokesperson for the company, 99% of couples who have had to change their wedding plans due to the pandemic still plan to get married and 79% of couples who planned to get married in April / May 2020 have already re-booked for a later date (1). Although the company certainly wasn’t prepared for what 2020 had in store for the wedding industry, I remain confident that they will come out even stronger and be positioned to continue their growth in 2021.
Citations
- https://www.fastcompany.com/90488160/as-covid-19-kills-wedding-plans-zola-cuts-salaries-and-lays-off-20-of-staff
- https://www.zola.com/expert-advice/is-coronavirus-impacting-your-wedding-heres-what-to-do
- https://www.investopedia.com/articles/markets/011416/how-does-zola-work-and-make-money.asp
- https://www.zola.com/expert-advice/faqs-about-coronavirus-and-weddings
Thanks Elisa for this post it is very interesting for sure! Like you stated weddings typically happen rain or shine and is an industry known for higher margins due to the nature of the once of a lifetime event being planned. Although this is a digital platform, the intermediary nature which helps to facilitate transactions and large in-person gatherings group makes it really hard to produce additional revenue streams while all are quarantined to their homes. This may be a situation in which diversifying the platform into ancillary offline services and offerings may hopefully benefit them in the long run (i.e. managing event planners, photographers etc.).
Interesting post Elisa. This industry was hit really hard and you’ve made some great insights into Zola’s positioning in the market. Since this is a registry for physical goods as well as services, I’m wondering what it means to be “go-to wedding destination to plan every step of the wedding, from the engagement to the very first year of marriage” when COVID-19 is framing what these norms are. If 10+ people weddings are no longer an option and across-world travel honeymoon locations a health risk, couldn’t a wedding could look like a multitude of things? While the company is currently doing damage control with existing clients, in looking towards the future, my question is- should Zola dedicate resources to weddings in COVID-19 times or weddings pre-COVID-19 times?
Great post Elisa (and hello to my fellow co-parent to a very tardy HBS student!). As someone whose wedding this summer will almost definitely be postponed due to the COVID-19 situation, this post hit close to home.
From my admittedly limited vantage point, it seems like right now most players in the wedding industry either aren’t admitting to themselves or their clients how significant and long-term the impact of the virus will be on the wedding industry. For example, some of our vendors advised couples with weddings in April/May 2020 to move them to July/August 2020. Very shortsighted in my opinion. Will the world be a lot more normal by August 2020? I sure hope so. Will it be normal enough that you’ll want to spend an entire day co-located with 100-200 of the most important people in your life, many of whom have flown in crammed airplanes from far away places and/or are elderly or immuno-compromised? Highly doubtful.
For Zola, though, the 2021/2022 wedding seasons will be a huge opportunity for growth in my opinion, but less so on the registry side of things and moreso on the planning / vendor search side. I predict a LOT of small wedding vendors will go out of business by the end of the summer. Coupled with the backlog of both weddings that were postponed and engaged couples who are waiting to plan weddings until things calm down, there will be HUGE demand for the vendors that remain, meaning that companies like Zola that can help couples search for and match with vendors will be able to capture some value.
Thank you for your post, Elisa! Have seen many friends cancel their weddings this year so it was an interesting and relevant read.
You finish by saying that 99% of couples who have canceled their wedding plans are still planning on getting married, I’m assuming many of whom have not yet re-booked for another date. Most likely, competitors to Zola are experiencing similar numbers. Zola could potentially do what airlines are doing – sell services to couples where changes due to the Coronavirus are possible at no cost, where Zola in turn works with partnering services to negotiate the same change-at-no-cost model. This could likely be done within the wedding registry in some version, but with lots of possibilities if Zola expands its offerings to other services (like booking locations, etc.). Although it will likely lead to extra work for each couple for the same price, it provides Zola with some type of cash flow.
Zola will be at an advantage as I suspect many competitors are waiting to offer services before they have more clarity over the situation. Yet couples are likely aware that just as weddings 2020 are canceled, the number of weddings planned for 2021 are soaring and locations and dates are already filled – if given the opportunity suggested, they may jump on Zola’s win/win offer.
Thanks for a great post! While I feel that Zola is feeling the impact of this crisis, I feel that they are actually in a much better position than many of the businesses that they serve. For one, the venues likely don’t have pandemic crisis insurance and so many of them have to make the decision on what to do now that many weddings in 2020 can’t happen. I imagine they will likely try to re-book many of them, but given how far out weddings are booked, this may be a difficult task.
Given that most of Zola’s revenue comes from registry, I think that it makes a lot of sense for them to offer discounts or price matching during this time. Many other retailers like bed bath beyond, williams & sonoma are having massive sales, and so if someone was to purchase off a registry, they might go to those other sites first rather than using Zola directly.
Lastly, I think there will be a sub population that decides to get married anyways during this period (either small ceremony or on Zoom). I think there’s an opportunity for Zola to be involved in those weddings, perhaps do features, blog posts, and of course provide the registry for the weddings that do happen in 2020.