ZALORA: the online revolution of the fast-fashion industry

ZALORA brings fast-fashion to the door of all South-East Asian customers through the Internet

ZALORA is an online fast-fashion e-commerce start-up in South-East Asia which aims to bring relevant fashion-fashion to all South-East customers. To deliver on that promise, the business is utilizing the Internet in three ways: to connect to its wide base of customers, to gather data on what products people want to buy and to target its potential customers effectively.

Bringing fast-fashion to all South-East Asian
In a region were fast-fashion brands’ retail is concentrated in large and mid-size cities’ malls and therefore restricted to less than 50% of the population [1], ZALORA utilizes the Internet to fulfill an ambitious goal: giving access to international fashion brands to everyone, everywhere, even on the most remote island. Creating an online retail platform in a region where e-commerce is currently under-developed (less than 3% of total retail compared to 14% in China [2]) is a huge but challenging opportunity. As Hoppe summarizes, “The region’s online retail market is growing rapidly, but its diversity and fragmentation present unique challenges.” [2] ZALORA successfully overcomes limitations by developing its own capabilities: 70% of its order are fulfilled by its own delivery fleet which collects cash directly from customers when delivering the package, for example.

Tailoring the products to the customers’ interests

The second ambition of ZALORA is to bring relevant products to its customers. To do so, ZALORA utilizes customers’ behavior data to understand supply and demand. Page views, products views, number of clicks, conversion rate: the whole customer journey is monitored in real time and drives instrumental insights to the buying team. ZALORA is able to build up a tailored product set in each market. For example, based on the huge number of search queries and a very high conversation rate of traditional fashion wear in Malaysia and Indonesia’s websites, ZALORA created its own traditional fashion brand ZALIA in 2015 which was an immediate success and achieved a 30% higher sell-through rate than industry average in first season.

Targeting customers efficiently through digital marketing

Finally, being online gives ZALORA the opportunity to target potential customers efficiently through the various online advertising tools available (Google Ads, Facebook Ads, Retargeting etc.). In particular, ZALORA is leveraging the high usage of social media in the region to connect with its customers (Bangkok, the highest social city in the world has 100% of its population on Facebook [3]). On Facebook, ZALORA is able to map its current customers’ social media profile (based on the place they live, their interest, their age etc.) and identify similar target audiences to advertise to. This is a great way for the start-up to control its marketing budget by using data and technology to increase the relevancy its advertising.


Going forward: the evolution of e-commerce

4 years in, ZALORA has achieved tremendous results, attracting 300+ fashion brands and achieving double-digit annual top-line growth. That being said the company will need to go a step further and revamp its business model going forward.

Embracing the swift to mobile

In South-East Asia, mobile internet now has 110%+ penetration [1] and Google’s mobile queries have surpassed desktop queries [4]. To achieve its goal of connecting with all South-East Asians, ZALORA has developed a top-of-the-art mobile app, already downloaded millions of times. That being said, the whole website environment needs to be rethought, especially the way to organize and utilize data to present the most relevant products on a smaller screen in a closed app environment.

Building a smarter inventory with marketplace

To keep brining customers what they want, ZALORA is taking more bets on local labels. In order to maintain healthy cash flow, the company has developed a new way to partner with retail: offer a marketplace platform where retailers can upload their products online directly and manage their inventory themselves. This is a great first step, but the platform is still manual and therefore very time-consuming to use. To serve its partners better and scale this business model, ZALORA will have to develop a stronger technology which can connect to retailers’ ERP system directly similarly to Alibaba or Amazon.

Understanding the limits of digital marketing

Finally, targeted digital marketing limits the reach to a wider audience at the top of the funnel. By investing in the highest return channels, ZALORA has focused the majority of its budget on existing customers who have the highest conversion rate. To sustain its growth’s ambition, ZALORA will need to bring more new customers to the site. One way would be to invest more in recurring offline traditional advertising, a strategy its competitors have understood by spending a relevant portion of their budget on TV and billboards annually.


(775 words)


[1] South-East Asia at the crossroads – Three paths to prosperity, Jonathan Woetzel, McKinsey Global Institute, November 2014

[2] Betting on South-East Asia’s e-commerce boom, Florian Hope, Wall Street Journal, April 2016

[3] Bangkok overtakes Jakarta as World’s Top City on Facebook, Rick Martin, Tech in Asia, May 2012

[4] Mobile Search Queries Start to Surpass Desktop: Here’s What You Can Do About It, Lindsay Kolowich, Hubspot Blog, May 2015


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Student comments on ZALORA: the online revolution of the fast-fashion industry

  1. Great post, Clara! I found these additional insights about Zalora’s digital business and operating models incredibly interesting as a supplement to the Zalora marketing case. I completely agree with your 3 suggestions for how Zalora can continue in its digital transformation journey. Getting the mobile strategy right, making the marketplace less cumbersome for both suppliers and customers, and widening the net for customer acquisition are all key for Zalora’s continued growth.

    I did, however, find the statistic about Bangkok having 100% of its population on Facebook hard to believe, and found it difficult to find data verifying that claim. Do you think this is a case of misleading data? I could see it being the case where all users who have listed Bangkok as either their hometown or current city are counted in the Facebook user population, but that doesn’t necessarily mean every single current resident of Bangkok is on Facebook. Similarly, the statistic about Southeast Asia having 110% mobile penetration also seemed misleading – doesn’t penetration by its very definition mean it can’t exceed 100%?

  2. One key asset that online retailers rarely use is the knowledge they build on customers. Unlike a traditional retail store, online retailers have the ability to generate panel samples that capture changing customer preferences over time. What if Zalora and its kind cashed-in this data with its brick and mortar partners to anticipate consumer demand and fashion trends. Could a spike in prices for one key material be avoided by anticipating the surge in demand, and hedging against it?

  3. Thanks for the insider info on Zalora, Clara 🙂

    When I lived in Indonesia, the 2 things I especially loved about Zalora was that they catered their clothing more to petite Asian sizes in a way that more global brands such as Zara and Mango didn’t. They also offered summer clothes all year round, taking into account the unique weather conditions of the geography better than European and American brands that sold their products in Southeast Asia. I would be curious to know how Zalora is responding to the growing e-commerce competitive threats in the region — both local/regional players such as Zalada and Paraplou and global giants such as Amazon and Zara. Are they taking any strategic actions to stay ahead of the competition? Do they have a first-mover advantage in this market, or do the second movers have more benefits?

  4. Clara, great post! What struck me most was that Zalora collects cash from customers. Can it provide discount to customers to incentivize them to pay by credit card or another form of electronic payment? I assume that cash collection from employees (i.e. theft) can be an issue, and maybe paying credit card fees would be less costly than cash management!

    Also, I am impressed that Zalora created a private label brand based on customer data. They should definitely continue to do this!

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