Companies looking to go public face pressure to make themselves more attractive to potential shareholders and, naturally, areas in a business that aren’t performing well can be detrimental to this cause. That’s something Berlin-based eCommerce giant Zalando is well aware of – as rumours of a potential IPO circulate, the company has now revealed it’s slimming down.
Zalando’s first victim in the restructuring is subsidiary company Emeza, an eCommerce site offering luxury goods, which was launched early this year. The platform will be shut down over a period of time – in the future, Zalando itself will include a premium section to replace Emeza. So far, it’s not clear how many employees will be affected by the closure. What led to Emeza’s downfall remains up for debate – it could have been that the site didn’t achieve market traction fast enough, that its revenues were too low or that the two-shop strategy was too complicated.
The second casualty in the restructuring is the webshop of Zalando’s in-house brand Kiomi – which was launched in February this year – our sister magazine Gründerszene hears. The brand Kiomi will still be available but will only be sold on Zalando. It makes sense that Zalando doesn’t want to lose Kiomi, as in-house labels provide the eCommerce giant with far more attractive profit margins than third-party brands.
Shifting goals – First internationalisation, now profitability
The reorientation away from extra verticals and towards a wider range of brands makes Zalando more accessible and somewhat more tangible for potential investors. These aren’t the only changes the company has made – in the summer, CMO Christian Meermann left Zalando after an internal restructuring. However, the company denies the rumours that a significant number of middle management have also left.
Overall, 2013 seems to have been a year of reflection for Zalando – there was less of a focus on expanding into new markets, meaning the company saved costs, and was finally able to reach profitability in its home regions and achieve impressive sales figures. At the same time, the business was confronted with serious allegations over sub-par working conditions in one of its logistics centres – it promised to look into the accusations.
Whether Zalando will really go public in the near future – as Wirtschaftswoche wrote this week – hasn’t been decided yet, the company told us. Although Zalando was a portfolio business from company builder Rocket Internet, it sold its shares in August this year. The decisions about the future of the eCommerce company now mostly rest in the hands of its largest shareholder Investment AB Kinnevik, which holds 38 per cent of shares. The Samwer brothers still own around 20 per cent via their investment arm, the European Founders Fund, while Asos cofounder Anders Holch Povlsen also holds a ten per cent cut of Zalando.