Now profitable, Zalora bets on B2B, subscriptions for growth

The year was 2012, and online shopping was still a novelty. Zalora, the ecommerce marketplace started and backed by German venture builder Rocket Internet, had just come on the scene.

Zalora would go on to popularize ecommerce for a whole generation of young adults. But a decade later, it’s fallen behind up-and-coming names like TikTok and Shein.

A Zalora pop-up store in Singapore / Photo credit: Zalora

Still, Zalora prevails on certain points.

Here’s a little-known fact: While Zalora may not claim the top spot among ecommerce platforms in Southeast Asia, it is profitable, a feat some of its peers are still struggling to achieve. Part of the reason might be its growing toolbox of ecommerce fulfillment solutions that it offers to brands and sellers.

In 2022, Zalora reported a positive adjusted EBITDA margin – a measure of earnings as a percentage of revenue – of 0.7%.

During the same period, 2.9 million shoppers purchased at least one item from the platform, excluding cancellations, rejections, and returns. This translated into 412 million euros (US$451.4 million) in net merchandise value.

The firm’s journey into the black has been a long one, though. As part of the Frankfurt-listed Global Fashion Group (GFG), Zalora had to offload its businesses in Thailand and Vietnam in 2016, as GFG wanted to focus on more promising markets.

On top of Zalora, GFG operates ecommerce sites The Iconic in Australasia and Dafiti in Latin America. The group reported 1.1 billion euros (US$1.2 billion) in revenue and gross profits of 468.9 million euros (US$513.8 million) in 2022. As of November 20, it had a market capitalization of 55.6 million euros (US$60.9 million).

Zalora, which today operates in Singapore, Malaysia, Indonesia, the Philippines, Hong Kong, and Taiwan, found its niche and honed in on it early on.

While the marketplace also sells apparel and accessories under its own house brand, many shoppers use the platform to access products from brands that can’t be found on other platforms. These include luxury labels Sandra and Maje and apparel brands Zalia and Lubna.

“Our advantage is our ability to attract top brands from the world,” Achint Setia, Zalora’s chief revenue and marketing officer, tells Tech in Asia.

“We’re their back end”

At 25 to 40 years old, Zalora’s main customer demographic is older than that of fast-fashion firm Shein, which is aggressively courting budget-conscious Gen Z with trendy and highly affordable apparel.

While Shein’s key market is the US, it ships to over 150 countries globally. In the last two years, the firm has also increasingly seen Southeast Asia as a region of interest – particularly Singapore, the Philippines, Thailand, and Malaysia.

The Zalora difference

Bullish on social commerce