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.
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.