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 , 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 ) 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.”  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 ). 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  and Google’s mobile queries have surpassed desktop queries . 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.
 South-East Asia at the crossroads – Three paths to prosperity, Jonathan Woetzel, McKinsey Global Institute, November 2014
 Betting on South-East Asia’s e-commerce boom, Florian Hope, Wall Street Journal, April 2016
 Bangkok overtakes Jakarta as World’s Top City on Facebook, Rick Martin, Tech in Asia, May 2012
 Mobile Search Queries Start to Surpass Desktop: Here’s What You Can Do About It, Lindsay Kolowich, Hubspot Blog, May 2015