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Zalando Raises Full-Year Outlook, Expands Integrated Commerce

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Zalando logistics fulfillment center

European e-tailer Zalando raised its full-year guidance after the market closed on Tuesday, despite experiencing slower sales.

The Berlin-based company reported group revenues between $906 million and $922 million in its third quarter, up 16 percent to 18 percent compared with last year but a slowdown from the 26 percent increase seen in the last quarter.

Zalando said it expects full-year adjusted earnings before interest and taxes (EBIT) to be in the range of 5 percent to 6 percent. The company had previously guided 4.0-5.5%. The latest prediction corresponds with a Q3 adjusted EBIT of $8.7 million to $27.4 million.

The Q3 results came on the heels of last week’s announcement regarding Zalando’s expanded approach to “integrated commerce.” The company is now offering small, local retailers the chance to sell their products online via Zalando.

For the first time ever, mom-and-pop retailers can connect to the Zalando platform using the external partner software “gax-system.” Ten stores are already participating in the pilot, which allows them to accept and fulfill orders from Zalando customers if the matching item is available in their stores.

“With its platform strategy, Zalando is working on different ways to not only connect big brands and retailers, but to connect local stores with limited technological infrastructures for the first time,” said Zalando’s vice president of logistics and products Jan Bartels. “This way, Zalando can be a digital solution for smaller retailers who are facing the challenges of digitalization and offer them a further sales channel.”

Tip Tap Kinderschuhe, one of first 10 participants, described how the digital platform benefited its market exposure and created a seamless commerce experience: “That’s why, in order to generate extra sales, e-commerce is important for us as an additional distribution,” said owner Thomas Ganguin. “If we were running our own online shop we would need much more storage capacity and would have to schedule more personnel.”

Zalando first began testing the initiative in June, when it connected local brick-and-mortar sellers of big partner brands, such as Adidas, to its platform.

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