Online fashion giant sees strong growth after entering AI

Tuesday 06 August 2024 10:46 am

Online retail giant Zalando reported strong growth in the second quarter as it invested in artificial intelligence (AI) to gain a bigger share of the fashion and lifestyle e-commerce market.

Adjusted earnings before interest and tax (EBIT) rose to €171.6 million (£147.3 million), up 18% from £144.8 million year-on-year in Q2 2024.

The German retail company operates in two main branches: consumer sales and business-to-business e-commerce solutions.

During this period, the focus was on enabling consumers to use AI, using GenAI to “reduce costs (and) increase customer engagement.”

In 2023, Zalando launched Zalando Assistant, “based on large language models from artificial intelligence research and implementation company OpenAI,” the company said.

The surge in AI usage comes after the company announced last year that it would lay off hundreds of its employees as the pandemic triggered a wave of hiring and tough economic conditions at the company.

Revenues in the business-to-consumer segment rose by 2.8% to EUR 2.4 billion in the second quarter compared with a year earlier.

The company said its active customer base grew by 300,000 to 49.8 million as of the end of the first quarter of 2024.

Zalando saw its B2B sales grow by 10.3% as the company expanded its infrastructure, software and service capabilities.

“Our ecosystem strategy enables us to capture a larger share of the e-commerce market in the fashion and lifestyle industry, and the positive response from customers and partners in the second quarter validates our vision,” said Robert Gentz, Co-CEO of Zalando.

“Our business and consumer customers are excited about the high-quality brands we add, spending time with our new digital tools and content, and enjoying our growing lifestyle offerings across sports, design and beauty.

“We also recorded double-digit growth in the B2B segment, which shows that both of our growth vectors are bearing fruit,” he added.

Artificial intelligence has brought rapid changes to the e-commerce industry – personalized product recommendations, automation, and price optimization are key advances in this industry.

Zalando left its full-year forecast unchanged, expecting EBIT to be between EUR 380 million and EUR 450 million.

The company’s share price rose by almost three percent during the first sessions on the German stock exchange.