🌀 How About You fits Zalando strategy?

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Welcome to MarketMaze, the #1 newsletter for staying on top of the latest in Marketplace and E-commerce. Get all the insights you need in just five minutes a week!

🌀This week’s maze:

1. The Big Story 🧠
How About You fits Zalando strategy?

2. Data 📊
US Holiday Spending is Flat

3. News 📖
🛒 🇺🇸 Amazon teams with Hyundai for online car shopping
🛒 🇺🇸 Temu expands marketplace beyond budget goods
👗 🇪🇺 Zalando acquires ABOUT YOU to lead fashion tech
👗 🇻🇳 Shein and Temu suspended in Vietnam
🍔 🇺🇸 Instacart cuts valuation to $13B for IPO prep
🍔 🇺🇸 Feds investigate HelloFresh over child labor

+ over 15 other hot news from the last week you need to know 🔥

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Zalando’s €10.3B revenue and About You’s €1.9B will be combined into a €12B EU fashion leader. The group’s 1.75% EBIT margin highlights profitability challenges.

🌍 Combined Power with Room to Grow

Zalando: Generated €10.3B in revenue and €184.6M EBIT in 2022, achieving a 1.8% EBIT margin.

About You: A mobile-first platform with €1.9B revenue but a negative EBIT margin in 2023.

Combined: A group with €12B revenue but an EBIT margin under 2%, highlighting the urgent need for synergies to enhance profitability.

This merger leverages Zalando’s scale and About You’s influencer-driven appeal to strengthen their market position.

🤝 Complementary Strategies for Growth

B2C Strategy: Maintain separate apps tailored to distinct audiences. Zalando focuses on premium, localized shopping (Brand-led), while About You appeals to a younger, trend-driven demographic (Style-led).

B2B Expansion: About You’s SCAYLE platform enhances Zalando’s ZEOS tools, creating scalable enterprise solutions and operational efficiencies. SCAYLE will enable ZEOS to provide e-commerce platform for brand’s own online store

🌏 Still Smaller than Shein

Despite its €12B revenue, the group remains significantly smaller than Shein, whose GMV is double at €45.

Shein’s ultra-fast fashion model and global logistics efficiency.A massive gap in speed and reach compared to Shein’s content-driven strategy.

To close the gap, Zalando and About You must accelerate innovation, expand logistics, and enhance content offerings to meet consumer demand more effectively.

📉 Profitability – Far to Go

Current (2023, pro-forma combined): Profitability is the group’s biggest challenge, with an initial EBIT margin of just 1.75%. Achieving 1% EBIT margin improvement through synergies is expected.

Mid-term (2028): Targeting 6-8% EBIT margin by improving potentially About You’s profitability and addressing Group inefficiencies.

Long-term (2030+): The ambitious goal of a 10-13% EBIT margin seems overly optimistic given current financial realities.

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The data from Earnest Analytics and Vela Gamma transaction data captures the US holiday spending.

🎄 Slide 1: Holiday Spending Trends

US holiday sales grew by a marginal 0.1% YoY, sharply lower than 2020's 20.9% surge.

Spending lagged 1.4% mid-November, with slight recovery in December.

Sluggish growth is tied to inflation and cautious consumer spending.

📈 Slide 2: Social Commerce Success

TikTok Shop grew by 225.9% YoY, dominating the holiday season.

Shein (20.5%) and Temu (18.5%) also saw strong growth.

Legacy players like Nike (-21.2%), and Under Armour (-21.8%) struggled.

▶🇺🇸 Amazon teams with Hyundai for online car shopping. Amazon Autos, launched in 48 U.S. cities, partners with Hyundai to offer online car buying. Customers can browse, finance, and schedule pickups. The service expands in 2025, adding dealerships and brands, offering seamless transparency.

▶🇺🇸 Temu expands marketplace beyond budget goods. Temu is expanding beyond budget goods to higher-priced items. At a recent footwear expo in NYC, the marketplace engaged with premium brands like Minnetonka to shed its low-cost image and challenge Amazon as the next everything store.

▶🇪🇸 TikTok launches its Shop platform in Spain. TikTok Shop has launched in Spain, its first continental European market. With 20M monthly users, Spaniards can now shop directly in-app. This move follows TikTok’s $100M Black Friday success and precedes a potential U.S. ban.

▶🇺🇸 Amazon donates $1M to Trump’s inauguration fund. Amazon and Meta each pledged $1M to Trump’s fund. Jeff Bezos is also in talks to meet with the president-elect. This marks a shift in Big Tech’s relationship with Trump, aiming for closer ties with his administration.

▶🇬🇧 eBay launches tech trade-in program in the UK. eBay UK launches Trade In, a new service for selling old tech. Partnering with Fonehouse, devices can be traded for cash or coupons. From Dec 9, 2024, to Jan 3, 2025, selected trades get an extra $50 bonus.

▶🇬🇧 Amazon, eBay to fund UK e-waste recycling costs. Amazon, eBay, and others will fund UK e-waste recycling by 2026. The plan creates fairness for UK firms like Currys. E-cigarette makers face added costs. UK households trash 100K tonnes of electronics yearly. New rules will enforce accountability.

▶🇦🇷 MercadoLibre and Nubank clash in fintech battle. MercadoLibre and Nubank battle for Latin America's fintech market, with $94B and $57B valuations. MercadoLibre leads in data mining; Nubank excels in unbanked outreach. Their rivalry may hinder new fintech entrants in the region.

▶🇪🇺 Zalando acquires ABOUT YOU to lead fashion tech. Zalando acquires ABOUT YOU, combining 62M customers to dominate Europe's $480B fashion market. B2B solutions SCAYLE and ZEOS create a powerhouse for brands and retailers. Co-founder Gentz calls it a leap for multi-channel business.

▶🇻🇳 Shein and Temu suspended in Vietnam. Vietnam has blocked Shein and Temu from selling until they register with local e-commerce agencies. The move follows concerns about discounts and counterfeits. Both companies plan to comply but gave no timeline for resuming operations.

▶🇬🇧 Shein's $63B IPO delayed over supply chain issues. Shein's $63B London IPO faces delays due to UK regulatory checks on supply chain oversight. Allegations of forced labor in China’s Xinjiang region have raised legal concerns. IPO approval is now targeted for early 2025.

▶🇮🇳 Myntra Turns Profitable, Revenue Jumps 15%. Myntra achieved profitability in FY24 with $372M net income, up 15% revenue to $617.8M. Key costs like materials dropped 8%, while Myntra launched quick delivery services like “M-Now.” Expenses fell 3%, driving success.

▶🇺🇸 Rent the Runway bets on subscription growth. Rent the Runway grew Q3 revenue 4.7%, hitting $75.9M. A new $119/month tier aims to boost subscribers, who drive 87% of revenue. CEO Jennifer Hyman sees 2025 as a big year for growth via onboarding improvements and inventory investments.

▶🇪🇸 Inditex reports 7.1% sales growth in 2024. Inditex, Zara's parent, posted 7.1% sales growth to $29.1B, profits rose 8.5% to $4.7B. It now operates 5,659 stores across 45 markets. Autumn/Winter sales climbed 9% YOY, solidifying the company’s global retail dominance.

▶🇩🇪 Adidas raided over customs and tax investigation. Adidas' German HQ was raided due to a tax probe on imported goods from 2019-2023. Offices in Herzogenaurach were searched. The company, cooperating with authorities, expects no major financial hit. Stocks remain stable despite recent scandals.

▶🇺🇸 Instacart cuts valuation to $13B for IPO prep. Instacart’s valuation dropped to $13B, down from $39B in 2021. The company filed for an IPO, cut staff by 3K, and reduced costs amid market volatility. Employee shares form the majority of the IPO, impacting investor expectations.

▶🇺🇸 Feds investigate HelloFresh over child labor. Feds are investigating HelloFresh’s Aurora facility and Midway Staffing over child labor claims. HelloFresh terminated Midway and denied wrongdoing. Midway also denies hiring minors. The case involves Factor, acquired by HelloFresh in 2020.

▶🇮🇳 Swiggy debuts One BLCK with exclusive perks. Swiggy unveils One BLCK, an invite-only membership offering exclusive perks like faster deliveries, free cocktails, and premium brand partnerships. Introductory plans start at $3.60, aiming to boost customer retention and engagement.

▶🇺🇸 DoorDash tests benefits, pays Dashers $200. DoorDash’s Portable Benefits Pilot paid 4,400 Dashers an average of $200 over six months. Despite funding for health insurance, only 7% used it for that. Most Dashers prefer independent work with benefits over full-time employment.

▶🇺🇸 Grubhub partners with Hilton for 2.6K hotels. Grubhub now serves over 2.6K Hilton hotels, expanding its 2023 partnership with the brand. Guests at Hampton, Tru, and Spark properties can enjoy food, grocery, and convenience deliveries. Grubhub benefits from greater U.S. brand visibility.

That’s all. See you next time in the 🌀Maze!