Excellent Christmas for the online pure players

The online pure players go from strength to strength. Zalando proudly announced that its sales for the period were over €1billion for the first time, but the others have produced impressive results as well.

Figure 1: Leading pure players Christmas performance, 2016
Growth Period Note
y/y %
Zalando 26-28 Q4
ASOS 36 4 months to 31st Dec
UK 18
Rest of Europe 38 At constant currency
Shop Direct 9 7 weeks to 23rd Dec
: : : :
: : : :
Note: Amazon results due at the end of January

Zalando is still the largest. ASOS’ EU sales are little more than 20% of Zalando’s and its group sales are only half of its German counterpart.

Asos vs Zalando

It’s worth highlighting quite how different ASOS and Zalando are. ASOS is geared to the more edgy fashion market in the UK, Zalando has a focus on young fashion, but the more conservative tastes in continental Europe. The following two screen shots of their websites highlights the differences.

Figure 2: Asos vs Zalando, January 2017
[graphic: image 1]
Source: Company websites/Mintel

Shop Direct

Shop Direct has been one of the great unsung (or not sufficiently sung) stories of online retailing in recent years. It has grown out of the mail order industry, but it has done so by launching a completely new business, Very, while leaving the traditional mail order style operation, Littlewoods, to gently decline. With online minimal recruitment expenditure a business such as Littlewoods can be very profitable indeed. But the future lies with Very, whose sales were up 19% over Christmas.

Shop Direct stands out for its success in reconfiguring its business. Even in 2015, its sales rose by 4% in sterling) while the former mail order market leader in Europe, Otto Versand, reported sales down 20% (in €uros). Shop Direct is building impressive momentum. The result for the consumer research for Online Retailing – UK, July 2016 showed that its customer base is still small, relative to Amazon’s, but its sales per customer are much larger.

Amazon and eBay

Amazon and eBay will not report its Christmas sales until after this report is published. We used to take a purist attitude to eBay and not consider it on the basis that it is a marketplace and not a retailer in its own right. But that line is no longer tenable since Amazon’s growth momentum is being maintained by its own marketplace activities. In fact we think that Amazon’s marketplace success is eating into eBay’s sales and the last full year figures for eBay were disappointing.

Where are the sales coming from?

It would be easy to point to the disappointing figures from H&M over December (sales rose only 6% on a 10% increase in store numbers) and suggest that online is winning at the expense of the high street. But we think that would be too simplistic. After all, in the UK we have seen excellent sales figures from M&S and, in clothing, Tesco and Sainsbury’s. That comparison may also be a little misleading because those three companies, especially the first, have a focus on older customers. ASOS and Zalando have a young fashion bias. There may also have been a small benefit from the failure of the likes of V&D or Sinn Leffers, though there again the customer bases of those failed companies were significantly older.

Highly competitive market

It’s true that online is a new channel of distribution and it has great advantages. But it is also true that ASOS and Zalando are young companies, targeting a young market. The real test for both will come in a few years time as their management teams age. It is not always easy for a company to keep abreast of such a rapidly changing market, especially when the senior management are no longer in its customer base. Recent history is littered with fashion retailers who were formerly targeting the young market and have since failed. Mexx is a good example from a couple of years ago and the last 12 months has seen a number of failures, such as MS Mode, that have also failed to keep in touch.


But at the moment, the momentum of these retailers is beyond doubt. They have more market share to gain before they reach maturity.

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