Jul 23, 2015
Zalando struggles with its payment methods
Jul 23, 2015
All that glitters is not gold. Though e-commerce seems to be the perfect platform for a brand, the pitfalls of online buying are often forgotten. The latest victim of an unsuspected setback is Zalando's German site, which is struggling to get its clients to pay for their purchases.
In addition to the expenses incurred with the management of returns, Europe’s top player in online retail is having a very hard time with customer payments, reports German media, Wirtschaftswoche.
The online retailer for fashion brands offers its German, Austrian and Swiss market a “pay by invoice” arrangement, and, according to the German newspaper, Zalando is struggling to get its customers to pay even after a series of reminders for an overdue payment. Sometimes they don’t pay at all. Improvement is not in sight, as the Berlin company plans to keep its customer-friendly, though erratic, payment method.
Also, the brand’s profit development can’t keep up with the rising sales. For the second quarter of its financial year Zalando anticipates an EBIT of €22-37 million, significantly down compared to the €35 million for the same period a year prior. The reasons for this forecast could include Zalando’s idle customer behaviour.
What measures the German brand will take against this rising trend are still unknown. The brand will submit its final second quarter results mid-August.
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