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Thursday, June 19, 2014

Asia Fashion Summit 2014 - In Talks With Mr Harry Markl, MD of Zalora

AFS 2014 Steven Kolb_1
Mr Steven Kolb, CEO CFDA
Buyer's Panel with Tracy Phillips, Franz Kraatz, Rick Yoo and Buyer from Galeries Lafayette Jakarta
AFS 2014 Harry Markl Zalara
Mr Harry Markl, MD of Zalora
AFS 2014 Franz Kraatz-1
Mr Franz Kraatz, MD of Robinsons
AFS 2014 Thomas Tait Colin McDowell_2
Thomas Tait and Colin McDowell in conversations
The inaugural AFS 2014 was definitely another enriching, learning experience for me this year, despite the usual two days of talks being condensed into one day. I especially enjoyed listening to Mr Harry Markl, Managing Director of Zalora, talk to us about e-commerce strategy and building a successful online business model. Naked Glory sat down with Harry and had a quick chat to learn more about what makes the relatively young company tick. 

Naked Glory: Zalora has quite a number of labels that are priced very competitively when we compare it against blogshops. So how does it differentiate itself from the offerings from blogshops? 
Harry Markl: Zalora is primarily a multi-brand online store, and we bring in targeted brands for certain customer groups. I feel that in SE Asia, there is a gap in the overall product offering, which is offering fashionable products at affordable pricing.

We also have our own inhouse brand Ezra by Zalora, with an attractive price point. It's not cheap but affordable. In comparison to Love Bonito which also manufactures some of its own apparel, they have a loyal customer who is slightly different from ours. We choose to analyse what our customers are looking for and then bring it to then at a good price point and in that sense we do not really focus on differentiating from a blogshop.

Basically we are about fast fashion products - fast sellout and short shelf life - and we bring in new products constantly. We are lucky to be away from big competitors in ASOS, as we are based in SE Asia and we can mannufacture in Indonesia and have a lead time of less than 45 days, which gives us a big advantage.

NG: Are there plans to have Ezra take up the major share of revenue for Zalora in the coming years?
HM: Yes, definitely. Ezra was launched since Sep 2013 and is very successful. We have a design team in Singapore of 15-20 people, merchandisers, patternmakers in Vietnam, China and other parts of Asia in order to form a seamless supply chain.

We also plan to have relevant high street labels - currently we stock Mango, River Island and New Look but it would be nice to have some local champions such as Charles & Keith on board. And finally to have private labels forming 40% - 50% of the revenue eventually.

NG: Charles and Keith used to be stocked at Zalora right?
HM: Exactly but eventually they dropped us. A lot of brands are not sure if it will affect their offline business and in many cases they need to realize that online an important channel. It's not a brand choice, it's a customer choice and the demand is there. We are not going upon price, but we are going upon product and making sure the product mix is always good for our customer base.

Offline will always be bigger than online even 10 years from now and brands would need to align their channel strategy and not have a significant difference in prices online vs offline.

NG: Zalora recently took up Sephora account. Why do you think Sephora was willing to work with you despite already having their online retail presence in US, UK and Europe? 
HM: It is likely that they took us up as we are targeting the same customer - young, fashionable and trendy. Also, online retail is complex especially in the SE Asia context, it is not a black and white playing field. It may be harder to ensure that the product is fulfilled when only 10% of the population here owns a credit card. You need to offer cash on delivery options and you need to be able to deliver the product without certain infrastructure in time, while not affecting the brand negatively.

NG: Zalora had a big marketing budget initially and was aggressive in advertising online on different channels such as Facebook, banner ads on websites and such. How do you keep the customer still interested and product moving now?
HM: Yes, customer acquisition is quite expensive online but the good news is that it's comparatively cheaper in Asia to acquire a customer - it's one tenth of what you would pay in Europe and so acquiring a large customer base is much cheaper.

Now Zalora enjoys a large share of organic traffic and we can release some of the marketing budget to other areas. We strongly believe that we need to be offline as well to up the market perception of our brand and we intend to spend more of the marketing budget offline.

NG: Would that mean more popups in the future?
HM: Zalora recently had our 2nd anniversary popup event at Tiong Bahru, which was very successful. 70% of the people bought something at the popup, with great feedback for Ezra.

Thank goodness that the Zalora team is young and our staff enjoyed organizing the popup store, despite working longer hours. But if we were to do it more often in dept stores for example, we would have to hire an exclusive team doing it. But yes, there are definitely plans to do it again in the future as it allows customers to understand more about what Zalora stands for.

NG: What can we expect from Zalora moving forward?
HM: High street brands definitely remain one of our top focus - it is not a question of if we would bring them in, but when. We plan to have Topshop, Dorothy Perkins, Miss Selfridge etc and our team is working hard to get all the relevant brands online. In the next 2- 3months we would have lots of new brands coming in.

The big mistake which we made in the past was that we tried to be too broad but it confuses the customer. We had Kids, Home & Living, we had BCBG Max Azria with low end products as well. We learnt that we need to stand for something and be more focused in terms of our product assortment. We would not go up the price ladder - but always remain affordable fast fashion.
Every month or every 45 days we get a new collection from each of the brands to keep the customer constantly excited, engaged and eventually buy more, while keeping price points wallet friendly. 

Hope you have taken away something from the interview. I certainly have, considering that I'm a business student interested in working in the business side of fashion in the future. Essentially, business still drives fashion and it is a competitive and fast-moving market in retail, despite all the surface glamour of fashion. 

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