Europe’s big beton online fashion
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In today’s world, it’s normal to buy clothes online and have them shipped to your home. But back in the 2000s, that proposition was still pretty radical.
German startup Zalando was among the first companies in Europe to bring the brick-and-mortar business of fashion online.
Founded as an online shoe retailer in 2008, co-founders Robert Gentz and David Schneider set out to create a frictionless shopping experience for customers while providing a greater choice of brands and sizes than in-store. Today, Zalando is Europe’s leading online fashion and lifestyle retailer, offering more than 7,000 brands across its platforms.
“Back in the day, many people thought that startups were meant to be tech platform-focused, rather than handling things like inventory or shipping that were seen as too complicated and eating up too much capital,” says Rainer Märkle, general partner at HV Capital.
“Zalando did something that was really groundbreaking by getting into physical goods. That was a really new thing for the Berlin startup scene.”
HV backed Zalando at seed with a €250,000 cheque, and continued supporting the company up until its IPO in October 2014.
“That’s the dream of any venture capitalist,” says Rainer. “I was in the basement in Berlin seeing the guys pack their first parcels to go out to customers. And then six years down the line, I was there when they rang the bell at the Frankfurt Stock Exchange. We demonstrated that HV is really a lifetime partner all the way.”
In today’s world, it’s normal to buy clothes online and have them shipped to your home. But back in the 2000s, that proposition was still pretty radical.
German startup Zalando was among the first companies in Europe to bring the brick-and-mortar business of fashion online.
Founded as an online shoe retailer in 2008, co-founders Robert Gentz and David Schneider set out to create a frictionless shopping experience for customers while providing a greater choice of brands and sizes than in-store. Today, Zalando is Europe’s leading online fashion and lifestyle retailer, offering more than 7,000 brands across its platforms.
“Back in the day, many people thought that startups were meant to be tech platform-focused, rather than handling things like inventory or shipping that were seen as too complicated and eating up too much capital,” says Rainer Märkle, general partner at HV Capital.
“Zalando did something that was really groundbreaking by getting into physical goods. That was a really new thing for the Berlin startup scene.”
HV backed Zalando at seed with a €250,000 cheque, and continued supporting the company up until its IPO in October 2014.
“That’s the dream of any venture capitalist,” says Rainer. “I was in the basement in Berlin seeing the guys pack their first parcels to go out to customers. And then six years down the line, I was there when they rang the bell at the Frankfurt Stock Exchange. We demonstrated that HV is really a lifetime partner all the way.”
A complexproblem
For HV, backing Zalando was a test of whether e-commerce fashion was logistically feasible in Europe. It was a risk, but one that could fundamentally transform how Europeans shop for clothing if the founders were to succeed.
Building a platform like Zalando was challenging. It didn’t only require developing a technical foundation, but bringing on board shipping providers, payment providers and brands who were willing to sell via online channels. It also meant establishing supply chains and delivery networks and creating a great user experience for customers — all while ensuring the business model remained cost-efficient.
“Back then, building an e-commerce business was all about optimizing every little screw in your business model, because otherwise it just explodes. The level of attention to detail the founders had was critical, and helped them overcome huge problems,” says Rainer.
“The DNA of Zalando is being very analytical, very data-obsessed. They tracked every single KPI, every development. The answer was always technology and data. The answer was never just people and money,” he adds.
In Europe, Zalando pioneered a free shipping model, as well as a 100-day free return policy, breaking down a key psychological barrier customers had about shopping online.
Within a year of its founding, Zalando expanded to Austria. The Netherlands and France followed in 2010, and in 2011 Zalando expanded into Italy, the UK and Switzerland.
Today, Zalando is present in 29 countries across Europe.
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An entrepreneurial flywheel
Zalando’s legacy extends beyond its impact on the fashion industry.
“The company demonstrated what is possible for entrepreneurs in Europe, inspiring those who were previously hesitant to found their own businesses,” says Rainer.
Zalando has bred a network of alumni that have started their own businesses — and now invest the proceeds into the next generation of startups. Gentz and Schneider themselves are also active angels.
A special thing about Zalando is that the founders are still leading the company today as co-CEOs, which isn’t always the case after a company goes public.
Rainer says he often questioned the founders throughout their journey on whether they would be able to lead a publicly listed company, where founders have greater exposure to the public, and businesses have rigorous milestones set by investors to adhere to.
But Gentz and Schneider always showed a great willingness to grow into the leaders a public business requires.
“They always said, we will always spearhead the company and we will bring external experts with domain experience into our organisation. But we want to be the ones shaping the culture and DNA of Zalando,” he says. “This was a pretty unique way of business building.”
Zalando didn’t just build a business; it fundamentally shifted consumer behaviour. By pioneering the ‘try before you buy’ model and reducing overall friction, the company transformed European customers’ willingness to buy fashion online.
"The DNA of Zalando is being very analytical, very data-obsessed. They tracked every single KPI, every development. The answer was always technology and data. The answer was never just people and money."
Rainer Markle
General Partner, HV Capital
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