FM-BINUS-AA-FPU-2.
344/R0
123-0505-001
December 2023
Internal Version for BBS Use Only
SUKMA PUTRA
PERI AKBAR MANAF
MEHRAN NAJMEI
FASHIONING THE FUTURE: ZALORA’S
OMNICHANNEL TRIUMPH IN SOUTHEAST ASIA
" Innovation distinguishes between a leader and a follower" – Steve Jobs
Gunjan Soni, the head of Zalora, pondered over the brand's trajectory in the vibrant core of
Southeast Asia's apparel retail hub. As 2023 began, the apparel sector was undergoing a significant
digital metamorphosis. The area's shopping environment was a rich mosaic of varied traditions,
segmented markets, and swiftly evolving shopper tastes. Amidst this backdrop, Zalora stood out
as a luminary in digital apparel commerce, though the path had its bumps.
"Transform, Innovate, and Lead!" This was Zalora's guiding principle from its birth in 2012. The
brand had navigated through many adversities, from early doubts and opposition to its forward-
thinking multichannel approach to the intricacies of tailoring shopper journeys in a region as
multifaceted as Southeast Asia. Nevertheless, Zalora had not only endured but flourished, marking
its territory as a top fashion hub in the area. But the emergence of the COVID-19 crisis and the
ensuing alterations in shopper habits posed new hurdles. The once lively lanes of Southeast Asia's
style centers had turned silent, with the digital hum of e-commerce taking over the lively buzz of
patrons. The health crisis mandated a swift pivot in shopper habits, and Zalora had to recalibrate
promptly. Even with the commendable expansion and achievements in the past, the question
lingered: Could Gunjan Soni navigate Zalora through these choppy waters? The task had dual
facets - maintaining Zalora's momentum in the immediate future while concurrently reshaping the
brand for the evolving landscape. The past strategies were now obsolete, and Gunjan recognized
the need for profound shifts. However, this was a daunting endeavor. It was akin to swapping a
vehicle's wheels while in motion. Gunjan acknowledged that Zalora's robust organizational ethos,
a cornerstone of its prior victories, would be pivotal in this metamorphosis. But she also realized
that mere adaptation would not suffice. Zalora had to not just respond to the future but mold it.
The brand's ambition was to transition from just being a player in the retail game to setting the
pace, defining the next chapter of apparel commerce in Southeast Asia.
Yet, the question remained - how could she successfully transform Zalora while ensuring its
performance in the present? This required a deep understanding of the new customer needs, the
ability to form strategic alliances with new partners, and the courage to implement innovative
business models. These were all moving parts in a complex machine, influenced by numerous
external factors beyond the company's control. However, Gunjan was not deterred. She believed
in the power of Zalora's collective strength, the resilience of its people, and the company's ability
to adapt and innovate. She knew that just as a caterpillar transforms into a butterfly, Zalora too
could metamorphose into a new entity, better equipped to navigate the future. The challenge was
to find the right path through this transformation process, from the known to the unknown, from
the present to the future.
Sukma Putra, Peri A. Manaf and Mehran Najmaei prepared this case from public sources under BBSCC’s supervision. BBS cases are developed
solely as the basis for class discussions. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective
or ineffective management.
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TRIUMPH IN SOUTHEAST ASIA
Industry Highlight: Southeast Asia's Fashion Retail Landscape
The retail sector in Southeast Asia is undergoing a phenomenal transformation driven by the
region's rapid economic development, changing demographics, and technological innovations. One
company at the forefront of this transformation is Zalora, a leading online fashion destination in
Asia. Zalora, part of the publicly traded Global Fashion Group, is a leading online fashion destination
where millions of customers across Asia can shop for thousands of local and international brands.
The company has adopted the principle of "data first, then fashion," relying heavily on data
analytics to inform decisions about everything from marketing to merchandising and operations.
Southeast Asia, comprising 11 nations, including the financial powerhouse Singapore and thriving
economies like Indonesia, Thailand, and the Philippines, is a region of contrasts. Home to over 400
million internet-savvy individuals, it is a hotspot for e-commerce ventures looking to broaden their
horizons. The fashion retail sector in this region is on the brink of a major upswing, propelled by
its swift economic progression, demographic shifts, and tech advancements. By 2023, Southeast
Asia is anticipated to be a goldmine for contemporary fashion businesses. The area's youthful
population and burgeoning digital realm are the catalysts behind this surge. Projections suggest
that by 2023, the e-commerce sector here could touch a staggering US$158.50 billion. With
consumer expenditure on an upward trajectory, digital sales across varied platforms are set to soar
in 2023. The fashion domain alone might hit a valuation of US$15.68 billion in the same year, with
a predicted yearly growth of 10.25%, culminating in a potential market cap of US$23.17 billion by
2027.
The race to the top in this domain is intense. To carve a niche, fashion businesses must fast-track
their digital evolution and integrate the most effective strategies. This encompasses harnessing
data analytics to anticipate consumer desires, delivering a seamless shopping journey through
cloud-based solutions, and prioritizing mobile-centric shopping experiences. The ascent of social
shopping and the expansion of markets focused on sustainability, corporate responsibility, and
fashion rentals are also pivotal trends molding the sector. Moreover, advancements in payment
methods, security measures, and regulatory compliance are gaining prominence. Yet, the fashion
retail realm in Southeast Asia is not without its hurdles. Some challenges include Grasping and
addressing consumers' varied tastes, maneuvering through segmented markets, and standing tall
amidst a rising tide of online fashion brands. Amidst this vibrant and challenging environment,
Zalora has positioned itself as a formidable contender, capitalizing on its deep insights into the
region's distinct market nuances to fuel its ascent.
Organizational Biography
Zalora, a leading online fashion destination in Southeast Asia, was launched ambitiously in 2012
with the backing of Rocket Internet. The company's goal was to dominate the online fashion market
in the region. Despite facing initial skepticism due to the nascent state of e-commerce in Southeast
Asia and the logistical challenges of serving such diverse markets, Zalora's founders remained
steadfast in their belief in the region's potential and the transformative power of the digital
revolution. The company's early adoption of an omnichannel strategy, which integrated online and
offline experiences, was a pioneering move in the region. This strategy, however, was met with
resistance, leading Zalora to invest heavily in consumer education, trust-building, and logistics
infrastructure.
Challenges and Performance Across Southeast Asia
Zalora's trajectory in Southeast Asia has been a blend of hurdles and achievements. Initial doubts
arose from industry experts, given the early stages of e-commerce in the region and the
complexities of catering to varied markets. However, a pivotal moment for Zalora was recognizing
the significance of tailored experiences. When a major promotional effort did not resonate due to
its generic approach, Zalora pivoted to a more data-centric strategy. They delved into AI and
machine learning to offer a more individualized customer journey, even though gathering and
processing data from different markets posed its own set of challenges. In the ever-evolving fashion
industry, Zalora introduced 'Trender', a tool offering brands valuable insights into consumer tastes
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and behaviors. But as the company expanded, it grappled with payment-related issues, especially
the prevalent cash-on-delivery system. This prompted Zalora to venture into digital payment
platforms. Parallelly, Zalora rolled out various endeavors, from fashion events to temporary retail
spaces, aiming to create memorable moments for its clientele.
The Rise of Zalora
In 2012, Zalora embarked on a bold journey, supported by Rocket Internet, aiming to dominate
the online fashion scene in Southeast Asia. Early on, they encountered skepticism and challenges,
especially from those familiar with the region's budding e-commerce sector and the intricacies of
catering to its varied markets. However, the visionaries behind Zalora remained steadfast, seeing
immense potential in Southeast Asia and the transformative wave of digitalization. Zalora quickly
embraced an integrated approach, merging online and in-person shopping experiences, which was
quite avant-garde for Southeast Asia at the time. This innovative strategy was not immediately
accepted, given its novelty to the regional audience. Consequently, Zalora invested significantly in
consumer awareness campaigns, fostering trust, and establishing a robust delivery system.
The Pivot to Personalization
A defining moment for Zalora was recognizing the essence of tailored experiences. They realized
that generic marketing strategies were not resonating with their varied clientele. After a significant
campaign did not yield the expected results, Zalora pivoted to a more analytics-focused approach.
They delved deep into AI and machine learning to offer bespoke customer journeys. Gathering and
deciphering data from different markets was not without its challenges, but Zalora navigated them
by collaborating with tech experts and constantly innovating. Zalora's commitment to
personalization saw them offering real-time tailored experiences across various digital platforms.
Leveraging tools like the Algonomy Hyper-Personalization Suite, Zalora ensured that interactions,
from searches to product suggestions, were tailored to individual tastes and shopping phases,
enhancing customer engagement.
The Future of Payments and Crafting Experiences
In the dynamic world of fashion, anticipating trends is crucial. Zalora unveiled 'Trender', a tool
harnessing data to give brands insights into what consumers desire. By analyzing vast transaction
records from various markets and integrating them with visual analytics, 'Trender' revealed
consumer buying patterns. This invaluable data allowed brands to fine-tune their promotional and
design approaches based on real-time feedback. However, Zalora's ascent faced challenges,
particularly with its cash-on-delivery system, which led to operational snags and delayed payments.
In response, Zalora transitioned to digital payment methods. While this shift came with its set of
hurdles, the advantages were clear, from elevating the customer journey to making the payment
process more efficient.
Alongside this, Zalora embarked on a mission to craft unforgettable experiences for its customers.
They launched various initiatives, including fashion showcases and pop-up retail outlets. A notable
endeavor was the #ZALORAYA2023 campaign, which metamorphosed The Starhill in Malaysia into
a pop-up fashion hub, spotlighting Zalora's curated selections. Impressively, this campaign
resonated with over 14 million people in just a quarter of a year. While these ventures required
substantial investments and presented challenges in bridging the online-offline gap, the potential
rewards were significant. Through these immersive experiences, Zalora sought to deepen its
connection with customers, boost brand loyalty, and distinguish itself in a competitive landscape.
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Zalora: The Omnichannel Personalization Powerhouse
When we examine Zalora's trajectory, it is evident that the brand has traversed a journey marked
by hurdles, doubts, and intense rivalry to stand out as a premier omnichannel merchant in
Southeast Asia. From its bold inception in 2012 to its strategic shift towards individualized and
immersive retail, Zalora has consistently showcased its prowess to evolve, pioneer, and spearhead
in a swiftly changing retail environment. Zalora harnesses data to curate a bespoke shopping
journey for its patrons. By discerning shopper habits and tastes, Zalora can refine its product
suggestions, ensuring patrons encounter the most pertinent selections. This degree of tailoring
augments the shopping journey, culminating in elevated patron contentment and allegiance.
Currently, Zalora's modus operandi is evidence of its triumphant tactics. The brand's precocious
embrace of an omnichannel paradigm has empowered it to meld online and in-person experiences
fluidly, offering patrons a uniform and effortless shopping journey across varied interfaces. Its
commitment to data-centric tactics, underpinned by AI and machine learning, has facilitated the
delivery of individualized patron journeys, boosting patron contentment and allegiance. Zalora's
immersive retail endeavors, spanning from runway events to transient storefronts, have crafted
memorable patron encounters and nurtured a communal ethos around the brand. Its tactical choice
to channel resources into digital transaction methods has refined the transaction journey,
mitigating the predicaments linked to cash-on-receipt transactions and amplifying patron ease.
Conclusion
Peering into the future, Zalora is poised against both trials and prospects in the swiftly
metamorphosing Southeast Asian retail milieu. The area's multifaceted markets, shifting populace
dynamics, and tech advancements craft a multifarious backdrop for operations. Yet, Zalora's
validated flair to adapt and pioneer places it in a favorable stance to maneuver these intricacies
and capitalize on emerging prospects. Zalora's trajectory furnishes invaluable perspectives for retail
aficionados, stakeholders, and admirers. It epitomizes how a brand can harness omnichannel
tactics, individualization, and immersive retail to forge enduring patron bonds and realize triumph
in a vibrant and contested arena. As we persistently track Zalora's advancements, we eagerly
anticipate its continued influence and molding of the retail domain in Southeast Asia. Zalora's
accomplishments in the Southeast Asian retail arena underscore the significance of immersive
retail, eco-friendliness, and tailoring. By capitalizing on data and centering on patron requisites,
Zalora has fostered enduring patron bonds and marked its territory as a regional retail luminary.
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About the Author
Sukma Putra, SE., M.Ed. Currently working as BINUS Case Center Manager
at Bina Nusantara Business School. In the process, he has been involved in
making more than 50 business case studies in BINUS and was certified by Ivey
Business School for case study writing and teaching in 2017. Previously he was
in various positions in Australia Awards Indonesia (AAI) for ten years and
primarily managed projects for prominent alumni in Indonesia, focusing on
development areas such as food security, health, education, poverty reduction,
energy, and innovation of technology and infrastructure.
Dr. Peri A. Manaf Currently working as Subject Content Coordinator at BINUS
Business School – Master Program. He has been teaching for the undergraduate
to graduate program, specifically in the subjects of Marketing, Retailing,
Business Ethics, Strategic Management, and Organizational Behavior. Before
joining Binus Business School, for 17 years, Dr. Peri had been responsible for
diverse finance applications and field operation, retailing, and strategic
marketing in different local and international businesses.
Mehran Najmaei Ph.D. Experienced International Business lecturer and
consultant with a demonstrated history of working with universities and start-
ups. Skilled in Strategic Business Planning, teaching, SMEs Strategies,
marketing research, and data analysis (Social Media Research & Regression
Analysis). Enjoying working in a team, organizing workshops, seminars,
corporate training, and working for good.
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