Zalando, a Wardley map about how they play the game

This map is a draft map I did just checking the different web sites Zalando has for different purposes.

This company continues evolving and gaining presence in the online retail business in Europe, and to understand the culture, main components, and other features is something I wanted to understand.

The map

Let’s start with the map, and then I will add some comments about my view after reading and digesting information about the company.

This map below is the original one I did in September 2021 (I have done some updates you can find at the end of the article):

Main Wardley map of Zalando

I have set a component in the middle just called “Zalando”, the reason to set that position is because they see themselves as leading a transformation, they see themselves in a continue development of their own destiny.

On the right, they have their sites per country where they attend specific niches of users (this is common to the market).

Users have some needs and I marked them in blue. I checked with some friends that have used Zalando and they told me: they are different in the way that they have well known brands and free shipping and return.

In terms of logistics they have agreements with different main delivery carriers that in my view is common in the market, there are 12 locations in 6 countries.

ZMS is Zalando marketing services

and here you can find 3 main components:

  • Creative: they support the onboarding of a brand in the Zalando ecosystem, they provide marketing services to enable the best fit of data into the environment and reach the target consumer.
  • Media: here they have thousand of influencers, audiences and other media resources that can enable a small brand to bright in the social networks and other channels.
  • Insights: they offer data and build models to designers so they can analyze the impact of their specific products in a competitive ecosystem.

In all descriptions of these 3 main services you can read how they use technology as lever to deliver value services. IT is in the DNA of all services.

Acquisitions

In the past they have acquired some local retail business and I have not been able to understand the specific reasons to do that. I can guess they have done it to gain market and growth in specific niches or countries.

Zalando’s last acquisition has been meepl. The main product they offer is the ability to scan a body with just 2 pictures, so I guess they are planning to use this for the end user and enable they can try clothes sending pictures and improve the user experience.

The strategic decision to become an European digital platform happened in 2013, following the example of Chinese companies, and making the company to shift to a new different future.

Open source

Zalando has different blogs and sites, for instance this one for engineering, or this one. All narrative I have found is that they are using open source tools, principles and philosophy as doctrine to improve their ability to change, adapt and deliver fast.

They have this updated tech radar: https://opensource.zalando.com/tech-radar/

Zalando tech radar June 2021

And you can check the main page of https://opensource.zalando.com where you will find how they work in a continuous adoption of new technology.

Org structure of Zalando Open Source

Internal guilds

composed by more than 200 development teams. Read the names, it’s not just technology: they work the user behavior, the producers, and so many aspects of the user using a technology umbrella first.

Management of initiatives

They manage their main campaigns using projects and programs as the vehicle to drive their business,

You can find explanations in the blogs about how the prepare Black Friday (2019) campaign from different perspectives, for instance the testing cycles:

Black Friday Testing structure for 2019.

Their engineering blog is a fantastic source of information. I have been able to pick different project initiatives and key goals from their posts, and then try to connect with their main vision:

Programs, projects and key goals of Zalando, connected to their vision

Doctrines

I have identified these doctrines being present in Zalando. I cannot know more from outside and how healthy they are. The previous mentioned blog and the code of ethics, is a great source of data.

They use these words: customer focus, speed, entrepreneurship, empowerment,

Doctrines table

Agility on Procurement

The aim of being fast reaches procurement. I found this 7 minutes video where Zalando’s head of procurement summarizes how agile is used in procurement. Agile is identified as part of the company culture and the use of scrum and other agility frameworks is just the result of the conviction of this type of building the value for the company.

snapshot from the video

Climatic patterns for the online retail industry with Zalando in the middle

This is my personal view about the climatic patterns that affect the industry:

Climatic patterns identified for the on-line retail industry and Zalando in the middle

Gameplays

This is my personal view about the gameplays that Zalando is putting in place.

Gameplays for Zalando

The combination of Open Source, sensing engines (ICL) and the desire to be the “first mover” in an environment where they move very fast is one combination that is making them to succeed in a very low barrier market with fierce competition.

Some Finance data

Source: https://simplywall.st/ and Zalando IR.

Revenue, earnings, operating expenses
EPS
Debts, equity, cash and equivalents
Increased marketing spend to capture full demand potential drives Q2 profitability lower

Updates to the original map (February 2022)

Updated map V2.0 done in February 2022

The main change to the map is for correcting a big mistake of the original map: the recognition of the existence of zDirect environment, that is the platform that gathers different business activities.

In addition to that I have added Zalando Research, an initiative that looks for understanding the customer problems and challenges through the use of data.

The other update I would like to add is this article about how the technical debt is managed, and that is related to the continuous improvement and learning approach the company has.

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