Introduction
Zalando and ASOS are two interesting cases in terms of behaviors in emerging and developing markets, such as the UK and India. This essay will implement various theoretical concepts, including high- and low-context nations, distribution strategies, cultural adaptation, and Hofstede’s cultural dimensions framework, to analyze their strategies. The work’s purpose revolves around reviewing the approaches to promotion, distribution, targeting, positioning, and segmentation with the help of theory and relevant literature.
Background Information
Zalando is a multinational e-commerce fashion clothing company headquartered in Berlin. As of 2021, its net sales exceeded €10 billion (Zalando, n.d.a, para. 1). The company’s overall profits have been growing since 2014 due to intensified foreign market expansion (Cadieux and Heyn, 2018, p. 5). Zalando’s (n.d.a) 48 million active customers enjoy choosing from 5,800 various brands of clothing, shoes, and accessories (para. 1). With its platform-based business model, Zalando remains a prominent name in Europe’s e-commerce.
ASOS is another globally renowned clothing retail business that serves customers in multiple markets. Based in London, the company offers a mix of its own product lines and other brands and has websites for processing online orders in the UK, the US, Australia, and some European states (ASOS, n.d.b). For customers in Asian markets, such as India, international shipping through collaboration with delivery partners is available (ASOS, n.d.a). In 2021, it had over 21 million users as the active customer base (ASOS, 2021, para. 1). ASOS and Zalando are, therefore, incomparable in terms of size.
Promotion
ASOS and Zalando have multi-component promotion strategies when it comes to the UK. Zalando’s co-CEO Robert Gentz defines the corporation as a “child of the European single market,” which implies its limited adaptability to cultural dissimilarities (Zalando, 2021a, p. 4). Aimed at developed countries, its promotion strategy incorporates seasonal family/friend discounts, coupons, and promotional codes, as well as social media and platform advertising (Zalando, 2021a). Inter-brand collaboration, including its recent partnership with Sephora, increases Zalando’s customer outreach. For ASOS UK, the common means of promotion include individualized e-mail notifications, special offers in its mobile application, leaflet and booklet dissemination, and magazine advertising (ASOS, 2021). The strategies above exemplify high-context cultures’ emphasis on contexts, which makes such approaches suitable for the UK.
No culture-related accommodations exist to align promotion strategies with the developing markets’ needs. Both companies’ product promotion efforts reaching the Indian market are limited to general information available in English. Zalando’s website for clients in India was established and shut down more than twelve years ago, even before the start of consumer transactions (Cadieux and Heyn, 2018). This could be attributed to the company’s limited understanding of the local market’s cultural characteristics and unpreparedness for e-commerce models prevalent in India. ASOS’s promotional efforts in India are limited by ethical causes and supporting the disadvantaged youth financially (ASOS, 2021). Within the frame of such efforts, ASOS also collaborates with India’s sports schools (Roy, 2020). Both UK and India are categorized as high-context cultures, which might imply the shops’ general strategies’ partial applicability to India (Patel, Trivedi and Yagnik, 2020). Table 1 has been created for this assignment to discuss promotion-related elements that could make both companies successful in high-context cultures.
Table 1. Peculiarities of high-context cultures manifested in ASOS’s and Zalando’s approaches to promotion
Physical Distribution
As for developed markets, Zalando employs a direct distribution strategy by operating thirteen order fulfillment centers in Europe. Zalando (n.d.a) provides retail services in 23 markets, including European countries, but its physical presence in Asia’s developing markets is limited (para. 1). Its new distribution center in the Netherlands is anticipated to reduce order delivery times for clients in the UK even more, thus promoting greater satisfaction (Zalando, 2021c). Regarding its offers aside from clothing, Zalando’s (2021a) physical cosmetics retail units are located in Berlin. For the last few years, Zalando has been pursuing the goal of digitalizing physical stores. Its Connected Retail project has been successfully launched in more than ten locations in Europe (Zalando, 2021a). The program supported Zalando’s sales and transactions during pandemic-related lockdowns.
ASOS, a UK-based company, operates fully online and does not have physical stores. As of 2021, its warehouse network consisted of fulfillment centers in Barnsley, Doncaster, Selby, Lichfield, and four more centers outside of the UK (ASOS, 2021). Some of the order fulfillment points implement process automation, which makes same-day delivery to multiple locations in the UK possible (ASOS, 2021). To some extent, physical stores’ absence aligns with a preference for online shopping that young people display.
Regarding India, the businesses lack convenient distribution solutions with prompt parcel processing. Based on distribution strategy theories, the nature of demand and customers’ perceptions concerning products can force distribution channels’ modification (Hollensen, 2020). This might imply an insufficient demand for Zalando’s and ASOS’s offers among Indian customers. Zalando decided to quit the Indian market more than ten years ago and has not attempted to reenter it yet, which explains the absence of physical stores. Zalando Lounge does not deliver orders to customers in India, and the corporation does not emphasize solutions for this audience (Jordan, 2021). Zalando’s position on serving individual customers in India is vague, so the latter can only resort to more complicated parcel delivery schemes (Jordan, 2021). Specifically, customers are offered to use Planet Express, the U.S.-based package forwarding service, to get their orders (Jordan, 2021). As for ASOS (2022), Indian customers can choose between express and standard delivery options, both of which involve additional customs fees that clients need to research independently. Parcels are shipped from the UK, the key country of operations.
The STP Marketing Model
Segmentation
Zalando and ASOS do not have separate consumer segmentation approaches for the UK and India as the Indian market is not considered specifically valuable. Therefore, the retail brands’ strategies for developed markets are applied universally and enable the companies’ websites to attract English-speaking consumers from the emerging markets with relevant tastes and preferences. Table 2 below lists the key consumer segmentation characteristics for the two businesses with reference to demographic and psychographic details.
Table 2. Consumer segmentation characteristics for Zalando and ASOS
Targeting
The businesses in question have dissimilar targeting strategies for developed markets and no dedicated approaches for consumers from India. Women are Zalando’s main target; they represent over 60% of its active customers in Europe (Divert, 2018, para. 3). Zalando’s representatives make it clear that the UK market is not the key priority area, though its sales in the UK remain considerable, especially among adult women (Brehm, 2019). Zalando sells both affordable and more expensive branded items, which attracts middle-class consumers with a preference for street fashion and more classic styles. ASOS targets both sexes equally and places a clear emphasis on socially active young adults, which finds reflection in its recent TikTok campaign (ASOS, 2021; Wightman-Stone, 2020). Individuals with a clear preference for bold and exciting color palettes rather than reserved shades represent ASOS’s target audience (Wightman-Stone, 2020). These peculiarities might imply ASOS’s popularity among the representatives of the creative community, freelance workers, or those in informal office spaces rather than industries with strict dress codes, and Zalando’s situation is different.
Positioning
ASOS positions itself as a retailer that stays at the forefront of fashion trends, which even includes some intersections with diversity and social justice narratives. Through collaboration with gender-nonconforming, ethnically diverse, plus-size, and shorter models in the UK, ASOS (2021) occupies the niche of a retailer that offers clothing solutions for everyone without imposing appearance-related standards on its target audience. By launching its Eco Edit and Reclaimed Vintage product ranges, ASOS seeks to incorporate customer division across aesthetic preferences (modern versus vintage designs) and perspectives on sustainable fashion into its offer (Zhi, 2021). ASOS (2021) has recently increased the selection of sustainable and ethical brands to instrumentalize green narratives’ growing popularity. In terms of pricing, its offerings are relatively inexpensive, which increases the role of affordability in positioning.
Zalando’s positioning approach is rooted in unique recommendations, a wide range of prices, and affordability for an average European customer. The retailer differentiates itself from other fashion companies in Europe by offering a mix of high-end and affordable brands rather than relying on luxury and premium items (Zalando, 2021a; Zalando, n.d.b). Zalando assists users from the UK and India in studying the offer and placing orders by personalizing outfit recommendations with the help of the Algorithmic Fashion Companion tool (Marr, 2019). Based on this, orientation at personalization also permeates its positioning strategy.
Hofstede’s cultural dimensions and the ideas of cultural adaptation could be applied to assess the companies’ performance in the UK. As per the country comparison tool, the UK scores higher than India on the individualism, masculinity, and indulgence scales, and both countries manifest high long-term orientations (LTO) (Hofstede Insights, 2022). Zalando’s use of AI to offer personalized recommendations and ASOS’s bright and provocative designs fit into the country’s individualism and high indulgence scores. Also, in their advertising campaigns, both ASOS (2021) and Zalando (2021b) avoid categorizing characters based on their socio-economic status. This decision aligns with the market’s low power distance scores and pro-equality narratives.
Hofstede’s ideas are helpful for evaluating the retailers’ potential for entering India. Due to the recent counterfeiting boom, customers in India have become more cautious about authenticity (Verma, Kumar and Yadav, 2018). Both retailers provide authentic products, so the culture’s LTO, in the form of customers’ patience, could be instrumentalized, and clients will be ready to wait for their parcels if product quality is guaranteed. Based on the products available for Indian customers through Stylicy (n.d.), ASOS has various offers that meet these customers’ aesthetic preferences linked with high masculinity scores and gender role distinction, such as dresses and floral prints. ASOS has various items to consider Indians’ growing appreciation of western garments, but its unisex models could turn out to be unpopular given India’s strong gender norms (Rahman and Kharb, 2018). Zalando’s (n.d.c) wide selection of styles, including classic expensive-looking outfits, could fit into India’s acceptance of inequalities in power distribution and clothing as a manifestation of one’s social position. Therefore, despite the need for more extensive consumer research, the retailers’ and Indian customers’ philosophies are not mutually exclusive, which could create opportunities for entering India.
Conclusion
Finally, Zalando and ASOS have some success in developed markets, which stems from an increased awareness of consumers’ psychographic profiles, whereas collaboration with Indian customers remains scarce and unsystematic. As for best practices and success factors, by emphasizing high-quality and relatively affordable clothing in sports, classic, and chic styles, the retailers, especially ASOS, incorporate younger generations’ values in the UK into their offers. Moreover, staying up to date with social justice trends by raising the topics of diversity and non-conformity in their campaigns also facilitates the companies’ positive reputation in developed markets. As a German company, Zalando still effectively reaches customers in the UK’s high-context culture, whereas its past attempts to enter India failed for unreported reasons. Unfortunately, the Indian market remains a poorly explored area of operations for both retailers, resulting in the absence of physical stores in India and convenient order delivery options for local customers. Cultural disparities, including the varying degrees of traditionalism versus progressivism in clothing choices, could explain the absence of large-scale collaboration.
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