{"id":495,"date":"2011-09-14T20:21:37","date_gmt":"2011-09-14T20:21:37","guid":{"rendered":"https:\/\/imagemme.com\/newsite\/?p=495"},"modified":"2020-07-24T22:07:24","modified_gmt":"2020-07-24T22:07:24","slug":"zara-case-study-spanish-retailer-finally-moves-to-ecommerce-what-were-they-waiting-for","status":"publish","type":"post","link":"https:\/\/imagemme.com\/newsite\/zara-case-study-spanish-retailer-finally-moves-to-ecommerce-what-were-they-waiting-for\/","title":{"rendered":"Zara Case Study \u2013 Spanish Retailer Finally Moves to Ecommerce. What Were They Waiting For?"},"content":{"rendered":"

September 7, 2011 was an epic day for American fast-fashion fans.\u00a0 The Spanish retailer, Zara, owned by parent company Inditex, finally launched its ecommerce site.\u00a0 What on earth took them so long?<\/p>\n

When I saw the first announcement of their ecommerce launch I ran home and dug through my undergrad course work and quickly produced a case study I\u2019d read in 2003.\u00a0\u00a0 \u201cZara: IT for Fast Fashion\u201d a Harvard Business School case study that examined Zara\u2019s IT infrastructure and how it supported their unique business model.<\/p>\n

Two important caveats from this case study stuck out in my mind.<\/p>\n

    \n
  1. Zara\u2019s business model closely linked customer demand to manufacturing and distribution.\u00a0 Inventory depended largely on the location of the store and what particular customers were buying.\u00a0\u00a0 They understood that their consumer had a penchant for trend driven pieces, and that marketing and advertising efforts lengthened the lead-time.\u00a0 Thus their marketing budget was usually .3% of revenue, and Zara was able to get high fashion looks in stores while they were still hot.\u00a0 Zara didn\u2019t need to convince their consumers to buy with advertising and marketing efforts, rather they changed 75% of their inventory every three to four weeks, so consumers knew to constantly frequent the store for up to date items.<\/li>\n
  2. Secondly, Zara had decided not to retail clothes online because of the high rate of returns (retail mail order rates were 50-60% whereas in store was roughly 5%), and because their distribution centers were not configured for small pick and pack orders.<\/li>\n<\/ol>\n

    If you think about it, Zara\u2019s business model is actually perfect for online retail.\u00a0 Their vertically integrated manufacturing operations allowed for the perpetual introduction of new pieces with short lead times.\u00a0 For the fickle online consumer that wants newness all the time, its heaven!\u00a0 In fact, the top right hand corner of their site pays homage to this brand ethos with a \u201cnew this week\u201d link standing out from the pack.<\/p>\n

    So what took them so long to make the move?<\/p>\n

    The same HBR case study detailed Zara\u2019s intricate IT infrastructure.\u00a0 Zara avoided commercial software and instead wrote custom applications.\u00a0 They also relied heavily on outdated POS terminals, for fear of switching to a newer, more \u201cbuggy\u201d system.\u00a0 \u00a0\u201cIf it ain\u2019t broke, don\u2019t fix it\u201d seemed to be their mantra.<\/p>\n

    Well, it seems as if consumers have made their demands and Zara\u2019s IT department has acquiesced.\u00a0 Their distribution centers are now equipped to handle small scale, direct to consumer orders.\u00a0 And they\u2019ve taken advantage of their prolific manufacturing, and are offering it in the fastest growing medium.\u00a0 Por fin, as we say in Spanish.<\/p>\n

    But what are they doing about their fear of the high rates of return?\u00a0 In the name of research, I placed an order.\u00a0 \u00a0My free shipping arrived in less than 2 days, and I received a follow up call to check on my order.\u00a0 Clearly CRM is top of mind.\u00a0 Like.<\/p>\n

    For those of you expecting superior quality classic pieces that will last a lifetime, you will most certainly be making a return.\u00a0 Zara, themselves, admits their trend driven pieces are meant to worn 10 times and then discarded.\u00a0 However, the new ecommerce launch makes the collections more accessible and less geo-targeted.\u00a0 I no longer have to run between the 42nd<\/sup> street location and the 53rd<\/sup> street location (yes, the inventory is different) because it\u2019s all at my fingertips.\u00a0 I\u2019d like to think of this as more of a loyalty program for current consumers who know the brand, the quality, the fit, than a way to usher in new consumers who might suffer from more post purchase dissonance.\u00a0 Either way, it\u2019s a solid move, Inditex!<\/p>\n","protected":false},"excerpt":{"rendered":"

    September 7, 2011 was an epic day for American fast-fashion fans.\u00a0 The Spanish retailer, Zara, owned by parent company Inditex, finally launched its ecommerce site.\u00a0 What on earth took them…<\/p>\n","protected":false},"author":2,"featured_media":496,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_uag_custom_page_level_css":"","footnotes":""},"categories":[38,62],"tags":[],"class_list":["post-495","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-marketing","category-miscellaneous"],"aioseo_notices":[],"uagb_featured_image_src":{"full":["https:\/\/imagemme.com\/newsite\/wp-content\/uploads\/2016\/11\/zara1.jpg",480,319,false],"thumbnail":["https:\/\/imagemme.com\/newsite\/wp-content\/uploads\/2016\/11\/zara1-150x150.jpg",150,150,true],"medium":["https:\/\/imagemme.com\/newsite\/wp-content\/uploads\/2016\/11\/zara1-300x199.jpg",300,199,true],"medium_large":["https:\/\/imagemme.com\/newsite\/wp-content\/uploads\/2016\/11\/zara1.jpg",480,319,false],"large":["https:\/\/imagemme.com\/newsite\/wp-content\/uploads\/2016\/11\/zara1.jpg",480,319,false],"1536x1536":["https:\/\/imagemme.com\/newsite\/wp-content\/uploads\/2016\/11\/zara1.jpg",480,319,false],"2048x2048":["https:\/\/imagemme.com\/newsite\/wp-content\/uploads\/2016\/11\/zara1.jpg",480,319,false]},"uagb_author_info":{"display_name":"admin","author_link":"https:\/\/imagemme.com\/newsite\/author\/admin\/"},"uagb_comment_info":310,"uagb_excerpt":"September 7, 2011 was an epic day for American fast-fashion fans.\u00a0 The Spanish retailer, Zara, owned by parent company Inditex, finally launched its ecommerce site.\u00a0 What on earth took them...","_links":{"self":[{"href":"https:\/\/imagemme.com\/newsite\/wp-json\/wp\/v2\/posts\/495","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/imagemme.com\/newsite\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/imagemme.com\/newsite\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/imagemme.com\/newsite\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/imagemme.com\/newsite\/wp-json\/wp\/v2\/comments?post=495"}],"version-history":[{"count":2,"href":"https:\/\/imagemme.com\/newsite\/wp-json\/wp\/v2\/posts\/495\/revisions"}],"predecessor-version":[{"id":502,"href":"https:\/\/imagemme.com\/newsite\/wp-json\/wp\/v2\/posts\/495\/revisions\/502"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/imagemme.com\/newsite\/wp-json\/wp\/v2\/media\/496"}],"wp:attachment":[{"href":"https:\/\/imagemme.com\/newsite\/wp-json\/wp\/v2\/media?parent=495"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/imagemme.com\/newsite\/wp-json\/wp\/v2\/categories?post=495"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/imagemme.com\/newsite\/wp-json\/wp\/v2\/tags?post=495"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}