Zara Marketing and E-Commerce Research Paper

Zara Marketing and E-Commerce

How Zara uses its Marketing and E-Commerce to spread its Brand

Management 336 Management Information System

Zhenxiang and Lijie pointed out that “The traditional marketing and management of fast fashion industry is experiencing a revolution because of the emerging of e-commerce” (2011, p.01). Today all industries, including the fashion industry are using internet and the latest technology techniques for reducing costs when purchasing, managing, supplying and even marketing products. Like several other industries, e-commerce has re-engineered the fashion industry and has allowed retailers to improve management, communications, processing and avail the chance of having a competitive advantage over others. Looking at the success of several retailers using e-commerce in the fashion industry, “Zara” also jumped in this world of Information Technology in order to market its products using the emerging techniques to remain competitive in the fashion industry.

Zara is a big name in the fashion industry and is famous for making clothing for men, women and children. It has a wide range of upper garments, lower garments, shoes, cosmetics as well as other fashion accessories. Zara having more than 5000 stores in 78 countries works under the parent company Inditex Corporation with its headquarters “The Cube” in La Coruna, Northern Spain. All the programs, proposals, plans, goals and strategies are formulated here at the headquarters which are than implemented in different stores of Zara across the globe. Inditex has eight brands from which ‘Zara’ has a place of crown jewel and growth engine due to its marvelous performance (Murphy, 2008).

Inditex has a long history of beating its competitors in the past. It has also overtaken H&M by getting the title of largest retailer of Europe. It is doing wide expansion and speedily spreading its network in different parts of the world. It has opened 150 Zara outlets only in China during last six years. This huge expansion has also increased the sales of the company by 53% in a period of six years. After doing physical expansion, now Inditex is using its online web network and latest business techniques to reach its target market.

Zara started selling its products online in 2010. Initially targeting Europe and getting a tremendous success, it expanded its sales to the United States in 2011. It estimated $84.13 million online sales from Europe in 2010; but the sales were 13.9% higher than the expectations, showing an impressive figure of $95.77 million (Kenna, 2011). The following paragraphs will discuss in detail how Zara is using the e-commerce and latest marketing techniques for spreading its brand across the globe.

E-commerce Website

Looking at the success of Zara’s competitor, GAP, which is doing online selling since last 10 years; Inditex finally launched an online shopping website for Zara in Spain, Portugal, Germany, Italy, U.K and France in 2010. In the next phase, it took e-commerce to the U.S. which is the largest online market of the world. Instead of opening stores, Zara now uses online sales as a key strategy to expand business in the U.S. resulting in beating their rivals like Gap and H & M. It launched its e-commerce website for all the 50 states in the U.S. In September 2011 along with the “Dear America” campaign. This launch made Zara accessible to those Americans who cannot find any brick and mortar presence of this brand in their surroundings (Kenna, 2011).

An e-commerce shopping analyst at the Forrester Research Centre, Sucharita Mulpuru, said in an interview “The web is a great strategy for them. It’s much cheaper with their nationally recognized [Zara] brand to launch a Web store than to invest in real estate in 50 more malls in the U.S.” (Dishman, 2011).

Looking at the China’s massive demand for fast fashion, Zara entered China’s fashion market in 2006. After opening 100 stores in 40 cities of China, now it has launched its mainland Chinese online store. This way Zara has availed the opportunity of becoming part of the multibillion e-commerce bandwagon of China to compete with the rivals H & M. And Unlqlo in the e-commerce market. Instead of competing on price, Zara is focusing on the new “O2O (online to offline) model of China’s e-commerce market which is a perfect business model. The prices of the items in the virtual stores are same as in the physical stores and offer free delivery (Jing Daily, 2011). This has made it convenient for the consumers of China to easily make an online purchase from a variety of products available and collect their shipment from the near by store.

Consumer Convenience

Inditex delayed its entry in the e-commerce because it wanted to create unique virtual stores for its consumers that gave them a real feel. The e-commerce website of Zara introduced by Inditex is user friendly and enhances the online shopping experience. All the features of the website; such as viewing the product, acquiring details and making a purchase are very easy to use and the consumers do not face difficulties when roaming in different sections of the website. The upload speed of the website is flexible and works in both low and high speed connections.

Zara’s website is quite different from its rival H & M. It was designed to maximize the consumer’s flexibility and has several positive attributes. There is consistency in the display of all items and all the products are displayed on different models. The items of sale can be easily recognized in photographs and user can view the items in multiple angles. A zoom in and out option is also available and customers can easily and quickly find suitable items on virtual store through browsing by size, price or color. A single click on the items shows the details and required information about price, shipment, and terms & conditions of making a purchase.

Social Networks

In order to draw the attention of online consumers, Zara also uses social media/social networking websites. This strategy is working well and millions of fans have joined Zara’s page on these social networks. It has more than 11 million face book fans from which 400,000 are only in U.S. (Kenna, 2011). Zara post official content as well as latest items pictures on this page in order to keep its regular consumers informed about the latest news and items. This way Zara is using the social media strategy to encourage the brand love and engage its consumers to post and text on these social media websites and share their views.

Smart Phone Apps

Inditex has also introduced a smart phone application for Zara which gives consumers the chance to browse new clothing arrivals on their cell phones. Soon a toll-free customer hotline will also be started for shoppers and a new mobile app for China market will also be launched in order to enhance the online shopping and check online availability.

Inventory Management and Distribution

Zara has expertise in inventory management and distribution which is helping expand its business in consumer market. Zara changes its item collections twice a week, dispatches products on time from different centers in Spain and makes available for the Europe, U.S. And China consumers within 3-5 days. The advantage of this quick manufacturing and delivery of products is the frequent visits of consumers who know well that there will be something new to buy in Zara stores after every two weeks.

The key advantage of Zara is its control on the production process, quick conversion from trend to creation & creation to stores and its ability to quickly customize products.

According to Simon Irwin, who is an analyst at Liberum Capital in London, “Zara’s online business will be more successful in the U.S. than its competitor H & M. And the annual sales will be €1.4 billion ($2 billion), or 7% of group sales by January 2014” (Kenna, 2011). This is due to the reason that Zara itself manufactures its products while other brands like H&M depend on suppliers. Zara can produce as quickly as it wants but other brands have to insist suppliers for quick delivery.

E-Commerce Product Diversification

After targeting online U.S. shoppers for one year, Zara announced to extend its product range to home collection. Inditex launched e-commerce website on Oct 9, 2012 which is the destination for the home products and targets 41 countries. The different categories of home collection include Bedroom, Bathroom, Living Room, and Tableware and kids section. This website also hosts videos that show the display house-ware in a home, a look book and virtual catalog (Deatsch, 2012).

Conclusion

Zara that always did extensive growth by opening stores and increasing foot prints has now diverted towards e-commerce. Inditex, the parent company of Zara is now focusing on latest techniques of e-commerce rather than doing physical expansion for accelerating the sales and competition in the market. Inditex virtual sales stores started in Europe have now been expanded to U.S., China and several other countries.

The new e-commerce movement by Zara has made the collections more easy and accessible for its consumers. Now there no need to run to the stores; as everything is on the consumer’s finger tips. Virtual stores can be visited unlimited number of times and items can be received either at home or a nearest store within 2-5 days. According to Lopez and Fan “Zara’s vertical integration of design, just-in-time manufacturing, delivery and sales; flexible structure; low inventory rule; quick response policy and advanced information technology enable a quick response to customer’s changing demands” (Lopez and Fan, 2009, p.281). Consumers can customize their products online and place an order which can receive by them in a very short period. Zara’s new e-commerce growth strategy is perfect not only for the new markets but also for its loyal customers who know the brand, its quality and the comfortable fit that Zara has provided them for years.

References

Deatsch, K. (2012). “Zara will add home goods to its U.S. e-retail ensemble.” Internet Retailer, Portal to E-Commerce Intelligence. Published Sept 28, 2012. Retrieved Dec 05, 2012.

http://www.internetretailer.com/2012/09/28/zara-will-add-home-goods-its-us-e-retail-ensemble

Dishman, L. (2011). “H&M and Zara Duke It Out for U.S. Online Sales While Urban Outfitters Moves on Face book.” Forbes. Published Aug 31, 2011. Retrieved Dec 05, 2012.

http://www.forbes.com/sites/lydiadishman/2011/08/31/hm-and-zara-duke-it-out-for-u-s-online-sales-while-urban-outfitters-moves-on-facebook/

Jing Daily. (2012). “Zara Jumps On China’s E-Commerce Bandwagon.” The Business of Luxury and Culture in China. Published Sept 4, 2012. Retrieved Dec 05, 2012.

http://www.jingdaily.com/zara-jumps-on-mainland-china-e-commerce-bandwagon/20571/

Kenna, A. (2011). Zara Plays Catch-Up with Online Shoppers. Bloomberg Business-week Magazine. Published August 25, 2011. Retrieved Dec 05, 2012.

http://www.businessweek.com/magazine/zara-plays-catchup-with-online-shoppers-08252011.html

Lopez, C and Fan, Y. (2009). Internationalization of the Spanish Fashion Brand Zara. Journal of Fashion Marketing and Management. Brunel Business School, 13:2, 279-296.

Murphy, R. (2008), “Expansion Boosts Inditex Net,” Women’s Wear Daily, April 1

Zhenxiang, W and Lijie, Z. (2011). Case Study of Online Retailing Fast Fashion Industry. International Journal of e-Education, e-Business, e-Management and e-Learning, Vol. 1, No. 3. Published in

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