Zalora expects to achieve profitability within 5 years

The e-commerce market in Malaysia is growing faster at 22%, according to COO

By LYDIA NATHAN / Pic By ISMAIL CHE RUS

Online fashion platform Zalora Group expects to achieve profitability in the next five years, as the e-commerce scene in the Asean region continues to grow.

Zalora COO Giulio Xiloyannis (picture) said since the platform was founded in 2012, the group had been doubling in business every year until a slowdown in 2015, due to heavy capital injection needed to fuel the South-East Asia fashion e-retailer’s expansion.

“Zalora is not a profitable company because it is in the region that requires a lot of investments, rather than extractions of capital.

“A big part of what Zalora does is injecting capital in the market we are in, and (we) will continue to do so for the next two to three years until the market is a bit more mature,” he told The Malaysian Reserve in an interview.

Xiloyannis added that between 2017 and 2018, sales increased by 30%-50%, aided by standout periods — namely, the 11.11 sales campaign last year-end.

“Some categories really smashed through (during the sales), like the sports inventory that grew 90%,” he added.

Xiloyannis said the e-commerce market in Malaysia is growing faster than the growth rate set in the e-commerce roadmap at 22%.

As a group, he said Zalora has not reached breakeven — but it is a conscious choice it has chosen to make.

“Our distance from profitability is something we have been able to manage by reducing investments other than into what is absolutely necessary. Being profitable would be like missing the opportunity.”

Xiloyannis said Zalora will also be opening a whole new set-up called “International Drop-Shipping” (IDS) to enable local small and medium enterprises (SMEs) to instantly sell their products throughout the region.

“The aim is to allow SMEs to be able to ship to Zalora Indonesia (for example) overnight. So, the focus is to make Zalora Malaysia a source market for internationalisation,” he said.

IDS will focus on three pillars — training, technology and logistics — while Zalora expects all the SMEs it’s currently working with to be fully on board by the end of 2020.

“Zalora believes in developing local suppliers, local designers and local talents. So, it is not just about collaborating with local talents here, but more about taking them to the international market,” Xilo-yannis said.