Zalando replaces up to 250 employees with algorithms
The online fashion retailer Zalando wants to cut up to 250 jobs and increasingly let algorithms take on tasks. The entire marketing department is restructured. This area is of central importance for the company, as online commerce relies on personalized advertising.
“We assume that marketing will have to be even more data-based in the future. For this, we need a higher proportion of developers and data analysts,” says Rubin Ritter, co-head of Zalando, to FAZ.NET. In the future, tasks that have so far been done by people, such as sending advertising e-mails, will increasingly be controlled by algorithms.
Zalando wants to cut between 200 and 250 jobs at the company’s headquarters in Berlin. According to Ritter, the employees should be transferred to other areas or be given termination agreements. We have ambitious growth targets,” says Ritter. Unfortunately, this sometimes includes taking such steps. Ritter explained that if there were no other tasks within the company, an extensive severance pay, including training or a start-up grant, would make it possible to take new steps outside of Zalando.
Zalando employs 15,000 people worldwide, 6,000 of them in Berlin where the company is currently building a new headquarters. The marketing, which is currently being handled by different teams, is to be merged. In addition, Zalando wants to work more closely with the brands it offers in its online shop. Advertising in 15 different markets is to be more localized. Customers in Italy are to be addressed differently than in Finland. In principle, Zalando is increasingly focusing on personalization, so that two Zalando customers in Munich can also theoretically see completely different offers on their computers or in their smartphone app. To do this, Zalando links as much of its customers’ data as possible and also uses the Facebook profile if customers allow it. “If we create a better shopping experience and help to find the product or interesting offers faster, customers are willing to let us work with their data,” explains Rubin Ritter.
Despite the restructuring, the online fashion retailer wants to grow its staff and recruit another 2000 employees this year, most of them in Berlin. New jobs are being created in areas such as software and data. The company is investing in logistics: around 350 million euros are to be invested in its expansion and new technologies in 2018. This is around 100 million euros more than in the previous year.
Zalando is aiming for a growth of 20 to 25 percent in the new fiscal year, primarily through a stronger focus on data-driven businesses. Last year, sales rose by 23.4 percent to 4.5 billion euros. The number of customers rose by 3.2 million to 23.1 million.
“We assume that marketing will have to be even more data-based in the future. For this, we need a higher proportion of developers and data analysts,“ says Ritter. It is not easy for Zalando to find such a match, because there is a big competition in the fight for the few talents. However, Ritter is confident: “We have always positioned ourselves very strongly as a tech company.” Zalando can inspire developers. “We work with large amounts of data and the work becomes visible and makes a difference,“ says Ritter.
Zalando has always spent a lot of money on marketing in order to win new customers, most recently 362.5 million euros. Expenditure has decreased in relation to sales, but overall Zalando spends more money on advertising than before. The company generates more revenue with the same budget. The company’s annual report states that it intends to further reduce its marketing expenditures in favor of logistics investments because it expects “a higher long-term return”. Ritter explains in an interview with FAZ.NET that the announced rebuild should be completed as soon as possible.