Z A L A N D O C O N V E N I E N C E

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1 Z A L A N D O C O N V E N I E N C E C A P I T A L M A R K E T S D A Y D A V I D S C H R Ö D E R M A S O O D C H O U D H R Y

2 T A B L E O F C O N T E N T S 1. WHERE WE WANT TO GO 2. HOW WE WILL MAKE IT HAPPEN 3. WHICH ROLE MÖNCHENGLADBACH PLAYS 4. Q&A 2

3 O U R M I S S I O N A S Z A L A N D O O P E R A T I O N S I S T O B E C O M E T H E B E S T F U L F I L M E N T P A R T N E R F O R F A S H I O N I N E U R O P E CUSTOMER SATISFACTION SUSTAINABLE GROWTH OPERATIONAL EXCELLENCE 3

4 Z A L A N D O C O N V E N I E N C E S U P P O R T S T H E Z A L A N D O P L A T F O R M W I T H T H R E E K E Y S E R V I C E S P A Y M E N T S L O G I S T I C S C U S T O M E R C A R E Payment processing Payment customer care Dunning & collection Fraud prevention Receivables accounting Deferred payments offering Warehouse logistics (inbound, storage, parcel outbound) Returns handling Transportation & shipping Network planning Warehouse engineering Mail & phone support Chat Social Media Self-help / Smart FAQ 4

5 C L E AR C U S T O M E R C E N T R I C I T Y F O C U S L E AD S T O SIGNIFICANT INCREASE IN CUSTOMER SATISFACTION NPS at alltime high +5 points 1 P A Y M E N T L O G I S T I C S C U S T O M E R C A R E + 4 % + 4 % % Satisfaction in % Satisfaction in % Satisfaction in % CAGR 5 Note: Customer satisfaction in percent of customers evaluating service as 1 or 2 on a scale of 1 to 5 with 1 = very satisfied, 5 = not satisfied. (1) YoY as per Dec-2016.

6 CONTINUED CAPACITY EXPANSION SUPPORTS BUSINESS GROWTH P A Y M E N T L O G I S T I C S C U S T O M E R C A R E % % % Number of transactions in m Number of shipments in m Number of contacts in m 6 CAGR

7 CONTINUOUS IMPROVEMENT CULTURE DRIVES OPERATIONAL EXCELLENCE P A Y M E N T L O G I S T I C S C U S T O M E R C A R E - 10% - 3% - 8% Total Payment costs in / order Logistics costs in / item Contact rate in % of orders CAGR 7

8 T A B L E O F C O N T E N T S 1. WHERE WE WANT TO GO 2. HOW WE WILL MAKE IT HAPPEN 3. WHICH ROLE MÖNCHENGLADBACH PLAYS 4. Q&A 8

9 9 L O G I S T I C S N E T W O R K E X P A N S I O N

10 T H E E U R O P E AN E N V I R O N M E N T I S C O N T I N U AL L Y C H AN G I N G THE CUSTOMER IS BECOMING MORE AND MORE DEMANDING GOOD PRICES BRAND TRUST BROAD AND EXCLUSIVE SELECTION CONVENIENT RETURNS FAST AND RELIABLE DELIVERY THESE THE MARKET IS BECOMING MORE AND MORE INNOVATIVE AND COMPETITIVE ONLINE RETAILERS UNDER PRESSURE FROM GENERATION CONSUMERS FOR CHEAPER AND MORE CONVENIENT FULFILMENT OPTIONS SIX-WHEELED DELIVERY ROBOTS ARE STARTING TRIALS IN EUROPE EASY TO USE IN-STORE AVAILABILITY CHECKABLE GREAT LOYALTY PROGRAM STORE PRICES MATCH ONLINE PRICES SUPERIOR CUSTOMER REVIEWS ECOMMERCE EUROPE SHAPES THE FUTURE OF CROSS-BORDER PARCEL DELIVERY FAST DELIVERIES TO GROW BY 40 PERCENT YEAR-ON-YEAR UNTIL 2025, SAYS NEW STUDIE AMAZON IS LOOKING TO EXPAND ITS TWO-HOUR PRIME NOW DELIVERY SERVICE IN EUROPE BY ESTABLISHING 1,300 NEW WAREHOUSES THE ASOS SUPPLY CHAIN CHARMS THE MILLENNIAL SHOPPERS 10 Note: (1) Source: PWC, Total Retail Survey 2016, n=22.618, Q: Thinking of your favorite online retailer, why do you shop h ere?

11 W E W I L L C O N T I N U E T O P L AC E O U R C U S T O M E R S F I R S T AN D W E W I L L E N AB L E N E W P AR T N E R S T O S C AL E T H E I R B U S I N E S S O N O U R P L AT F O R M FREE & FASTER DELIVERY AND RETURNS PERSONALIZED CONVENIENCE OPEN UP OUR LOGISTIS CAPABILITIES Being able to reach 95% of our customers within 1-2 days Leading returns proposition Free 24hr service for good customers Preferred delivery & returns option to 95% of our customers Personalized recommendation of delivery and returns services Provide logistics solutions to help our partners to scale their business on our platform in a cost efficient way Increase convenience level of Zalando Partner Program for our customers!!! MACRO NETWORK DEVELOPMENT MICRO NETWORK DEVELOPMENT ZALANDO FULFILLMENT SOLUTIONS 11

12 ! W E AR E E X P AN D I N G O U R L O G I S T I C S O P E R AT I O N S T O A T R U L Y E U R O P E AN N E T W O R K EXISTING FOOTPRINT T O T AL CAPACIT Y O F ~ 8BN IN REVENUES H U B B U I L T - O U T Purpose: Scale, flexibility and process efficiency M GLADBACH HUB ~130,000 m2 Start in 2013 STOCKHOLM SPOKE Start end of 2017 Serving majority of our markets (10-15 markets) High degree of automation PARIS SPOKE ~20,000 m2 Start in 2017 LAHR HUB ~125,000 m2 Start in 2016 SZCZECIN HUB ~130,000 m2 Start in autumn 17 BRIESELANG HUB ~30,000 m2 Start in 2011 S P O KE B U I L T - O U T Purpose: Reduction of lead times to customers MILAN SPOKE ~20,000 m2 Start in 2016 ERFURT HUB ~130,000 m2 Start in 2012 Serving only local markets (1-3 markets) Low-medium degree of automation 12

13 ! W E C O N T I N U AL L Y S T R I V E T O P R O V I D E E V E N B E T T E R S E R V I C E S T O O U R C U S T O M E R S AC R O S S E U R O P E Same day reach (LH 1 < 2hrs), in % Next day reach (LH 1 < 9hrs), in % 2 nd day reach (LH 1 < 18hrs) in % go-live Brieselang go-live Moissy (FR), Brunna (SWE), Gardno (PL) Planned extensions 13 (1) LH = line-haul

14 !! W E C O N T I N U AL L Y S T R I V E T O P R O V I D E E V E N B E T T E R S E R V I C E S T O O U R C U S T O M E R S AC R O S S E U R O P E CUSTOMER NEEDS OUR SERVICE OUR NETWORK Free Delivery & Return Free Standard Delivery & Return CEP Reliable Delivery Express Delivery Timeslot Delivery Wish-day Delivery Carrier, Express & Parcel Network Convenient Delivery & Return Pick-up & Drop-Off Points Fast Delivery & Return Same Day Delivery & Return on Demand Local Delivery Network LDN 14

15 S T R O N G F O C U S O N D E F E R R E D P A Y M E N T M E T H O D S 15

16 W E AL R E AD Y O F F E R A B R O AD V AR I E T Y O F P AY M E N T M E T H O D S... OVER 20 PAYMENT METHODS INVOICE TAILORED TO LOCAL NEEDS PREPAYMENT CHEQUE PERSONALIZED OFFERING 16

17 ...WITH A STRONG FOCUS ON DEFERRED PAYMENT METHODS DEFERRED PAYMENT METHODS CHARGES CUSTOMERS ONLY FOR THE GOODS THEY KEEP AFTER A CERTAIN TIME PERIOD WHEN do you want to provide the funds? immediately payment term credit credit HOW do you want to pay? BANK TRANS. CREDIT CARD DIRECT DEBIT PAYPAL INVOICE PAYLATER INSTALLMENTS We already offer a strong invoice product in 9 countries! CASH ON DELIVERY PAY LATER CREDIT CARD COMBINES THE BEST OF TWO WORLDS FIRST TESTS IN FRANCE SHOW PROMISING RESULTS + - Only pay what you keep No risk as customer Hassle of bank transfer Risky for merchant to offer INVOICE + - All funds transferred automatically Low merchant side risk Order needs to be paid directly Large orders require high credit card limits CREDIT CARD 17

18 I N T E R A C T I V E A N D S E A M L E S S C U S T O M E R C O N T A C T 18

19 WHY WE CREATED AN INTERACTIVE HELP AND CONTACT CENTER REDUCE CUSTOMER CARE Approx. 40% of inquires can be solved with easy replies or info the customer already has FULFILL CUSTOMER NEED Customers often search for answers via search engines FOCUS ON HIGH VALUE ADD W e want customer care to Focus its resources on true value add inquiries COLLECT & LEVERAGE DATA Self-help usage data leads to better insight and categorization of customer pain-points 19

20 W H AT W E O F F E R I N O U R H E L P AN D C O N T AC T C E N T E R 1 3 CUSTOMER QUESTION Does Zalando refund the costs for express delivery? 2 20

21 T A B L E O F C O N T E N T S 1. WHERE WE WANT TO GO 2. HOW WE WILL MAKE IT HAPPEN 3. WHICH ROLE MÖNCHENGLADBACH PLAYS 4. Q&A 21

22 Z AL A N D O L O G I S T I C S M Ö N C H E N G L AD B AC H AT A G L AN C E New Bagsorter bags 130,000m² area of fulfillment center ~4 years old operational since 2013 >2,100 employees 20km conveyor system 22

23 M Ö N C H E N G L AD B A C H H AS AN I M P O R T AN T R O L E W I T H I N O U R N E T W O R K, E S P E C I AL L Y F O R W E S T E R N M AR K E T S LOCATED IN THE MIDDLE OF THE EU SERVING ALL OUR 15 MARKETS LOCATED IN A HIGH DENSITY AREA WITH 62 MILLION INHABITANTS WITHIN A 3 HOUR DRIVING TIME OUR FIRST ZALANDO FULFILLMENT SOLUTION LOCATION, FULFILLING SINCE 02/16 HIGHLY AUTOMATED, WITH BAG- SORTER IN RAMP-UP MODE 23

24 M Ö N C H E N G L AD B A C H T H E L AY O U T PHASE 1: UNIT S 1-3 (66K M ²), 2013 PHASE 2: UNIT S 4-5 (44K M ²); 2017 Picktower Inbound/ Outbound Picktower Bagstore/ Bagsorter Outbound Picktower / Bagsorter Inbound Hall 1 Hall 2 Hall 3 Hall 4 Hall 5 Retoure Dock Receive Singe & Multi-Order Pack Area Container Buffer (High Dynamic Storage) Outbound Dock Singe & Multi-Order Bag Pack Area Inbound Bagsorter 24

25 M Ö N C H E N G L AD B A C H K E Y P R O C E S S E S POTENTIAL RETURN CUSTOMER TRY ON SHIPPING MULTI PACKING INBOUND DOCK RECEIVE SORT (MULTI ONLY) SINGLE PACKING PICKING STOW GOODS RECEIVE MANAGEMENT & INBOUND & RETURNS PROCESS CUSTOMER ORDER CUSTOMER ORDER & OUTBOUND PROCESS 25

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27 D I S C L AI M E R C e r t a i n s t a t e m e n t s i n t h i s c o m m u n i c a t i o n m a y c o n s t i t u t e f o r w a r d l o o k i n g s t a t e m e n t s. T h e s e s t a t e m e n t s a r e b a s e d o n a s s u m p t i o n s t h a t a r e b e l i e v e d t o b e r e a s o n a b l e a t t h e t i m e t h e y a r e m a d e, a n d a r e s u b j e c t t o s i g n i f i c a n t r i s k s a n d u n c e r t a i n t i e s. Y o u s h o u l d n o t r e l y o n t h e s e f o r w a r d - l o o k i n g s t a t e m e n t s a s p r e d i c t i o n s o f f u t u r e e v e n t s a n d w e u n d e r t a k e n o o b l i g a t i o n t o u p d a t e o r r e v i s e t h e s e s t a t e m e n t s. O u r a c t u a l r e s u l t s m a y d i f f e r m a t e r i a l l y a n d a d v e r s e l y f r o m a n y f o r w a r d - l o o k i n g s t a t e m e n t s d i s c u s s e d o n t h i s c a l l d u e t o a n u m b e r o f f a c t o r s, i n c l u d i n g w i t h o u t l i m i t a t i o n, r i s k s f r o m m a c r o e c o n o m i c d e v e l o p m e n t s, e x t e r nal f r a u d, i n e f f i c i e n t p r o c e s s e s a t f u l f i l l m e n t c e n t e r s, i n a c c u r a t e p e r s o n n e l a n d c a p a c i t y f o r e c a s t s f o r f u l f i l l m e n t c e n t e r s, h a z ardo u s m a t e r i a l / c o n d i t i o n s i n p r o d u c t i o n w i t h r e g a r d t o p r i v a t e l a b e l s, l a c k o f i n n o v a t i o n c a p a b i l i t i e s, i n a d e q u a t e d a t a s e c u r i t y, lac k o f m a r k e t k n o w l e d g e, r i s k o f s t r i k e a n d c h a n g e s i n c o m p e t i t i o n l e v e l s. 27