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Portugal reaps the benefits of the European single market and is well on its way of modernizing its country. Its westernmost position on the European continent make them an important transit country for transnational trade to the south of Europe. Portugal is in fact a very important country for the fashion industry and has in recent decades been attracting a lot of foreign investment towards this industry.

It hosts a lot of textile and leather factories and is especially attractive for its high quality products and lower wages and costs Forbes, Furthermore, the prevalence of a very modern and well-developed transport infrastructure over land, air and sea make it especially attractive for foreign direct investment. On a side note, this is below German budgetary expenditures taking up 4. Hitherto, other surveys seem to lead to the same conclusion that the Portuguese are somewhat more conservative when it comes to online shopping.

The country covers an area of Moreover, the higher rate of economic growth has resumed the process of convergence towards the average EU income level. The average real wage growth has increased with 2. On the other hand, the unemployment rate has fallen to 4. Its geographical location in the centre of the European market and its transitional corridors with neighbouring countries makes the country very attractive markets for foreign investors. The high density of the road and rail network ranks the Czech Republic amongst 2 Functional urban is described as a measurement for urban areas with a population higher than 50, inhabitants.

The service sector accounts for The economy has also developed highly competitive business support services sector in finance, accounting, ICT and customers support and logistics. The urban population of the country is more or less evenly distributed, with exception of Prague which alone accounts for 1. From the graph bellow it is evident that number of internet users has been rapidly growing in the past 10 years. In addition to the positive growth rate, the price for the internet access service has been following fast. The mobile phone subscriptions have also been growing in the Compare to other European member states the Czech Republic have above the average rate of mobile subscription see figure below.

Figure 5: Internet access and mobile subscriptions Source: Eurostat The e-commerce sector in accounts for 8. The main driver of the growth in the sectors is the increased online purchase of electronics, toys and clothes Henoch van Paesschen and Dirkjan Vis, The evidence of the growth of the e- commerce sector is also visible from the graph below.

Moreover, the results suggest that in the last two years the growth of on-line purchase has been increasing, presumably due to the recovery of the economy. According to the ICT survey, the main reason given for not making a purchase online is loyalty to the shops or by force of habit, followed by luck of necessary skills, payment security concerns and concerns about receiving or returning the good. Moreover, from the figure above it is evident that level of perceived barriers to buying goods on internet has increased in all indicators compare to the pre-crises period.

Slovakia covers an area of Slovakia economic growth recovered fast after the economic crisis in , however the post-crisis growth rate has been increasing with a very slow paced. Annual growth rate slowed to 1. In real GDP growth picked to 3. The unemployment rate falls to Slovakia have an average annual income of euro and the highest labour productivity ratio among the CEE and SEE region since , making the market very attractive for retailors and businesses alike see the figure 6.

The present infrastructure of Slovakia has a very high density with total road network of Recently Slovakian road network has been also on process of intensive development and modernization. Moreover compare to situation in , the road network density have increased from Slovakia has a population of 5. The population density of Slovakia is people per sq. Moreover, around 2 million people lives in 8 urban areas with population of more than 50, inhabitants, from which their biggest city Bratislava accounts for , inhabitants. The mobile subscription has also experience some growth,although with a slower paced in the last two years.

By mobile abonnements reached subscriptions per inhabitants, a number not so distance from their rival partner the Czech Republic and above the average EU level figure 8. Figure 8: Internet access and mobile subscriptions Source: Eurostat 0 20 40 60 80 0 20 40 60 80 Percentage of households with internet access mobile subscription per inhabitants The data from the ICT survey also indicates growth in the sector. Figure 7 below also shows that the share of cloths and sports goods sold on internet has been increasing since In comparison to the percentage change was 29 points less.

Thus the figures suggest that the e-commerce market is attractive for e-retailors, especially in specializing in fashion sells and business alike. Moreover, the analysis reveals that the e-commerce sector, which accounts for 3. Mobile and Internet users have also been increasing in the last 5 years with tremendous peace reaching above the EU average level. Another favourable fact for international expansion to Czech Republic is its close proximity to Germany.

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Moreover, the Czech Republic has a high dense road infrastructure, ranking the country amongst the top 13 in world. Thus, the geographical location of the country combined with its modern road infrastructure helps Zalando to guarantees its fast delivery and return policy and decreased their costs from return orders. With combination of low wage costs, the country also provides healthy environment for natural growth to many ICT companies such as Microsoft, DHL, and IBM which makes it attractive for Zalando and its greenhouse expansion strategy in setting up Tech Hubs.

Furthermore, the lack of any big competitors for Zalando in this market wins the argument in favour of further expansion in the Czech Republic. The economy of Slovakia showed quick recovery after the financial crisis. With average income euro, Slovakia would seem to be a potential market for Zalando internationalization process.

Moreover, the location advantage of Slovakia combine with Zalando close-proximity expansion strategy is an objective reason for Zalando to enter the market. Thanks to EU structural funds and public investments, the road infrastructure is the process of modernization. The high density of the read network combine with its modernization process could guarantees Zalando fast delivery and return policy which is of the main competitive advantage of the company. The population access to internet has also been increasing in the last 10 years indicating that the country has well developed telecommunication infrastructure.

Thus, Slovakia could be seen as another viable choice for Zalando expansion strategy in the future. Several data make clear that the Portuguese internet retailing market has not yet kicked off, and internet-only retailers such as Zalando would require to make substantial investments to motivate buyers to purchase online. This does also come with an opportunity but it inevitably involves a considerable risk of being unprofitable in the short and long run. Although it serves as an argument that the company is already active in Spain, Portugal is not as big a market as the latter country.

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Ireland Ireland would seem like a viable choice to expand towards, and while they have highest purchasing power of all 4 countries in the analysis, it also faces country-specific issues that are not to be neglected. Ireland as an island state means that Zalando has only 2 options to service this market. Both options can be questioned for their profitability as the Irish market is not so big either.

Furthermore, Zalando would not be able to guarantee its shipping policy and fast delivery service. Shipping through the UK would theoretically be more economical, but up to date, there exists no bridges or tunnels linking the two countries together. It sketches a similar situation as with Portugal in terms of viability.

Ireland would stress the business model of Zalando and its centralized management of its logistic centres. Therefore, it is reasonable to believe that the company has accumulated knowledge and sensitivity in regard to cultural differences between the domestic market and Poland. Thus, the acquired tacit knowledge in the CEE region is a prerogative for successful expansion in other Central Eastern European countries such as the Czech Republic and Slovakia. The results of uncertainty avoidance points out that both the Czech Republic and Germany tolerates risk aversion more highly compare to Slovakia.

Likewise, all three countries show high percentage level of long term orientation with the highest level in Germany, followed by Slovakia and the Czech Republic see figure 9. Last but not least, the findings indicate that the Czech Republic and Slovakia have quite similar level of indulgence, while Germany score a little bit higher on this indicator. Althoughallthree marketshave visible differencesbetween their culturalbackgrounds,theystill remain quite similar in some indicators such as individualism, uncertainty avoidance and indulgency.

Moreover, all three countries have shared common history and culture since their existence, indicator for which is the high share of German speaking people in both Slovakia and Czech Republic Sandford, Administrative Distance All three countries are members of the European Union and benefits from the Common European Market and its governing principles of free movement of factor of productions and people.

Moreover, the EU community law has a primacy over the law of National States empowered by the doctrine of supremacy of EU law3, and therefore indicating very low administrative distance between The Czech Republic, Slovakia and Germany. Thus, this could be seen as another explanation of why Zalando is so successful in their logistics distribution and could also vote in favor of further expansion in the Czech Republic and Slovakia. Moreover, both countries have shown progress in strengthening their institutions.

According to Transparent International and their developed Corruption Perception Index4 , the Czech Republic has moved with 7 percentage points since , reaching 37th place in the world, while Slovakia takes the 51st place in the world as of Moreover, the small distance of km between Prague and the logistic center of Zalando in Erfurt, combined with well- developed road infrastructure of the Czech Republic wins the argument in favor of further expansion to the market In regard to Slovakia, albeit the country does not have border with Germany, it still remains with a very close proximity to Zalando in comparison to other markets in which the company is active such as Belgium and the Netherlands.

What is more, in the recent years the road infrastructure has been efficiently improving thanks to government spending and EU structural funds. Economic Distance Although the GDP per capita still remains below the EU average as for the Czech Republic and for Slovakia, both countries have shown tremendous progress in strengthening their economy. However, Slovakia GDP per capita in some regions in the country is characterized by high variance compare to the capital level, which could be regarded as an exposure towards financial risk for Zalando.

Nevertheless, the Slovakia regional GDP per capita has shown some improvement towards convergence in the last two years and it is expected to continue moving in this trend. Rivalry among existing competitors: High For the European market, the fashion industry is to one of largest and most important industries of the region.

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With the great variety of cultures and local preferences, the fashion industry is fragmented and featured by strong online and offline fashion competitor which Zalando has to face. Moreover, the online fashion industry contrary to the traditional one is still growing which puts in even more competition from smaller players.

Many online firms have existed far longer than Zalando and consequentially have built greater economies of scale and a larger customer base than Zalando. It was only until recently that the firm started to reap the benefits from its universal presence in the core market of Europe.


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Zalando is thereby able to reach specific interests groups. Therefore, the first force is considered as high. Threat of new entrants: Medium The online fashion industry, unlike the traditional one, has low barriers to entry if a retailer is concentrating on one specific country. This can be concluded from the start-up story from Zalando as well as new entrants require only a modest starting capital to purchase stocks and to create an internet presence. Everything can quite literally be done from your basement or garage until your business grows and the rest is history.

But if start-ups are concentrating on the whole European market, it has faces larger entry barriers.


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In this environment, there are already strong established companies with economies of scale and scope with broad product ranges that precedes a different kind of knowhow and business as usual. Zalando shows as an interesting case study and proves how at some points their future survival hanged in the balance because of how complicated the entrance of new player is in the diverse European market. It requires an efficient logistic and distribution network to be built up from scratch.

So albeit, the threat of new entrants can be rated as medium, because of the easy entrance of small local online stores that can develop into potential rivals for Zalando.

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All together, they have low bargaining power. With the high reputation and success of Zalando many local suppliers are eager to sell their items through this online retailer. These forces exert pressure on those who refrain from supplying to Zalando. Bargaining power of customers: High Shopping over the internet has become very popular in Europe. Considering these facts, costumers are in a strong position to influence prices as the internet enforces some kind of transparency. They can quite easily, more easily than in traditional stores, compare for prices or search for stores that offer promotions of some sort.

Because of that, the bargaining power of customers is classified as high. Threat of substitute products: Medium to High In regard of different individual tastes, the various kinds of materials, the wide range of patterns and colours, fashion is a very multifariously industry. Therefore, the threat of substitutes is classified as high.

If costumers do not like specific features of products, it is easy for them to find other similar substitutes according their demands and requests. Zalando is a well-established European market leader with fast growing business and large customer base. With a strong international management, including the IT and logistics team, the company created a lead in the competitive environment. In addition, their wide product and brand portfolio let them stand out from others.

Every country-specific customer has the opportunity to shop secure and stress-free with the convenient service that the online stores offers. This includes, among others, the clear and easy navigable website, various payment possibilities, free shipping and return, and not to forget, the days return guaranty that no other competitor offers.

Without trying the sketch out a business fairy-tale, not all is bright on the horizon either. Furthermore, variations in quality rise between the various products and brands which can cause negative customer ratings. Publicity is a major theme which can lead to falling customer base and loss of profits. In the recent years, Zalando troubled with criticising news. On one hand, hazardous chemical pollutants in distributed shoes were laboratory- And on other hand, a video became public which showed bad working conditions under the roof of the online retailer Marzilli, Last but not least, the generous services it provides to its customers is not only a strength, but also bares a weak point of the company with high shipping return rates and this seems to be an upward trend Popplow, The first and most important group of competitors are the internet-only retailers who operate in the main segment of Zalando, the second are retailers who primarily rely on physical stores for their sales but also have an online store.

One of the major rivals of Zalando is the US giant Amazon, which is considered as the largest shipping retailer worldwide Li, But contrary to Zalando, Amazon does not directly focus on fashion sales alone, but offers a very broad product range from electronical devices, books to movies and food. Furthermore, as a global online retailer, Amazon lacks sufficient localization in Europe and finds itself in a more difficult position to offer the same terms of payment and speedy delivery that Zalando offers Amazon, In Amazon acquired the online retailer Zappos which is a strong established company in the United States with a similar business model like Zalando.

Back in time, this retailer was perceived as role model in Europe. It is not a direct a competitor of Zalando because it operates primarily in the United States. But if it decided to expand with Amazon logistic network in Europe, the online retailer can develop itself to become a strongest rival Zappos, Both fashion companies operate in the same segment and have a similar offer compared to Zalando, hosting a very wide range of international brands and in-house private labels.

In contrast with Zalando, they both concentrate primarily on specific customer groups. ASOS is specialized for youth fashion where the majority customers are twenty-something shopper Asos, And YOOX focus on the high income consumer which is why they offer luxury and high fashion articles Yoox, In this aspect, Zalando and their versatile assortment stand out from these online retailers. They however, operate in a very different business environment than Zalando.

Compared to the other mentioned online stores, these companies have established stores in the offline environment. Their strong brand awareness enhances their online reputation and the business success. However, these physical fashion retailersare of course constricted toamore limited offer than Zalandoor thecompetitorsabove, as it only sells its own fashion labels. The German retailer sells clothing, shoes and accessories.

It competes directly against established clothing retailers whose primary source of income comes For Zalando, the online presence is the only and single-most important source of income which makes clear that it demands a different strategy than a traditional clothing retailer. Their current logistic centers are not yet operating at full capacity, and both the Czech Republic and Slovakia combined are not expected to stress their operations to much. Albeit, the financial risk can be assessed as low, as it requires no substantial investments. It would be able to guarantee its fast delivery policy.

Exchange rate risk There is no exchange rate risk involved in trade and expansion to Slovakia as they have adopted the euro as their currency. This is however, not the case for the Czech Republic which maintains its domestic currency: The Czech Coruna. Des dizaines de grandes marques vous attendent tous les jours pour vous offrir les plus belles remises sur leurs collections! Meilleurs prix sur la mode femme. Meilleurs prix sur la mode enfant. Comparez les autres promotions populaires 2 0.

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