Zalando’s AI-Powered Expansion: From Retailer to Tech Platform

Berlin – After a successful 2025, German online fashion platform Zalando is solidifying its position as a provider of infrastructure, software, and data solutions for the fashion sector. The company plans to increase profitability through expanded artificial intelligence integration and synergies created by its acquisition of ABOUT YOU.

Financial Performance Boosted by ABOUT YOU Acquisition

“Fueled by our strategy and the acquisition of ABOUT YOU, we significantly accelerated our financial performance in 2025,” stated David Schroeder, co-chief executive officer of Zalando, during a press conference on Thursday, July 11, 2025 . “This strong set of results demonstrates the strength of our business model, with further acceleration expected this year.”

Zalando’s revenues increased by 23 percent in the fourth quarter of 2025, reaching €4.07 billion. This contributed to a 16.8 percent increase in full-year revenue, totaling €12.35 billion. Prior to acquiring ABOUT YOU, Zalando’s revenues had been growing at an average rate of 7.6 percent per quarter in 2025.

Profitability and EBIT Growth

Zalando’s earnings before interest and taxes (EBIT) also saw significant growth, rising 15.6 percent to €591 million in 2025, exceeding market analysts’ expectations from firms like Goldman Sachs and RBC. While EBIT increased, the company’s profit margin remained stable at 4.8 percent, consistent with the 2024 level.

Customer Base Expansion and Scayle Integration

Zalando’s active customer base reached 62 million across its various platforms. The acquisition of ABOUT YOU significantly contributed to this growth, adding approximately 9.1 million customers since the middle of 2025, when the customer base was 52.9 million.

The acquisition also brought Scayle, ABOUT YOU’s proprietary sales software, into the Zalando ecosystem. Zalando has already leveraged Scayle by establishing it as the global commerce platform for denim brand Levi’s across the U.S., Canada, and Europe.

Focus on European Market with B2B Expansion

While acknowledging past speculation about U.S. Expansion, Zalando remains primarily focused on the European market, estimated to be worth around €500 billion. Zalando currently holds a 3-4 percent market share in Europe. Schroeder emphasized the company’s strategy of expanding its business-to-business (B2B) software offerings outside of Europe, stating, “Zalando obviously has opportunities here in Europe but also has opportunities outside – we are tapping into these opportunities with B2B software.”

Data-Driven Insights and AI Implementation

Zalando’s extensive customer data, collected over nearly two decades, is a key asset. The company has gathered data from approximately one million customers who have submitted their physical measurements, with an additional 20,000 customers providing measurements weekly. This data, combined with information from 7,000 brands and analyzed using AI, has resulted in an 8 percent reduction in returns due to incorrect sizing.

Zalando is also utilizing AI to accelerate software development, improve supply chain efficiency, and enhance fulfillment timing. The company’s AI-powered online fashion assistant is being refined to better “matchmake” shoppers with relevant products, resulting in a 13 percent increase in items added to shopping bags and wish lists. 90 percent of Zalando’s marketing materials are now AI-generated, a significant increase from almost zero a year prior.

Logistics Restructuring and Automation

Despite the positive results, Zalando is undergoing logistical changes, including the closure of four logistics centers, including the facility in Erfurt, Germany, by September 2026. This decision, impacting approximately 2,700 jobs, has drawn criticism from local politicians. The shift reflects a move towards automated logistics centers utilizing AI and robotics, contrasting with the human-powered processes of older facilities like the one in Erfurt.

Ecosystem Strategy and Future Outlook

In 2024, Zalando launched its “ecosystem strategy,” dividing the business into consumer sales and B2B activities. While consumer sales still account for the majority of revenue (€11.28 billion in 2025), B2B revenue is growing, reaching €1.09 billion – the first time exceeding the billion-euro mark. The platform aims to increase the proportion of revenue from partner businesses to 40 percent by 2026.

Zalando forecasts continued growth in the coming year, with revenue and gross merchandise value (GMV) increasing between 12 and 17 percent. Adjusted EBIT is expected to be between €660 and €740 million in 2026. The company also aims for revenue growth of 13-18 percent and an EBIT margin of 6-8 percent by 2028.