Zalando won’t expand into the U.S. ... for now

August 2, 2022 by
Frank Calviño

Zalando, one of the largest e-commerce fashion platforms, was planning to launch in the U.S. next year with an estimated investment of over a hundred million euros. However, current financial results have delayed the plan.

Zalando called its American expansion ‘project Kangaroo’ and it had a headcount of over 100 employees already working on the project. 

The company wanted to launch in the wealthiest regions, starting from the northeastern states, such as Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont. 

A slow year for Zalando

The main reason to put the project on hold was the poor financial situation that Zalando reported at the end of the Q1 of this year: with a total revenue of 10.4 billion euros, Zalando decreased its global revenue by 1.5 percent. 

It might not seem as much of a decrease, but the fact that Zalando reduced its global revenue, instead of increasing it, poses a heavy blow for the company and a clear warning that the e-commerce boom is finally over. 

Additionally, its market capitalization decreased from 26.35 billion euros by July 2021 to 9.4 billion in May this year.

The end of the e-commerce boom?

As reported to media and investors, between January and June 2022 Amazon posted a loss of 20 cents per share versus the 13 cents per share analysts had expected, a drop after posting net income of 15,885 million in the same period of 2021. And despite this, expectations and the investment market have received the figures as positive news. And why is that?

The accounts include 3.9 billion loss from Amazon's investment in Rivian Automotive, an electric car manufacturer in which it has an 18% stake, which it has not been able to offset with the rest of its businesses, since, excluding this operation, the firm would have made a profit of 1.9 billion dollars. This is the main reason why the market has not taken the losses negatively.

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