After Zalando's Takeover of About You: How That Affects German eCommerce

Unless you've been living under a rock for the past few months, you've probably heard that online fashion retailer Zalando is acquiring its closest competitor, About You, from Otto. This news signals deep shifts in German eCommerce, which made us wonder about the underlying power dynamics at play.

More specifically, what does the acquisition of About You by Zalando mean for German eCommerce?

Amazon Remains the Number One eCommerce Retailer in Germany, Regardless of Acquisitions and Shifts

One thing is clear: Amazon remains the undisputed number one in German eCommerce and everything that is going on in the lower ranks does not concern the U.S. eCommerce behemoth one bit.

The pie chart in the infographic illustrates how far ahead Amazon is in terms of net sales, which does not even include its eCommerce activities as a marketplace: 50.7% of the net sales generated in the top 10 eCommerce ranking in Germany are attributable to Amazon. The ranks 2 through 10 share the remaining 49.3%.

To clarify: The three largest retailers in German eCommerce, consisting of Otto, Zalando including About You, and Ceconomy (which operates Media Markt in fourth place) could not come close to Amazon’s lead if they joined forces. This fact becomes clear when you add up the net sales of these online stores . But it goes even further. If we take into account online shops outside the top 10, Amazon's lead prevails.

This means that if the subsidiary domains of the three largest German retailers, such as zalando-lounge.de, baur.de, saturn.de and others, were included, they would still be at a disadvantage to Amazon.

Zalando Consolidates Its Lead in the Online Fashion Sector

Is there really anything these domestic retailers can do to beat Amazon at its own game? To be fair, not really. Aside from getting closer to Amazon's winning method and gaining leverage in their field of expertise, there is statistically not much chance that any of these players will surpass Amazon's net sales any time soon.

What does gaining leverage in one’s field of expertise mean in practice? Within the German fashion store ranking, zalando.de holds the number one spot, before otto.de in second and amazon.de in third place. With the acquisition of aboutyou.de, Zalando is going to extend its lead further. Considering the whole picture, this is the winning formula in German eCommerce as the dynamics are now.

The world does not stand still and other competitors are looming in the distance to take over the ranking, as has already been seen in U.S. eCommerce. While the U.S. ranking and the related infographic discussed in that post look at marketplaces, the message remains the same: competition is fiercest at the bottom, with tighter margins and fewer resources to insulate against external shocks.

How Likely Are Temu and AliExpress Going to Surpass German eCommerce Companies?

Certainly, the recent news about the success of Temu and AliExpress with their competitive prices has played a role in the strategic decisions of leading companies in German eCommerce. Even Amazon has taken measures to compete with a discount strategy and it is the least likely to be seriously affected by the likes of Temu and AliExpress.

Even if Temu is still far from the top 10 in German eCommerce, there is only so much users can spend on their purchases within a year. Even a small increase in the share of consumers' wallets could hurt retailers at the bottom of the rankings, which is why mergers and acquisitions can serve as a hedge against future market disruptions.