ZARA Fast Fashion, Little Known Business Management

The brand competitiveness of ZARA is not imitated by all fashion brands in the world at present. Without scale, after all, it is possible for everyone to achieve scale. The mode used by ZARA is called Vertical Integration, vertical shipment. Greatly shorten the shipment time: an average of 2 weeks, so the fast fashion brand represented by ZARA can have 15-20 Collection a year. In comparison, the whole process of ordinary brand shipment takes 4 to 6 months, with only two Collection in a year. In pursuit of speed, ZARA can sacrifice a lot of costs.

1. in the production process, ZARA relies on the countless handicraft shops and family factories in La Coruna where headquarters are located, and many products are directly produced locally. It has not been outsourced in recent years. However, in, 75% of the products were made in Asia, and now the production has been completely outsourced. However, for this reason, the price of H&M is about ZARA 50%-70% (without considering the cost of raw materials).

2. all the long haul transportation is an aircraft, instead of a cargo ship, willing to pay high freight charges rather than spend advertising and marketing expenses, ZARA's marketing expenses account for only 0.3%-0.4% of the total cost, while other brands account for about 3%-4%. Despite the high cost of pursuing fast, ZARA's gross margins and net interest rates are still comparable to those of H&M, and ZARA is unwilling to save the cost in order to increase profitability. Therefore, ZARA has reached the highest level of all fashion brands and retailers. My teachers in Milan never call ZARA brand, because it focuses more on production and retail links, never used the design to locate the style of brand products, nor does it have a Brand Identity that a fashion brand should have.:1. ZARA headquarters warehouse will not stay for more than three days in all the clothes. The store will order products two times per week to replenish products, and the inventory turnover rate is 3-4 times higher than that of other brands. On average, only 15% of the clothes per quarter need to be discounted, while the other brands are 50%.

3. the average customer goes to ZARA 17 times a year, and the other brands only have 4 times. At the same time, ZARA's credit is also attributed to their "inverted" design concept. When I was in the ZARA interview, HR told us that the core of ZARA is shops, because only when shops can really reach customers can we understand the needs of customers. Therefore, shops provide Sales data The storefront manager will then submit it to the storefront manager. After finishing the storefront manager, the result will be given to the design department. The design part will design the style according to the customer's needs and submit it to the commercial department to evaluate the cost and price. After that, the board will start to play the plate, the sample production will be handed over to the factory, the product will be stored in the ZARA super logistics warehouse (9 times as much as Amazon), and there will be countless freight cars at the warehouse door to transport the products to other European areas or airports two times a day. In this process, on average, 20 minutes for a design, a garment can be designed, and more than 25 thousand new designs can be designed each year, 4-6 times that of H&M. Because customers' demand for fashion is changing, the data collected from shops are timeliness, so fast is the most fundamental and important magic weapon for this model.

Precisely because ZARA This unique model makes it impossible for the rest of the existing brands to follow suit, because if they imitate, designers will no longer play a decisive role in the design, or even rebuild the designer team, logistics system, production process and so on. But there are drawbacks to this pattern:

1. because of the control of all processes, the risk of operation increases. If there is an economic downturn or a downturn in the industry, the pressure can not be transferred to suppliers, such as requiring suppliers to reduce prices. )

2., it is impossible to integrate national advantages and maximize benefits.

3. shops are directly branded Administration There is no way to expand quickly through proxy and other forms (for example, Benetton in Italy), and some of the property also needs to invest in new shops and renovation of existing shops, reducing the turnover rate of assets (ZARA's Assets Turnover is 1.4, GAP is 1.8, H&M is 2) 4., as everyone knows, plagiarism, ZARA has been copied for many years, and you tell me that you will lose money if you lose the lawsuit, anyway, I can earn it back. In short, ZARA is creating a completely new business model, a business model based on customer needs. Therefore, ZARA's current enemy is only itself. Only by fully recognizing and controlling the pros and cons can we achieve long-term, stable and sustainable development.