Inditex puts Zara products online
By Financial Times Sept 2010 
Spanish retailer Inditex makes its second foray into web-based selling on Thursday, giving Zara customers across Europe the opportunity to buy garments from the popular fashion brand online.
The long-awaited roll-out of Zara’s transactional website will begin in Spain, the UK, Portugal, Italy, Germany and France – six countries that are among the most important of the company’s 76 markets.
The Zara online service will later be extended to the Americas and Asia, and the format will eventually be adopted by more of the company’s brands.
Of Inditex’s eight store brands only one – housewares retailer Zara Home – has sold directly to internet users until now.
Asked recently about the company’s late arrival to internet retailing, Pablo Isla, chief executive, said: “For us, now is the right time to go online.”
Some analysts venture that Mr Isla, who has made Inditex the world’s largest apparel retailer by sales since taking the helm five years ago, wanted to concentrate on Asian expansion and cost controls before turning to new sales formats.
Others point to relatively low broadband and online buying penetration in the Spanish market, which still accounts for about a third of total group sales.
With its focus on fashion-conscious teenagers and young people, Inditex has long used the internet to promote its various lines and corporate image and is also popular on Facebook, where it has 4.5m fans.
Its smartphone application, launched about a year ago, has been downloaded by 2m people.
“The internet and the world of social networking are indispensable tools and extraordinary channels for communication and fit perfectly with our group’s philosophy,” said Mr Isla on Wednesday.
Inditex, whose brands also include Massimo Dutti and Pull and Bear, is at the vanguard of computerised ordering and dispatching systems, with managers in each of its 4,700 stores providing daily updates on sales and taste trends.
However, Mr Isla says Zara, its flagship brand, had been waiting for online demand to build before launching into cyberspace.
The fact that clothes are not as easy to sell online as, say, books and music – people generally like to try on garments and there is a high return rate – also made the venture less urgent. He told analysts in July that he expected the web sales service to be “complementary”, rather than cannibalistic.
Analysts are upbeat about the possible impact of internet sales on Inditex’s results, with some suggesting a 10 per cent boost to next year’s profits. Group net profits were €1.3bn ($1.7bn) in 2009, up 5 per cent year on year, with Zara accounting for about one-third of group sales of €11.1bn in the six countries where online sales begin on Thursday
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In spite of difficult trading conditions in its home market and other crisis-hit countries, Inditex’s shares have performed well this year, up more than 20 per cent as the push into Asia – including an Indian debut for Zara – and the online plans won the support of investors and analysts. The shares on Wednesday closed up more than 2 per cent at €53.69.
Inditex said on Wednesday that all items on sale at its Zara outlets would be available online and at the same prices. Customers can choose from the usual range of paying methods and opt either for a free store pick-up or paid-for postal delivery.
The online return and exchange policy is identical to the store system, with shoppers given 30 days to change their minds. Queries will be handled by customer service operators or via e-mail or chat messaging.
Inditex said on Wednesday that iPhone and iPad applications that allowed purchasing would “soon be available”.
“This should be a big deal,” says Luca Solca, analyst at Bernstein Research.
“What we generally find is that high street names with strong public recognition see an advantage from online selling.”
Inditex is expected to follow up its six-country trial by introducing Zara online next year in key non-European markets such as the US, Japan and South Korea.
“Inditex is in a lot of countries where it still does not have much depth,” said Mr Solca. “Online sales will help it reach potential customers who have no easy access to physical stores.”