Zalora is a global fashion group that operates online and has been regarded as one of the most growing brands in an emerging market. The fashion e-store has been working towards superseding all the other online fashion companies. The main pillar is the fashion industry in Asian countries such as Thailand, with the ecommerce industry worth approximately $3 billion (Sakawee, 2014). The price strategy of Zalora is premium pricing and competition-based pricing models since the firm focuses on trending fashion items. The strategies improve the firm’s profitability by increasing market penetration using mobility.
The premium pricing strategy is incorporated with other sub-strategies, such as providing many consumer options, having an offline store, and focusing on a mobile e-store (Sakawee, 2014). In this case, the company’s price is higher than that of the competitors meaning that the firm will employ a study to monitor the market price levels. Zalora argues that their designs are significantly of higher quality than the other online and offline shops. Therefore, price discrimination is felt at two degrees for the company to influence the customer in the market (Pradana & Novitasari, 2017). First, there is a second degree in marketing where Zalora charges a different price for specific quantities, for instance, quantity discount for bulk purchases referred to as bundling in marketing.
Secondly, the company has a third-degree price factor where it charges a different price to different consumer groups after buying from the store, hence, the occurrence of tying in marketing. For example, Zalora offers a higher price when selling fashion items using the Ezra label, 7-11 pick-ups, and pop-up stores. Furthermore, versioning occurs in Puma shoes are sold at a different price in Malayisa depending on the purpose of the consumer, as shown in Figure 1 below (Sakawee, 2014). The price is increased for these cases due to the convenience it has and the feeling of differentiation in terms of delivery of quality products. Third-degree pricing is evident when selling the Ezra-labelled designs that celebrities and influencers desire in their wardrobes. Zalora has various models as of 2021, which have been offered at different prices depending on business tastes (Pradana & Novitasari, 2017). An example is Alicia Amin, Natalie Prabha, and Eileen Yong, which have been sold differently depending on the preferential aspects of the customer experiences.
The various strategies discussed above have a significant boost in Zalora’s total revenue and profit. First, there has been a competitive advantage where consumers feel that Zalora’s products are of higher quality, leading to increased sales and higher returns on investment. When the returns are high, profitability is realized after deducting costs from the total revenue earned (Ong, 2020). For example, through the mobile e-store strategy, Zalora has witnessed a shift to increased users through messaging app Line. In Thailand, there are 24 million users and 400 million in terms of global view (Sakawee, 2014). The premium pricing is received with a positive reaction as many buyers want to have an item from the store, contributing to the increased revenue for the company.
The rise in revenue has been possible due to the Ezra label and 7-11 pick-ups. These strategies in Southeast Asia have been reported to have taken the company to another level of volume as sales. Through the addition of buyers in the stores, the company has witnessed a whopping 36.3% rise in revenue as of 2021, which translates to $512.73 million (Sakawee, 2014). Pricing discrimination discussed above focuses on adding value to the company’s products, meaning demand increases, which translates to significant revenue, as shown in Figure 2 below. The curve goes upward to the right, meaning that Zalora’s revenue has increased due to the increase in the number of items demanded due to its pricing strategies (Ong, 2020). Additionally, when the price is higher, consumers perceive the products as high quality; hence, they buy them in high quantity.
References
Ong, H. (2020). Retail strategies used by Zalora Philippines to overcome e-commerce challenges.Financial Adviser.
Pradana, M., & Novitasari, F. (2017). Gap analysis of Zalora online application: Indonesian users. International Journal of Learning and Change, 9(3), 1.
Sakawee, S. (2014). Tech in Asia – Connecting Asia’s startup ecosystem. Techinasia.com. Web.
Zalora Malaysia. Zalora. (2022).