Where Is The Advantage Of Zara Brand Winning?

The mode adopted by ZARA is called Vertical Integration, which greatly reduces the shipment time: an average of 2 weeks, so the fast fashion brand represented by ZARA can have 15-20 Collection per year.

By comparison, the whole process of ordinary brand shipment takes 4-6 months, and only two Collection a year.

However, with the adoption of Vertical Integration mode, ZARA can better control the whole process (from market research, design, dress up, garment production, mass production, pportation and retail) to other fast fashion brands, which is 5 days faster than that of H&M, also known as shipping speed.

In pursuit of speed, ZARA can sacrifice a lot of costs.

1. in the production process, ZARA relies on the numerous handicraft shops in crabnya headquarters, home factories, and many products are directly produced locally, knowing that they have gradually been outsourced in recent years.

In the past few years, 75% of the products were made in Asia, and now they have outsourced production.

However, for this reason, the price of H&M is about 50%-70% of ZARA.

2., all long-distance pportation is an aircraft, rather than a cargo ship, willing to pay high freight charges, and not willing to spend advertising and marketing costs, ZARA marketing costs account for only 0.3%-0.4% of the total cost, while other brands are about 3%-4%.

Despite the high cost of pursuing fast, ZARA's gross margin and net interest rate are still comparable to that of H&M, and ZARA is unwilling to save the cost in order to increase profits.

Therefore,

It has reached unprecedented heights for all fashion brands and retailers.

All the clothes in the 3.ZARA headquarters warehouse will not stay for more than three days. The store will order products to the headquarters two times a week to replenish the products, and the inventory turnover rate is 3-4 times higher than that of other brands. On average, only 15% of the clothes in the season need to be discounted, while the other brands are 50%.

On average, customers go to ZARA 17 times a year, while other brands only have 4 times.

In this process, in terms of single design, an average of 20 minutes to design a garment, each year can design more than 25 thousand new models, is 4-6 times the H&M.

Therefore, speed is the most fundamental and important magic weapon for this model.

But this one

Industry has disadvantages:

1. because of the control of the whole process, the operational risk is increased. If there is a recession or a downturn in the industry, the pressure can not be pferred to suppliers.

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

3. shops are directly managed by brands, unable to expand rapidly through agency and other forms, and part of the property needs to be invested in new shops and renovated and renovated to reduce asset turnover.

4. as we all know, plagiarism.

At the same time, ZARA's credit is also attributed to their "inverted" design concept.

The core of ZARA is shops. Only when stores can really reach customers can we understand the needs of customers.

Therefore, stores provide sales data and submit it to the design department. The design department designs the style according to the needs of customers, then submitting it to the commercial sector to evaluate the cost and price, then start to plate, sample production, produce, and finally store ZARA super large logistics warehouse (9 times as much as Amazon). There will be countless freight cars at the entrance of the warehouse to pport products to other European regions or airports two times a day.