Zara Business Model – Business Model Analyst

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Zara is by all means a household name in the world of fashion. The company attracts polarized views within the fashion industry, with some calling the Zara business model revolutionary and others seeing it as exploitative and unauthentic. Despite this, the company is certainly successful, with the company being branded with a value of nearly $13 billion in 2022
Let’s take a look at the Zara business model, the history of the company, and most importantly, how it makes money.
Contents
Year, name change, type of company, business model, number of stores, employees, valuation, number of products sold, famous for little advertising, criticisms, effects on the industry
The company known as Zara was started in 1975 by Amancio Ortega and Rosalía Mera. It was initially named Zorba, but the name was quickly changed since it shared the same name with a local bar. The first store was opened in Galicia, an autonomous community located in the northern part of Spain. They specialized in the sale of cheap imitations of popular, high-end fashion trends.
The company opened several more stores throughout Spain in the 1980s, but did not achieve truly massive growth after Amancio Ortega developed the concept of “fast fashion”. He then changed the design, manufacturing, and distribution procedure to reflect this new business model and achieved a significant reduction in the production process, and responded to changes in a high-end fashion more quickly.
These changes were mostly centered on the core tenets of the fast fashion philosophy. These included:
Zara is owned by Industria de Diseño Textil, S.A. (Inditex), a Spanish multinational clothing company that has its headquarters in Arteixo, Galicia, in Spain. Inditex is the largest fast-fashion group in the world, with a market capitalization of $73.7 billion in 2020. Zara makes up its largest subsidiary with 2,007 stores in 96 countries, which contribute about 70% of the total sales volume of the Inditex Group. 
Zara’s mission statement is simply to “give customers what they want, and get it to them faster than anyone else.
This perfectly represents the key value propositions of; being able to provide cheap, near-replicas of high-end fashion trends and deliver them quickly, with a 15-day lead time between the initiation and completion of the entire production process of a single item.
Let’s take a look at how Zara makes money.
Zara is said to sell over 450 million products a year, and a significant portion of these sales come from its retail stores. The company has thousands of retail outlets in nearly 100 countries. These physical locations provide male, female, and children’s clothing and accessories, as well as a range of other products such as beauty products, shoes, and perfumes.
Online sales also make a significant contribution to the total sales volume of Zara. E-commerce sales for the year 2022 were said to have contributed $8.6 billion to the total sales revenues. This represents a continuation of a steady uptrend in its online sales revenue with $6.1 billion generated in 2021, $4.8 billion in 2020, and $2.9 billion in 2019. The company has plans to further increase its online presence and still projects significant room for growth.
Let’s take a look at the Zara Business Model Canvas.
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Zara customer segments consist of:
Zara value propositions consist of:
Zara channels consist of:
Zara customer relationships consist of:
Zara revenue streams consist of:
Zara key resources consist of:
Zara key activities consist of:
Zara key partners consist of:
Zara cost structure consists of:
Here are some of the top competitors to the Zara business model.
Let’s take a look at swot analysis of Zara business model.
Fast fashion was one of the most significant revolutions in the fashion industry in the last century. Zara has been at the very forefront of this movement for almost five decades and has shown strong growth as well as the potential for further development. Though the company enjoys a large market share in Europe, it still has room to compete for a wider global customer base, as well as utilize the ever-expanding opportunities offered by E-commerce.


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