BUSINESS

Zara’s Business Model: How does it make money?

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The fashion industry is seeing some exciting new brands emerging on the international front with their unique design trends and “apparently” unique business strategies. However, experience and maturity triumphs over everything in the fashion industry. And since I have mentioned experience, Zara is the first name that comes in mind considering the immense experience and rich fashion history the Spanish brand has.

Zara, owned by its parent company Inditex, is undoubtedly one of the world’s largest clothing manufacturers. Since its official launch in Arteixo, Spain, in 1975, the brand has centered its attention towards being accessible to all kinds of customers.

Let’s have a look at Zara’s business model.

Business Model of Zara

If you were to ask which fashion brand’s sudden absence could make an irreplaceable void in the fashion industry, that would be Zara. With over 6000 functional stores across 85 countries, Zara has quite a prominent existence in the world of fashion, especially Fast Fashion. If you are unaware of the term fast fashion, you will find out soon.

Considering a company of Zara’s potential and stature, it is expected to consist of an impeccable business model sewn by carefully thought and tightly-knitted business strategies. Since Zara is renowned for satisfying all types of its customers, it has satisfied us in this expectation too. The internationally popular fashion brand consists of a business model that is a mixture of vertical integration, effective supply chain management, and a touch of uniqueness.

Significance of Fast Fashion

Zara’s primary focus has been towards producing products that count as fast fashion.

Easily put, fast fashion is similar to the idea of FMCG i.e., Fast-moving Consumer Goods. So fast fashion is the type of product line that targets young adults, and middle-aged working individual. People who want to enjoy the latest fashion trends without stressing their bank accounts.

Product Line

The company claims to cater to everybody’s needs and they happen to do so by producing for the following categories:

  • Accessories,
  • Beauty and Lifestyle Products,
  • Children’s clothing,
  • Men and Women’s clothing.

Strategies

Independent Design and Manufacturing

People often wonder why does Zara bears the cost of personally managing the designing and manufacturing of its products instead of outsourcing them to others. This serves as the most important part of Zara’s success as it is in complete control of their claimed quality.

Product Replacement

Zara has a unique business strategy of keeping no safety stock. This business loophole is backed by its property of releasing new and fresh designs at regular intervals so the customers get to see new designs very often.

If a particular product is underperforming, the company instantly replaces it with a newer design.

Lack of Advertisement

Zara relies on a unique strategy of zero investment in advertising. The company solely relies on the establishment of public stores and word-of-mouth to increase its publicity.

How does Zara’s Business Model generate money?

Since Zara is in control of the design, manufacture, distribution, shipment, promotion, etc. of its products it helps the company to manage the finances and manually control the financial fluctuations.

Furthermore, Zara never compromises on the quality of products no matter what the circumstances. This has cemented the customers’ trust in the international brand which has helped the company in retaining long-term customers.

To find out more about Zara’s business matters, you might want to have a look at the following articles.

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Pursuing my passion i.e. Graduation in Computer Science while creating exciting and informative content to satisfy my thirst of writing.

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