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Have you ever found yourself scrolling for hours through Zalando or another e-commerce platform, trying to find something that feels just right? Well, you’re not the only one. With over a million products and 6,000 brands, Zalando gives shoppers endless options, and sometimes too many. This diverse range of products makes it overwhelming, leading to hesitation, abandoned carts, and an industry-leading return rate of almost 50%. It’s a problem that costs money and time, and even creates unnecessary emissions through reverse logistics.

We wanted to rethink this experience. How can Zalando preserve its massive product range while making shopping convenient, personalized, and environmentally friendly? The answer: Generative AI.

Our Concept: The AI Style Assistant

We developed an AI-powered Style Assistant that acts like a personal stylist embedded within Zalando. Instead of filtering through thousands of products, customers can upload a picture of themselves or an outfit that inspires them, and inform us of the occasion or mood they seek, as well as their budget.

The assistant then creates customized mood boards and complete outfit suggestions based on what’s available at Zalando right now, in a matter of seconds. Picture a stylist who knows your closet, your aesthetic, and your budget, in your face.

Changes in Zalando’s Business

It isn’t just a fabulous feature; it changes the nature of Zalando’s business. The platform shifts from a massive online marketplace to a personalized fashion site.

–              Customers are given styled looks, not endless results.
–              Automated exposure and cross-selling (“complete the look”) generate profit for bands.
–              Zalando gains from greater efficiency, higher loyalty, and a more sustainable strategy through reduced returns.

The Impact

We expect the impact to be considerable. Conversion rates could increase from 2–3% to up to 25%, session lengths could increase by 30%, and repeat rates could decrease by about 20%. All these improvements add up to happier customers, lower emissions, and improved returns for Zalando.

Why It Matters

There are other fashion competitors like Amazon and Shein already using AI, but not nearly as transparently. Zalando can lead in different ways by combining personalisation with privacy, sustainability, and creativity.

Our business idea shows how GenAI can help turn the shopping experience from overwhelming to relaxing. With the right technology and trust, Zalando can transition from Europe’s largest marketplace to its most personal and sustainable one.

Team members (37)

• Alessandro Kato – 772838 
• Analucia de Las Casas Rivera – 760863al 
• Pien van der Leeden – 659283pl 
• Alex Yang – 755062yy

References

Deloitte. (2024). The state of AI in retail and consumer products 2024. Deloitte Insights. https://www.deloitte.com

Euronews. (2023, March 9). Fast fashion retailer Zalando claims its returns are climate neutral—is it true? https://www.euronews.com/green/2023/03/09/fast-fashion-retailer-zalando-claims-its-returns-are-climate-neutral-is-it-true

Iyengar, S. S., & Lepper, M. R. (2000). When choice is demotivating: Can one desire too much of a good thing? Journal of Personality and Social Psychology, 79(6), 995–1006. https://doi.org/10.1037/0022-3514.79.6.995

Landmark Global. (n.d.). Returns done right: Lessons from five standout brands. https://landmarkglobal.com/eu/en/news-insights/returns-done-right-lessons-from-5-standout-brands/

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Today’s e-commerce experience is no longer just about shopping; it’s also about staying entertained while you do it. TikTok’s move into retail with TikTok Shop demonstrates how a platform can challenge a giant in an industry like Amazon, leveraging its large user base and engagement model. And the numbers bear it out: U.S. sales through TikTok Shop rose 120% year over year, and active TikTok Shop stores rose from around 4,450 in July 2023 to over 231,000 by July 2025 (Silberstein).

TikTok offers a different experience, as it is not the search-driven shopping experience that Amazon offers. They push a discovery-driven approach, where products appear in your feed through live streams and recommendations. This is a very good example of platform envelopment, where a company includes bundles of a new service into its core product to move into an adjacent market (Eisenmann, Parker, & Van Alstyne, 2006).

But what really makes TikTok Shop powerful is network effects. The more content creators showcase a product, the more buyers are attracted, which results in attracting more sellers. Van Alstyne, Parker, and Choudary (2016) describe this as the way platforms succeed by efficiently connecting multiple sides of the market. This new section of TikTok also allows smaller merchants to reach millions of potential customers, something that would not be very easy on platforms such as Amazon. TikTok mixes entertainment with commerce, which can lead to impulse purchases, unlike Amazon, where users search for specific products.

But network effects can also run in the opposite direction. If the platform gets filled with poor-quality merchandise or misleading advertising, users can lose trust — a clear case of negative network effects (Eisenmann et al., 2006). Amazon, on the other hand, has had decades to build its reputation for logistics, consistency, and consumer protection. To really succeed, TikTok has to go beyond entertainment and prove that it can do quality control and shipping just as well.

Following this new proposal, questions arise regarding regulations. As Belo and Li (2022) note in their work on freemium platforms, growth strategies depend heavily on user trust. Combining commerce with social media creates a lot of uncertainty regarding consumer protection, privacy, and how the platform can identify its underage audience.

This shows how Titok Shop is entering a new phase in the competition between platforms. Its goal is not to copy Amazon, but to redefine the social experience when shopping online. TikTok is going to be able to hang onto the entertainment element and demonstrate that it can get the job done on trust and reliability, and become a true threat to Amazon, and in doing so, redefine shopping for an entire generation.

References:

Belo, R., & Li, T. (2022). Social referral programs for freemium platforms. Management Science.

Eisenmann, T., Parker, G., & Van Alstyne, M. W. (2006). Strategies for two-sided markets. Harvard Business Review, 84(10), 92–101.

Silberstein, Nicole. “Two Years In, TikTok Shop Is a Commercial Powerhouse: A Look at the Numbers.” Retail TouchPoints, 12 Sept. 2025, www.retailtouchpoints.com/topics/customer-experience/two-years-in-tiktok-shop-is-a-commercial-powerhouse-a-look-at-the-numbers?email=analuciadelascasas%40gmail.com. Accessed 19 Sept. 2025.

Van Alstyne, M. W., Parker, G., & Choudary, S. P. (2016). Pipelines, platforms, and the new rules of strategy. Harvard Business Review, 94(4), 54–62.