Investing in Zalando's Shares Comes With High Uncertainty

Zalando is the leading European pure-play e-commerce fashion platform. We believe that through its wide reach (over 48 million active customers, or around 10% of the addressable population in markets where it is present and over 5,800 brands represented), it benefits from traces of network, cost, and intangible asset advantage. Although we don’t think these advantages are currently strong enough to warrant a moat, we think the intangible asset advantage should strengthen over time as more customer traffic data is accumulated and better analytics allow for improved conversion rates and customer loyalty, granting Zalando a positive moat trend.