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Retailer Zalando launches AI shopping agent as margins squeezed

By Reuters News

PARIS, Nov 3 (Reuters) - Top European online fashion retailer Zalando ZALG.DE on Tuesday launched its first AI shopping agent amid concerns that artificial intelligence could disrupt online retail, after reporting third-quarter gross margin below market expectations.

Shares in the German company fell 5% in early trading.

Zalando reported a gross profit margin of 38.7% in the quarter, missing expectations partly due to investments, analysts at Jefferies and JPMorgan said in notes to clients.

The industry is facing disruption from so-called agentic commerce, in which autonomous AI agents execute the full purchase cycle for goods, from price comparison across multiple retailers to payment, on behalf of human shoppers.

"The stock could drift lower in the coming days given the lack of any incremental positives, in our view, and its current level, along with ongoing structural risk from agentic commerce development," JPMorgan said.

As shoppers increasingly use AI to compare prices, check product availability and get recommendations, retailers are racing to adopt AI tools to remain competitive and expand the range of products available on their platforms.

JOINING THE AGENTIC COMMERCE RACE

Zalando said it would launch Zalando Extended, a platform where users will buy products from other online shops using AI agents on the Zalando app, with a pilot in collaboration with home retailer Westwing WEW.DE.

"Our shift to a platform business model is accelerating, with our partner business and retail media growing at a double-digit rate and B2B revenue up almost 28%," Zalando finance chief Anna Dimitrova said in a statement.

Zalando sells clothes, shoes and accessories from thousands of brands including Nike, Hugo Boss, and Coach.

It said its third-quarter revenues grew 5.1% year-on-year to €3.17 billion ($3.55 billion), above the €3.15 billion expected by analysts polled by LSEG. Gross merchandise value, a metric measuring the value of all goods sold, rose 7.5% to €4.54 billion.

($1 = 0.8937 euros)

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