01.2 CORPORATE STRATEGY

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1 PAGE 10 ZALANDO IS EUROPE S LEADING ONLINE FASHION PLATFORM FOR WOMEN, MEN AND CHILDREN. WE PROVIDE OUR CUSTOMERS WITH A CONVENIENT ONE-STOP SHOPPING EXPERIENCE, OFFERING AN EXTENSIVE SELECTION OF FASHION ITEMS INCLUDING SHOES, APPAREL AND ACCESSORIES, WITH FREE DELIVERY AND RETURNS. OUR ASSORTMENT OF MORE THAN 1,500 INTERNA- TIONAL BRANDS RANGING FROM POPULAR GLOBAL BRANDS TO FAST FASH- ION AND LOCAL BRANDS IS COMPLEMENTED BY OUR PRIVATE LABEL PROD- UCTS. OUR LOCALIZED OFFERING CATERS TO THE DIFFERENT PREFERENCES OF OUR CUSTOMERS IN EACH OF OUR 15 EUROPEAN MARKETS. more than 138 m VISISTS PER MONTH Our logistics network, with three central fulfillment centers in Germany, allows us to efficiently serve our customers throughout Europe. A new fulfillment center in Southern Germany, and our first international fulfillment center in Northern Italy, are in the planning stages. Zalando s websites attract more than 138 million visits per month. In the fourth quarter of 2015, roughly 60% of traffic came from mobile devices, and we had more than 17.9 million active customers by the end of the year STRATEGIC FRAMEWORK Our business model is based on three pillars: Fashion, Technology and Operations. Fashion represents Zalando s retail offering, Technology underpins every step of the company s value chain, and Operations, specifically our highly efficient fulfillment infrastructure, plays a vital part in contributing to customer satisfaction. The effective interplay between these three pillars is central to the company s success, as demonstrated by the 2015 financial results. JAN WILMKING IS TALKING ABOUT THE PLATFORM STRATEGY. Our market offers a significant opportunity: the European fashion market 1 had total sales of approximately EUR 417bn in While total fashion retail sales remained largely stable between 2010 and 2015, online sales doubled from EUR 24bn in 2010 to EUR 46bn in 2015, implying a compound annual growth rate (CAGR) around 15% 3. However, with only 11% of the total market in 2015, the online share is still relatively small. Despite being the European leader in pure-play online fashion, with annual revenues of ~ EUR 3bn, Zalando has a market share of less than 1% of the total addressable market. It is our ambition to achieve a market share of more than 5%, which is the basis of our annual revenue growth corridor of 20 25% for the coming years. Fashion as an e-commerce category has significant potential and we expect continued growth in the coming years. With a leading market position and customer proposition, we believe we are well placed to capture a disproportionate share of the online market. For example, in our most mature category and geography, shoes in Germany, we already have a market share of around 5% 4. In addition, being a multi-brand aggregator, we believe we should be able to capture a market share larger than large incumbent European verticals, who have approximately 4% and 3% 5 respectively. A further key driver for growing market share is our platform strategy, which we started implementing in early ) Excluding Russia 2) Source: Euromonitor International, January ) Source: Euromonitor International, January ) Source: Euromonitor International, January ) Source: Euromonitor International, January 2015

2 COMPANY COMBINED MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS 01 PAGE SERVICE PLATFORM STRATEGY Our aim is to connect people and fashion. We are building the technological infrastructure for online and mobile fashion commerce that enables all participants to create value through our platform. In everything we do, we serve customers, brands and intermediaries. CONSUMER D7 INTERMEDIARY N8 CORE CAPABILITIES I10 I16 BRAND AND MERCHANT

3 PAGE 12 Customers visit us to discover fashion from a broad range of brands, and to shop on a regular basis. Brands appreciate us as their strategic partner because we offer them instant access to the entire European fashion market, significant traffic, deep insights into customer buying behavior, a clear fashion focus, and access to a platform that lets them present themselves in an engaging way. Intermediaries are third-party service providers that interact in the fashion market as stakeholders, such as fashion stylists, logistics providers and marketing affiliates. To connect customers, brands and intermediaries effectively, we are continually developing and improving our technological and operational capabilities. D7 P CONSUMER The large and growing number of customers we serve, and the increase in shopping frequency on our platform reflect our appeal to customers. In fiscal year 2015, we had 17.9 million active customers who placed an average of 3.1 orders through our websites and apps. We design our websites and apps to sell millions of unique fashion and lifestyle products from hundreds of brands across multiple categories in a user-friendly way. Our customers preferences are as diverse as our portfolio. The average customer is years old, and ~75% are female. Through our various channels, such as Zalando Shop, Zalando Lounge and Zalon, we cater to the needs of different customers. In our largest channel, the Zalando Shop, we mainly serve customers focused on a broad fashion assortment and convenience including free, fast and reliable delivery and returns. Bargain hunters, meanwhile, prefer our Zalando Lounge channel, featuring attractive daily sales campaigns with deep discounts, but longer delivery times and added delivery charges. And with Zalon, we recently launched a curated shopping service offering free personal style advice for those seeking fashion inspiration. With 17.9 million active customers, we currently only capture a portion of the European market of 427 million 6 people. Our goal is to extend our customer reach by including additional offers that address even more customers through new channels, an even wider assortment, and different value propositions. I16 P BRAND AND MERCHANT We provide the fundamental technological infrastructure and marketing reach that helps brands leverage the power of the internet. Currently, we operate the Zalando Shop, which sells around 150,000 styles from over 1,500 brands. Owning almost the entire inventory, we engage in direct sales to the customer. 6) Source: Euromonitor International, January 2015

4 COMPANY COMBINED MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS 01 PAGE SERVICE 13 We also let selected brands sell their products directly on our websites via our partner program. In this model, we connect the customers with the brand who then sells directly to the customer. We receive a commission on the sale, and the brand is responsible for the delivery process. With our platform strategy, we will increase the opportunities for brands to sell their products directly through our websites and mobile apps. We believe that such opportunities can take various forms, enabling different groups of brands to sell their merchandise through our ecosystem, e.g. branded / unbranded market places, different kinds of production models or custom-designed tools that connect the offline world to the online world. Furthermore, we already provide a brand solutions service to our brands, encouraging them to create their own personal brand store within the Zalando Shop, and assisting them with analytics. Going forward, the service level Zalando provides to their brand partners can vary: for example, fulfillment by Zalando versus fulfillment by the brand. Similar to the partner program, our function is not to be the seller of record in those transactions. Instead, we offer our partners the chance to use this business model, and Zalando earns commissions depending on the service level provided INTERMEDIARY We are developing a large ecosystem for online and mobile fashion commerce that enables participants to create and share value. Participants include fashion stylists, logistics providers and marketing affiliates: N8 P. 28 Fashion stylists: We function as an online platform that gives independent stylists the opportunity to provide our customers with personal shopping advice through our stylist tool Zalon. This set-up is good for everyone: stylists earn a commission on their services, customers receive free advice, and Zalando now has an offering for customers looking for advice. Logistics providers: In order to efficiently conduct business in each of our markets, we work closely with a multitude of logistics partners, including long-haul and last-mile delivery services. In addition, we run eight decentralized return centers throughout Europe, mainly managed by external service providers. Marketing affiliates: With the launch of Zalando Media Solutions, we have developed a proprietary online marketing technology platform. Brands and other advertisers are invited to place their marketing content on this platform into our shop websites and apps. That content can also be placed on marketing affiliates websites and mobile apps. Our marketing partners benefit from our wide reach with more than 400 million visits every quarter across 15 European markets, and the targeted control of advertising content. Zalando earns commissions from this additional marketing offering.

5 PAGE 14 I10 P CORE CAPABILITIES: TECHNOLOGY AND OPERATIONS Our technology and smart data capabilities are at the core of our platform and help us create improved solutions for customers, brands and intermediaries as well as drive efficiency across all processes. We consider our own technology systems secure, robust and highly scalable. This facilitates efficient supply chain management, sourcing, customer relations, enterprise resource planning, risk management control, as well as stakeholder-facing e-business functionalities. The effective utilization of our technology platform and smart data solutions is at the core of our business success, helping to optimize processes and contributing to well-informed decision-making across our organization. The localization of Zalando s products and services is a key contributor to our success in the European fashion market. The design of our processes and services is tailored to customer requirements in the various regions from adapted product offerings and preferred methods of payment and delivery to free customer service in the respective local languages. 290,000m² FLOOR SPACE IN OUR FULFILLMENT CENTERS This contrasts with centralized processes within the platform, such as content creation and order processing. In addition we offer free delivery and returns across Europe to all our customers. Our logistics infrastructure, with currently 290,000 m 2 divided between three central fulfillment centers in Germany, is being expanded with a further fulfillment center in southern Germany and another in northern Italy, the pilot project for the internationalization. The fulfillment centers in Brieselang, Erfurt, Mönchengladbach and soon Lahr and Stradella, allow us to quickly reach our customers all across Europe. As one of our key strategic elements, we are making significant investments in proprietary technologies and infrastructure to support the growth of our platform. Our expertise allows us to harness the substantial volume of data generated from our platform and to further develop and optimize the products and services we offer. We encourage innovation such as our easy-to-use mobile shopping apps by ensuring that most of time spent by our 1,000-strong technology team is dedicated to new projects across all process steps, always following their Radical Agility (see page 35) approach. As part of our tech nology expansion, we opened two international tech hubs in 2015: one in Dublin and another in Helsinki. In the Irish capital, we established our Fashion Insights Center, which focuses on data analytics. Our Helsinki hub focuses on customer-facing technologies, especially in the mobile sector.