After the body blow, the Japanese Zozo decides to hire staff to strengthen his online shopping mall

TOKYO (Reuters) – Japan's Zozo Inc., a cheeky online fashion retailer, has made a comeback, but not in the way it's hoped for.

Zozosuit, which was to measure the body and was supposed to put the company at the forefront of custom fashion, has not been successful in boosting sales. The leaders were criticized in the media for extremely optimistic targets and the company announced in November that it was gradually abandoning the product.

Adding to its setbacks, the fashion brands that contributed to the reputation of Zozo's billionaire founder and CEO, Yusaku Maezawa, became increasingly dissatisfied with what they saw as an excessive reduction in the online shopping center of Zozo. Zozotown. Japanese apparel companies, such as Onward Holdings Co Ltd and Right On Co Ltd, have left the site.

The turmoil forced Zozo to reduce its earnings outlook in January. Shortly after, advertising advisor Maezawa, acknowledged to be the first private pbadenger to travel on Elon Musk's SpaceX Moon, announced that he was taking a break from Twitter to focus on his "real job".

According to Yuki Kanayama, Director of Innovation at Zozo Technologies, Zozosuit was not a failure – it was just the first edition of the company's bespoke business.

The next step for bespoke services "is still the subject of internal debate", while Zozo focuses on strengthening its online shopping mall, he told Reuters at a news conference. interview.

The abandonment of the combination however highlights the difficulties in making mbad customization a reality of the fashion industry. Many retailers, from startups to giants like Amazon, are advancing body measurement technology, including in-store scanners and apps that capture data via a smartphone. None had success in escape.

To strengthen its malls business, Zozo is recruiting engineers to tailor online shopping to user preferences and to work in areas such as advertising, said Kanayama, who created the Vasily fashion technology company before to give it to Maezawa in 2017.

Zozo Technologies, the company's research and development center, hired just under 100 people in the past year, mostly engineers, bringing the workforce to 280. This year, it plans to hire a hundred or more people, mostly engineers.

"It's a research question. When you have more products, the search becomes more difficult. So it's about things like personalization and discovery – not just what you want, but what is recommended and what you discover. "

How Zozo, who obtained a 15 billion yen ($ 135 million) line of credit from banks at the end of March, can rebuild his image and his finances will be the focus when he publishes his annual results and forecasts for the current fiscal year Thursday.

He said that he expects operating profit to decline to 26.5 billion yen, one-third lower than the previous estimate and 19% lower than the results of the previous year. Cash and deposits also fell sharply to 8.2 billion yen at the end of December, down two-thirds from nine months earlier.

Zozo stocks have seen their stock slide by nearly 60% since its peak last July, valuing the company at 653 billion yen (£ 4.52 billion).

However, the company has seen the number of Zozotown stores grow from 100 to 1,200 over the past year, attracting cheaper brands like Shimamura Co Ltd. Zozo has also taken steps to make the rebates less visible to users.

UNFIT

Michael Causton, badyst at JapanConsuming, describes Zozosuit as a good idea but "very poorly executed".

The first version, launched at the end of 2017, used built-in sensors to download data via a smartphone, but suffered from high costs and production problems. Zozo quickly abandoned this approach in favor of a pea-print version easier to manufacture using a smartphone camera to capture data.

But a bigger problem quickly emerged: customers who received one of the millions of freely distributed suits did not order a lot of clothing and some did not even download their data.

"It was a problem for them," said Kanayama, adding that the positive results achieved by the test customers before the launch of the suit were taken into account by Zozo's overly optimistic sales objectives.

"This is a big topic for us to think about," he said.

Zozo compounded the problems by extending its tailor-made offerings beyond basic products, such as t-shirts, to much more ambitious items, such as suits, which resulted in delivery delays and complaints about a bad product. sizing.

Zozo, however, will not give up his bold business approach, said Kanayama, who, like Maezawa, was once part of a rock band and helps cultivate the unconventional image of the firm with its penchant for cowboy boots -boy.

"Zozo is not going to mature," he said, dismissing the idea that 2018 represented a hectic period of adolescence for a company that needed to grow. "We are still punk."