Zara speeds up rollout of online outlets

It s been just 20 days since the launch of Zara s first online stores in six of its biggest European markets. Already, it s clear that the company behind the fast-fashion chain, Inditex, has embarked on one of the swiftest roll-outs in online history.

Today, the company surprised analysts by saying it will open online stores in five more countries by the end this year. On September 2, Zara started selling its products online in six European countries: France, Germany, Italy, Portugal, Spain and the U.K.. It s gone down so well with customers that Zara now plans to go global, with online stores opening in Austria, Ireland, The Netherlands, Belgium and Luxembourg during the second half of 2010 and extending to the U.S., Canada, South Korea and Japan during 2011.

The other 79 countries where the group has a physical presence will follow in due course. CEO Pablo Isla also said today that he plans to introduce some of the company s other brands online next year.

Compare that with its closest s European rival, Sweden s H&M, who had a big head start in online sales, having opened its first online store almost four years ago in The Netherlands.

H&M told the WSJ last month it prefers to take small steps, country by country. Read our previous coverage here. With the recent launch of it s U.K. internet store, it s in eight countries. That means that in four months, Zara will have overtaken H&M in terms of its web presence, albeit not in online sales. It also means it can grow faster than before, without opening as many physical stores as it used to it opens a store a day on average right now.

The reason why the Spanish retailer can go so fast can be traced back to its particular business model, which some analysts say is ideal for online retailing.

Inditex became famous back in the 1990s for its fast-fashion reaction model, and continues to set the standard for the speed with which it can get the latest trends from the design table to stores.

At the heart of this model is a complex logistics system. Everything Inditex sells has to go through through one of the company s three logistics hubs, which are all located in Spain. A T-shirt made in China for Zara is shipped to Spain first, even if it s final destination could be a store in China.

So what Inditex did was rejig the newest of its logistics hubs, a gigantic warehouse close to Madrid, so that it can pack and arrange shipping to individual clients, instead of just to stores.

Just as it now ships to stores in 79 countries twice a week, it can easily deliver individual packages to clients who ve shopped online for a very small added cost. No local infrastructure is needed, hence the roll-out can be swift, like-for-like sales can get a decent boost, as can profit margins all because of the marginal extra costs.