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How Does Zola Make Money? The Zola Business Model In A Nutshell

Zola is an online wedding retailer, planner, and registry. It enables couples to register for experiences, gifts, and cash funds, founded in New York City by Shan-Lyn Ma and Nobu Nakaguchi in 2013. Zola generates revenue from the purchases in much the same way as any online retailer. For example, when a wedding guest purchases an experience such as a wine tour, Zola takes 20% of the total purchase price. This percentage doubles to 40% for physical product purchases.

History of Zola

Zola is an online wedding retailer, planner, and registry. It enables couples to register for experiences, gifts, and cash funds.

The company was founded in New York City by Shan-Lyn Ma and Nobu Nakaguchi in 2013. When asked about the origins of Zola, Ma recounted attending multiple weddings in the same year and becoming frustrated at the outdated, inconvenient, and impersonal nature of wedding registries.

With a background in creating engaging eCommerce shopping experiences, Ma partnered with product designer Nobu Nakaguchi. The latter also lamented the cumbersome process of planning his wedding ten years earlier. The pair then partnered with Gilt Groupe founder Kevin Ryan to build a new company for modern weddings and their savvy guests.

Initially, Zola was a wedding registry service. After repeated requests from Zola users, the service expanded in 2017 to include Zola Weddings – a free service offering guest list management, RSVP tracking, and customizable checklists. A partnership with home décor retailer Crate & Barrel followed soon after, enabling registry gifts to be selected from over 3,500 branded products. In 2019, the first bricks-and-mortar store was opened in the Flatiron District of New York City.

Recent estimates suggest Zola has an annual revenue of $120 million and has helped over 600,000 couples plan their weddings since its launch.

Zola revenue generation

Zola is first and foremost an eCommerce store. The company claims it carries over 100,000 gifts and experiences from more than 1,000 brands.

More importantly, the Zola app is designed to appeal to younger generations who want a seamless shopping experience. Products can be added to (or removed from) a registry with a simple swipe. If an item is out of stock, the app provides helpful alternative suggestions.

Zola generates revenue from the purchases in much the same way as any online retailer. When a wedding guest purchases an experience such as a wine tour, Zola takes 20% of the total purchase price. This percentage doubles to 40% for physical product purchases.

While these percentages are comparable to similar businesses, Zola can increase profit margins by avoiding the costs associated with warehousing inventory. Instead, the vast majority of items are shipped directly from the manufacturer or company providing the experience.

Cash requests

When engaged couples request cash gifts, Zola charges a 2.4% fee. This fee is the lowest of its kind when compared to the fees of similar wedding registry companies.

Couples can choose to pay this fee themselves or pass it on to their guests. In any case, Zola does not make a profit here because the fee covers the transaction fee charged by the credit card company.

Key takeaways

  • Zola is a North American wedding retailer that also offers registry and planning services. The company was created after co-founder Shan-Lyn Ma discovered buying wedding gifts online to be inconvenient, impersonal, and outdated.  
  • Zola makes money by selling over 100,000 items and experiences in its eCommerce store. The company does not hold physical inventory, instead taking 20% of the total price of experiences and 40% for products.
  • Zola also charges a fee for processing cash gifts. Ostensibly, this offsets the transaction fee charged to Zola by the credit card provider.

Read Also: How Does Wix Make Money, Wish Mobile E-commerce Platform Business model, How Amazon Makes Money.

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A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. Platform business models usually comprise two sides: supply and demand. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model success.

Marketplace Business Model

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