Inside the Luxury E-Commerce Race
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After years of speculation, designer e-tailers are finally consolidating in an effort to increase profits and gain market share. BoF’s Robert Williams and Tamison O’Connor unpack what’s in store for major players including Farfetch, YNAP and MatchesFashion.  Background:  The launch of Net-a-Porter in 2000 changed fashion forever, heralding the first phase of luxury e-commerce, and inspiring a slew of competitors to get in the game. But in an increasingly competitive market, e-tailers have struggled to retain pricing power and turn a profit. Now, the space is starting to see some consolidation. In August, Farfetch took a stake in Yoox-Net-a-Porter Group, which laid the groundwork for an eventual acquisition, and allowed Richemont to offload the platform — which had long weighed on its portfolio.  “This deal is a pretty major step for Farfetch in terms of setting up the platform to solidify a dominant position… YNAP was Farfetch’s biggest competitor,” said Tamison O’Connor, BoF luxury correspondent.  Key Insights:  As part of the deal, Farfetch acquired a 47.5 percent stake in YNAP, in an agreement that contains provisions for a full acquisition within a full year. Farfetch will power YNAP’s technology, and sell YNAP inventory — including Richemont brands — on its own platform.  E-commerce can be hard. Farfetch is attractive to brands because it offers back-end management, stock management and connection to the company’s fulfilment logistics network, at a time when brands are struggling to wrangle their supply chains due to macroeconomic challenges.  Brands are getting better at creating curated universes on their own sites, and that could end up hurting multi-brand e-tailers, who have set big growth expectations with investors. Farfetch has struggled to build a brand to match its business ambitions, where players like Mytheresa, Matches and Net-a-Porter — while facing their own challenges — have stronger identities.  Additional Resources: Richemont, Farfetch and YNAP: Understanding a Transformational E-Commerce Deal: The Swiss luxury group is spinning off Yoox Net-a-Porter in a joint venture with Farfetch. What does it mean for Richemont, Farfetch, YNAP and the luxury industry at large? BoF dissects the deal. Inside Farfetch’s Bid to Dominate Luxury E-Commerce — Download the Case Study: During a blockbuster year for online sales, Farfetch surged ahead of rivals to position itself at the front of luxury’s e-commerce race. Can it spin the current momentum into sustainable — and profitable — growth and become the unrivalled platform for luxury fashion online? Hosted on Acast. See acast.com/privacy for more information.
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