London – What will happen to European luxury e-commerce pioneers Yoox Net-a-porter, Matches and Farfetch? Will they die out like the dodo, or regenerate like the mythical phoenix? ?
Born in the early 21st century, these once-mighty technology platforms forever changed the way customers shop. We raised the bar on service and helped fashion brands big and small reach far-flung new markets with the click of a button.
However, in recent years, macro and micro forces have continued to disrupt the luxury e-commerce landscape, and in December the situation changed completely.
These three companies lost much of their value and power to countless market forces and the brands themselves. Many brands built their own websites or started direct-to-consumer offerings. Multi-brand e-tailers suddenly seemed less important.
Over the course of a week last December, Farfetch and Matches were sold at knockdown prices, but YNAP's owner, Compagnie Financière Richemont, was looking to sell to Farfetch before the company went bankrupt, leaving YNAP's future uncertain. remains unclear.
“Today, the world has changed a lot in terms of who has the access and ability to become an e-commerce player,” said Toshi, founder of Toshi, a digital business-to-business company that works with luxury brands. Sojin Lee said. Store the experience in the customer's home.
Sojin Lee is the founder of Toshi, a B2B service that connects online and offline retail.
Roberto Aguilar
Mr. Lee was also one of Net-a-porter's first employees in the early 2000s, leading the retail and purchasing department and overseeing brand partnerships, merchandising, customer service and warehouse management.
At the time, she said: “Multi-brand retailers were king. They were handouts.” But with the rise of Shopify, social media sales, and companies' determination to control their own online distribution, the power of multi-brand retailers has diminished. It started to decline.
Lee acknowledges that while these are difficult times for first movers, there is still value.
“Multi-branding isn't going away. It's just that competition, the landscape, consumer behavior, and access to software have changed so rapidly over the past five years that it's hard to be just as agile or come up with a different model. It's hard to catch up unless you can.
“The era of monobrands has arrived, but I don't mean to downplay the role of multibrand retailers. Like most tech companies, they too have been caught up in the wave of a bull market and are now in a position to It needs to be reconfigured to find its place and determine its true role,” Lee said.
“We still think it has value” in terms of curation, convenience, and reliability. “I think what's important now is to understand what role they play,” Lee added.
Mytheresa CEO Michael Kliger knows exactly what that role is.
Mytheresa, which went public on the New York Stock Exchange in 2021, has always been small compared to its European competitors, but the end of the great bull market is a shock that has devastated tech companies across all sectors. It's not that I couldn't avoid it.
The company's stock price has fallen significantly since its debut on the stock market, but unlike its competitors, Mytheresa has been consistent in terms of growth and profitability with a few quarterly exceptions.
Michael Kriger, CEO of Mytheresa.
courtesy
“Significant challenges currently exist for all participants in this market. As an industry, we need to move beyond this normalization phase, but the fundamental trends driving online and luxury remain intact. And for me as a retailer, the fundamental principles have never changed,” Kriger said.
“We're in the age of the consumer. We need to talk to, engage with, and collaborate with defined customers. If you don't have a customer proposition, you can't have great technology or a huge list of products. is also of no use,” Kriger said.
He believes the role of luxury multi-brand retailers is to provide service, curation and experiences that money can't buy. “This is how we win the hearts and minds of consumers. It takes curation, service and activation,” he said.
Kriger also has a long-term view. Mytheresa's 2023-24 fiscal year got off to a rocky start, but Krieger told analysts in November that he expected better performance in the second half of the 2024 fiscal year (January to June). .
Kriger said he believes this aspirational customer could return in 2024 once there is evidence of an improving economic outlook.
He also pointed to predictions published by Bain and Altagamma that online and mono-brand e-commerce channels are expected to account for two-thirds of the total luxury goods market by 2030.
The report, published in November, says brands must focus on “providing differentiation and meaningful experiences across the entire customer journey, regardless of the interaction touchpoint,” and “Leading in Sustainability.” “Embracing technology is key.”
However, some are not so optimistic about the future of online multi-brand stores.
Jonathan Siboni, founder and CEO of Luxurynsight, which provides data-driven insights for luxury goods, fashion and beauty brands, says the era of luxury multi-brand online retailers has given way to the rise of mono-brand luxury stores and pure brand I believe that this is rapidly coming to an end due to the rise of the The cost of attracting customers online.
Jose Neves and Bruno Pavlovsky of Chanel.
Photo provided
Siboni said online specialty stores will eventually replace ambitious big-box retailers such as eBay, Tmall and JD.com, which already have high traffic and could make space for luxury goods on their sites. I think there is a possibility that
“Only large companies can survive online business.” [commercial] It's not a high-end platform.These companies operating other businesses [and other demographics]Since you already have traffic, you can make room for a luxury store in your portfolio. ”
Siboni said eBay could put 2% of its 135 million customer base in front of luxury brands.
“It has the potential to create an 'eBay luxury store', providing logistics, infrastructure, transportation, and ultimately profitability for brands. It could allow brands to build stores and customize their offerings. “There is a gender,” he said.
He believes the opportunity is there, but it's up to the big e-commerce companies to work closely with luxury brands to make it work. “The question they're asking is: How much energy, ambition and resources does it take to do something like that?”
In the meantime, it remains to be seen what White Knights Coupang and Frasers Group will do with their respective acquisitions, Farfetch and Match, and how Richemont will handle YNAP once it returns to its stable of luxury giants.
Lee believes the future is bright. She argued that the collapse in Farfetch and Matches valuations was happening across all areas of tech business as part of a broader economic cycle.
“There are no bad actors in this,” Lee said, adding that Matches and Farfetch are both working hard to grow during the bull market and are doing exactly what investors expected. He said there was.
“Then a lot of things caught up and changed quickly. It was a perfect storm and it was tough. These companies [and their founders] They move forward and what they do next defines them. They will one day be recognized as superheroes. ”
In the meantime, Farfetch and Matches will be used as a vehicle to help owners move upmarket.
Coupang headquarters.
SOPA Image/LightRocket (via Getty)
Coupang bailed out Farfetch with a $500 million injection in December, and it is already one of South Korea's largest online marketplaces. As South Korea's luxury goods e-commerce competition intensifies, Farfetch is expected to leverage its existing technological capabilities to attract more luxury brands and retailers.
Coupang could use Farfetch to source tier 2, tier 3 and lower tier fashion and luxury brands to add 'vertical' to South Korea, said Bernstein, an investment advisor and brokerage firm. “It's highly sexual.”
Frasers Group, which bought Match for £52m – a fraction of what Apax Partners is thought to have paid for the company in 2017 – plans to use the retailer to fulfill its luxury ambitions. Dew.
Frasers described the acquisition of Matches as an opportunity to develop its own elevation strategy and develop a premium product offering.
Frasers CEO Michael Murray said Match would “deepen” Frasers' relationship with the fashion giant and “accelerate our mission to give consumers access to the world's best brands.” I hope that you will.
Hannah Traore, Tinks and Eve Jobs attend Net-a-Porter's 2023 Summer Dinner in New York.
Lexi Moreland/WWD
YNAP is a different story. The company already had a luxury owner in Richemont and was planning a sale to the tech-savvy Farfetch.
Richemont suspended the deal after selling Farfetch. The company now plans to “re-evaluate options to maximize YNAP's strengths and potential under new management,” which means the e-commerce landscape will continue to shape change next year. It means.
