The selling of luxury goods online has proved to be a boon to counteract slowing economies, particularly since it’s not dependent on any particular region. All that is required is Internet accessibility. That enables people anywhere in the world in search of high-end products, from designer bags to jewelry, to find a broad selection—also globally.
The online marketplace, though, of course is not without its own risks—and some of those risks can be surprising. Investors need to keep abreast of the hazards to luxury firms, and the surprises bubbling to the surface, as the online luxury market matures.
Here are three of the most recent developments.
1. Yoox Buys Net-a-Porter
Yoox SpA has agreed to buy Cie. Financiere Richemont SA’s Net-a-Porter business, which will make the online retail luxury goods business the largest in the world. The new entity, which will be called Yoox Net-a-Porter Group, will corner about 15% of the global online luxury market, according to Italian luxury association Altagamma, with two million customers and 1.3 billion euros’ worth of business.
Yoox runs the e-commerce sites for numerous luxury brands that range from Armani to Ermenegildo Zegna. The deal teams Yoox founder Federico Marchetti with Net-a-Porter founder Natalie Massenet, offering the potential for exponential expansion in the high-end fashion business.
Some may be surprised to hear of the agreement, since just days before, Amazon.com denied it had had any intention of acquiring the online luxury retailer. Reports in Women’s Wear Daily had said Amazon was “in talks” to acquire Net-a-Porter itself, and said such a move would be Amazon’s largest.
While Amazon already owns online shoe firm Zappos and the boutique ShopBop, it has not been as successful at dominating the fashion sector as it has been in books and electronics. In 2012 the online retailer declared its intention to enter the world of high-end fashion, saying that it would keep “the designer brands … happy,” according to a New York Times report, with the prices it would charge. But so far that hasn’t happened, although Amazon certainly sells a huge volume of clothing. However, its reputation still is more that of a shark than a supporter.
2. Chanel Will Finally Go Online
Chanel has been a longtime holdout against selling anything other than its makeup, fragrances and sunglasses online (and that’s only because those products are licensed to other companies), but the luxury retailer has finally decided to take the plunge. Women’s Wear Daily reported that Bruno Pavlovsky, Chanel’s president of fashion, announced that its online presence could go live at the end of 2016. Why? Customer demand.