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HomeUncategorizedFarfetch beat YNAP.But next, it will have to compete with Amazon

Farfetch beat YNAP.But next, it will have to compete with Amazon

When Richemont announced the sale of its majority stake in luxury fashion business Yoox Netaporter Group to designer goods rival platform Farfetch, the move was a shock for the fashion industry. news.

Farfetch will remain the leader in luxury e-commerce after the transaction closes. MyTheresa, another publicly listed luxury platform, and to a lesser extent Ssense and Matchesfashion, has been listed among other competitors, but with this sale it is now clear that the dominant player in the online luxury fashion competition The two main players are Farfetch and Amazon Luxury.

Ten years ago, YNAP and Farfetch went head-to-head, and under Richemont, YNAP was in trouble, and with the sale to Farfetch, Richemont will write down $2.7 billion. YNAP has gone from trendsetting online fashion pioneer to the eccentric kid of a family of companies specializing in hard luxury goods like jewelry and watches. The deal also represents a huge win for the asset-light model of online luxury. YNAP’s flagship brand, Netaporter, is essentially a digital department store. It buys inventory from brands, warehouses and ships it to customers, in stark contrast to Farfetch’s model, which brings together boutiques from around the world but doesn’t keep inventory.

The uneasy relationship between luxury goods and e-commerce

Despite the huge luxury fashion market, worth around $110 billion globally, it is still one of the last categories where e-commerce has not yet fully penetrated. Clothing is hard to capture online, and fashion purchases tend to have high return rates.

Video and live streaming can help some people, but the in-person shopping experience is hard to replicate. It’s no coincidence that e-commerce started with little-changed items like books and electronics, and then expanded into other categories. When the first online design styles arrived, it was shoes and the like, and their fit wasn’t that complicated. For example, shoe seller Zappos, now owned by Amazon, was an early adopter of e-commerce.

Selling makeup via e-commerce can also be challenging, but given that luxury beauty is still more affordable compared to luxury clothing, shoppers don’t mind gambling. If the end result of the product is not what they expected, they lose $70 instead of $7,000.

It’s not just customer hesitation. Brands are also reluctant to give up control over the customer experience. Clicking a few buttons and having a cardboard box delivered to your door a few days later ends up lacking that special. Luxury companies take pains to ensure a high level of customer service, with some even opening invite-only ultra-luxury boutiques offline to differentiate themselves from VIPs.

Enter Amazon

Amazon Luxury, established in the US for two years , is the attempt of the world’s largest designer fashion retailer. While the number of brands on the platform is still small, Amazon’s massive customer base and technical capabilities make it a force to be reckoned with when it expanded into Europe in June.

Whereas Farfetch may be able to deduce from customer data that a person prefers YSL over Dior or prefers A-line skirts, Amazon, with its vast empire, can see how customers prefer groceries, books and furniture. Taste, and parse data about the shows they watch and the music they listen to, creating in-depth customer profiles and AI-driven predictions that few can match.

The purpose of Amazon’s luxury marketing to brands is to leverage their control over the shopping experience, allowing them to manage inventory, selection, and pricing, while delivering a large consumer base. If YNAP created a department store online, Amazon is trying to create a luxury mall with many digital storefronts managed by the brands themselves.

Ultimately, luxury fashion e-commerce has room for more than one player. Farfetch brings deep fashion credibility to an industry that is notoriously discerning but requires constant innovation in its technological capabilities. Amazon’s challenge is the other way around — overcoming its image as an uncurated retailer and creating a polished portal that keeps big-box shoppers wanting to shop the latest designer items.



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