Farfetch defeated YNAP. Then it will have to tackle Amazon — Quartz

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When Richemont announced that he would be sell majority stake in luxury fashion Yoox Netaporter Group to Farfetch, a competing platform for designer goods, the move was seismic news for the fashion industry.

After the deal, Farfetch will sit comfortably as the leader in luxury e-commerce. MyTheresa, another listed luxury platform and, to a lesser extent, Ssense and Matchesfashion, were launched as other competitors, but with this sale it is now clear that the two main players in the race for dominance of luxury fashion online are Farfetch and Amazon Luxury. .

Whereas ten years ago YNAP and Farfetch clashed, under Richemont, YNAP floundered and with the sale to Farfetch, Richemont will write $2.7 billion. YNAP had grown from an edgy online fashion pioneer to the odd child of a family of companies specializing in luxury like jewelry and watches. The deal also represents a big win for the asset-efficient online luxury model. YNAP’s flagship brand, Netaporter, essentially functioned as a digital department store. It buys inventory from brands, warehouses and ships to customers unlike Farfetch’s model, which aggregates boutiques around the world but does not keep inventory.

The difficult relationship of luxury with e-commerce

Although the luxury fashion market is huge, valued at some $110 billion worldwide, it remains one of the last categories not yet penetrated by e-commerce. Clothing is difficult to capture online and fashion shopping tends to have a high return rate.

Video and live streaming can help some, but the in-person shopping experience is hard to replicate. It’s no coincidence that e-commerce started with low-variability items like books and electronics before expanding into other categories. When the first in-line styling breakthroughs came, it was things like shoes, which are less of a hassle to fit. For example, shoe retailer Zappos, now owned by Amazon, was an early adopter of e-commerce.

Cosmetics can also be a tough sell through e-commerce, but since luxury beauty is still much more affordable than luxury clothing, shoppers aren’t as worried about gambling. If the product doesn’t finish quite as expected, it costs $70, not $7,000.

It’s not just that customers are hesitant either. Brands are also reluctant to give up control of the customer experience. Clicking a few buttons and having a cardboard box arrive at the door a few days later is ultimately missing something special. Luxury houses strive for top-notch customer service, and offline, some have even created invitation-only ultra-luxury boutiques to stand out among VIPs.

Enter Amazon

Amazon Luxury, which has now been around for two years in the United States, is the endeavor of the world’s largest designer fashion retailer. Although the number of brands on the platform is still small, it expanded to the European market in June and Amazon’s huge customer base and technological capabilities make it a force to be reckoned with.

While Farfetch may be able to infer from customer data that a person prefers YSL to Dior or has a fondness for A-line skirts, Amazon, with its sprawling empire, is able to see a customer’s tastes in fashion. groceries, books, and furniture, and analyze data about the shows they watch and the music they listen to, creating an in-depth customer profile and AI-powered predictions few can match.

Introducing Amazon Luxury to brands capitalizes on their desire to control the shopping experience, allowing them to manage inventory, selection, and pricing while delivering a huge consumer base. If YNAP created a large online store, then Amazon is trying to create a luxury mall, with many digital storefronts, all run by the brands themselves.

Ultimately, luxury fashion e-commerce has room for more than one player. Farfetch brings deep fashion credibility to an industry known to be finicky, but it must continue to innovate in its technical capabilities. The challenge for Amazon goes the other way: overcoming its image as an unorganized retailer to create a polished portal that big shoppers will want to buy the latest designer goods.

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