What a difference 24 hours makes. After a Monday spent speaking to industry contacts about rumours of a buyout of luxury etailer Net-a-Porter by either Amazon or Yoox, by Tuesday morning a deal was done.
While in terms of brand alliance the merger with Milan-based fashion etailer Yoox makes sense, what was interesting in my discussions was the divide among etail experts over which of Amazon or Yoox would be the best fit.
Johann Rupert, chairman of luxury group Richemont, which formerly owned Net-a-Porter but now has a 50% stake in the combined group, said: “Established business models are being increasingly disrupted by the technological giants. It is with this in mind that we believe it is important to increase leadership and size to protect the uniqueness of the luxury industry.” This gives insight into the decision-making process, embracing Yoox and dismissing Amazon all in one sentence.
Yoox may not be that well known in the UK, but the company - founded in 2000, the same year as Net-a-Porter - has not only had international success on its own platform but developed sites for a number of designer brands, including Armani.com and Lanvin.com, cementing its relationships in the luxury sector. It has been described as the “Amazon of the fashion world” and founder Federico Marchetti as “the [Amazon founder] Jeff Bezos of fashion”, indicating why, despite Amazon’s deeper pockets, it is Yoox that secured the deal.
I’m sure Amazon’s innovation and investment in new technology would have appealed to Richemont, but part of the Net-a-Porter proposition is its publishing side. Investment in content is not something Amazon has historically been known for (although the launch of its photography studio in Shoreditch could indicate that this is changing).
What both Amazon and Yoox have, and why they are often compared, is a slick operational and logistical infrastructure. This topic has risen again over the past few weeks as retailers continue to advance their logistics strategies, deciding which delivery options to offer and at what cost. The government has announced plans to scrap the requirement to apply for permission to install click-and-collect lockers and eBay has declared its intention to pilot a ‘click-and-drop’ scheme - to allow users to drop off sold items at an Argos store, for packing and shipping by eBay - which indicates both believe these methods are ones to invest in.
However, many retailers are still trying to satisfy the needs of shoppers by offering as many delivery options as possible, often for free. This is sure to reach breaking point as multichannel directors begin to see the cost implications of providing the maximum number of delivery options. The debate centres on what to charge for delivery, collections and returns (if at all) and how to convey to customers that service is key, alongside delivering at the time and place promised.
Nish Kukadia, co-founder of flash Sales website Secretsales.com, said recently that, although the business’s only delivery option is between five and 10 working days after a Sale has closed, this satisfied the customer as delivery details are transparent on the site. The nature of the proposition at Secretsales is that the customer is getting a deal so they are prepared to wait. I’m not sure fast fashion etailers such as Asos.com and Boohoo.com could go down this route, as part of the appeal of these sites is the time element. However, it does give other retailers something to think about and the Yoox Net-a-Porter Group will be one of many watching this area.