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Farfetch beat out YNAP. Next, you’ll have to take on Amazon: Quartz

When Richemont announced that it would be selling its majority stake in luxury fashion business Yoox Netaporter Group to Farfetch, a rival platform for designer goods, the move was seismic news for the fashion industry.

Following the deal, Farfetch will sit comfortably as a leader in luxury e-commerce. MyTheresa, another publicly traded luxury platform and, to a lesser extent, Ssense and Matchesfashion, have emerged as other competitors, but with this sale, it is now clear that the two main players in the race to dominate luxury fashion in line are Farfetch and Amazon Luxury. .

Whereas a decade ago YNAP and Farfetch went toe-to-toe, under Richemont, YNAP faltered and with the sale to Farfetch, Richemont write down $2.7 billion. YNAP had gone from being a trend-setting online fashion pioneer to an odd child in a family of companies specializing in luxury goods like jewelry and watches. The deal also represents a big win for the asset-light inline luxury model. YNAP’s flagship brand, Netaporter, essentially functioned as a digital department store. It buys inventory from brands, warehouses and ships to customers in contrast to Farfetch’s model, which aggregates boutiques from around the world but doesn’t hold inventory.

The awkward relationship between luxury and e-commerce

Although the luxury fashion market is huge, valued at some $110 billion worldwide, remains one of the last remaining categories that has not been fully penetrated by e-commerce. Clothing is difficult to capture online and fashion purchases tend to have a high return rate.

Video and live streaming may help some, but the in-person shopping experience is hard to replicate. It is no coincidence that e-commerce began with items with little variability, such as books and electronic products, before spreading to other categories. When the first forays into style came online, it was things like shoes, which are less complicated to fit. For example, shoe seller Zappos, now owned by Amazon, was an early adopter of e-commerce.

Cosmetics can also be difficult to sell through e-commerce, but since luxury beauty is still much more affordable compared to luxury clothing, shoppers don’t mind taking a chance as much. If the product doesn’t turn out the way they expected, they’re spending $70, not $7,000.

It’s not just that customers are hesitant either. Brands are also reluctant to relinquish control over the customer experience. Clicking a few buttons and receiving a cardboard box at the door a few days later ultimately lacks that special something. Luxury houses go to great lengths to ensure there is a high level of customer service, and offline, some have even created ultra-luxury, invite-only boutiques to distinguish themselves from VIPs.

Enter Amazon

Amazon Luxury, now two years old in the US, is the world’s largest retailer’s attempt at designing fashion. 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 can infer from customer data that a person prefers YSL to Dior or has a penchant for A-line skirts, Amazon, with its expanding empire, can see a customer’s taste in groceries, books and furniture, and Analyze data about the shows they watch and the music they listen to, creating a detailed customer profile and AI-driven predictions that few can rival.

Amazon Luxury’s pitch for brands capitalizes on their desire to control the shopping experience, allowing them to manage inventory, selection, and pricing while serving a huge consumer base. If YNAP created an online department store, then Amazon is trying to create a luxury shopping centre, with many digital shop windows, all managed by the brands themselves.

In the end, luxury fashion e-commerce has room for more than one player. Farfetch brings great credibility to fashion in a sector known to be finicky but in need of further innovating its technical capabilities. The challenge for Amazon goes the other way: overcoming its image as an unselected retailer to create a polished portal where high-spending shoppers will want to shop for the latest designer goods.

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