As the market leader in its sector, luxury group LVMH has created the blueprint for how to build – and run – a luxury brand in the 21st century. The company’s acquisitions of family-owned brands and its success at turning them into well-oiled luxury machines have put LVMH at the forefront of the recent growth and innovation in the luxury arena. There is one important segment of the luxury economy, however, where LVMH has lagged behind: digital sales, which according to consultancy Bain & Company will account for about 25 per cent of the global luxury goods market by 2025. Truth be told, in 2000 LVMH did make an early foray into online sales with eluxury.com, an e-commerce website for luxury goods that was run as an afterthought and folded in 2009. Fast forward almost two decades, and in June 2017, amid the rise of online luxury players such as Yoox Net-a-Porter , Matches Fashion , Farfetch and Mytheresa , LVMH decided to give e-commerce another shot with 24 Sèvres , now 24s.com, the company’s first fully fledged digital selling platform, offering items from brands ranging from LVMH-owned labels such as Celine and Givenchy to rivals Prada and Bottega Veneta. But according to 24S CEO Eric Goguey, an LVMH veteran who before launching the site had been in charge of online sales at LVMH-owned beauty retailer Sephora, being late to the game has been an asset rather than a hindrance. “We entered the market quite late, in 2017, when our competitors had been around for almost 20 years, but there’s one advantage to arriving late because in terms of technology you can be more agile,” says Goguey when we meet him in Paris during fashion week . “They have systems that are 17 or 20 years old but we started more recently and could adapt to the requests of brands with a digital and technical internal team.” There’s no competitor that’s able to take the Parisian element like we do and take it to the world Eric Goguey Goguey adds that by looking at the successes and pitfalls that incumbent players like Yoox Net-a-Porter and Farfetch have had over the years, 24S knew early on which markets to target and how to build a loyal clientele while staying lean and nimble. “The other good thing arriving late is that our customers already buy their groceries or other stuff online because we entered the market at this stage so our mission is not to turn customers who didn’t purchase online into online shoppers; they already are,” adds Goguey. The website started as an offshoot of Le Bon Marché, the LVMH-owned department store on Paris’ Left Bank which caters to wealthy Parisians, in-the-know tourists and industry insiders who every fashion week stop by for some retail therapy in between catwalk shows. The original name, 24 Sèvres, referred to the physical address of Le Bon Marché and was shortened to 24S in May 2019 to make it easier for customers around the world to become acquainted with the platform. While the merchandise available on 24S is different from what you find in the mid-19th-century building that houses Le Bon Marché, Goguey says there is a deep connection between the platform and the shop. “Le Bon Marché was the first store in the world to do ‘instant selling.’ They created catalogues and shipped them all around Europe and were shipping orders via mail 150 years ago,” says Goguey. “All orders coming from Europe in the morning had to be shipped on the same day. It was even described in detail by [French author] Émile Zola.” This anecdote speaks to LVMH’s passion for the legacy of its brands, but this is where the similarities between the storied department store and 24S end. France is still one of its top markets (the platform launched in French and English) but 24S has a global reach and has recently launched versions in German and Korean. While 24S is a known entity among industry insiders, it still lacks the visibility of its competitors, which means that it has had to work much harder to catch up with them to acquire new customers, especially in advanced digital markets such as the United States and the United Kingdom. “It’s only a question of time and the quality of service,” says Goguey. “Trying to fit a 20-year-old gap and putting all resources into advertising is short term. My strategy is to do it step by step and attract customers one by one and show them that the quality of service is very good and to offer a level of satisfaction that’s very high. Those customers that we target are repurchasing. This is the way to build a long-term business instead of burning money to just acquire new customers.” In spite of the backing of LVMH and the assumption that the parent company’s unlimited coffers can sustain the business, Goguey runs 24S as a small start-up, based not in the fancy area of Avenue Montaigne or Rue Saint-Honoré, where most LVMH brands are headquartered, but in the low-key 15th arrondissement of Paris. “The day that we will be known everywhere as a luxury player, maybe we will move there [Avenue Montaigne],” jokes Goguey. Why Chanel resists selling online, and why menswear isn’t on its agenda But how does 24S stand out when compared to its more established rivals, which all have strong identities and are known for their different strengths, whether it’s the varied offering of cool labels at Matches Fashion, the wide selection of fashion and beauty brands on Net-a-Porter and the exclusive collaborations with top designers at Mytheresa? “We have one main asset: Paris, which is the city of fashion, so we have the chance to show fashion in Paris also because women around the world love French women and their style,” says Goguey. “We’re based here and that’s our point of difference. There’s no competitor that’s able to take the Parisian element like we do and take it to the world.” The “world” Goguey is referring to, however, doesn’t include one of the largest, and fastest growing, e-commerce markets: China, where the company delivers but has limited reach. “We’re convinced that China is a very strategic market but also the most complex one; it’s not a low-hanging fruit,” says Goguey. “Bad strategy with a lot of money doesn’t work; we want to have the best strategy for each market, which is why we decided to go to South Korea and Germany first. We’ve seen many unsuccessful examples [in China] but our idea is to have a good understanding of the customer and to respect the brands we sell.” In spite of LVMH’s relatively slow approach to online retail, something which applies to the luxury industry as a whole, Goguey believes that the debate surrounding the ability to offer a luxury experience online is over. “I’m 100 per cent convinced that you have to sell online. For years artists weren’t streaming their music on Spotify and they were missing the new generation because those young listeners are never going into stores to buy music,” says Goguey. “Even though people still go to luxury stores, not being available online [there] is a risk of shutting young customers, who see this as a natural behaviour, even before buying in a store by just doing research online.” Bad strategy with a lot of money doesn’t work; we want to have the best strategy for each market, which is why we decided to go to South Korea and Germany first. We’ve seen many unsuccessful examples [in China] Eric Goguey Whether that research will lead them to purchase that Valentino skirt or Nanushka sweater on 24S versus Net-a-Porter or Farfetch is still a question. Goguey believes that taking a slow-and-steady approach by offering clients a remarkable unboxing experience and cultivating long-lasting relationships is the right strategy for long-term success. Amazon’s flawless customer experience in mass retail and Yoox Net-a-Porter’s 20 years of selling luxury to the world (with China now also included) may make more headlines, but Goguey is unfazed and determined in his vision of gradual growth. “We’re not a warehouse or a convenience store, but we deliver products that people don’t need. It’s not just a transaction,” says Goguey. “Luxury is different. It’s not what sells out on Friday has to be restocked on Monday. “We’re selling a vision of fashion and have the privilege of having the best luxury brands. It’s a look that is from Paris and not something that will disappear in two months, because we want to drive our customers to pieces that make you look good and are good.” Purchase the China AI Report 2020 brought to you by SCMP Research and enjoy a 20% discount (original price US$400). This 60-page all new intelligence report gives you first-hand insights and analysis into the latest industry developments and intelligence about China AI. Get exclusive access to our webinars for continuous learning, and interact with China AI executives in live Q&A. Offer valid until 31 March 2020.