Fashion shopping in Hong Kong

Yoox Net-a-Porter to up its game with same-day delivery in Hong Kong

The online luxury-fashion retailer has invested in new shopping apps with the goal of becoming a mobile-only business, and is getting purchases to buyers quicker in key markets

PUBLISHED : Tuesday, 01 November, 2016, 6:34pm
UPDATED : Tuesday, 01 November, 2016, 6:42pm

Online luxury fashion retailer Yoox Net-a-Porter aims to be as mobile as its shoppers – and Hong Kong is high on its agenda.

Since the merger of Yoox and Net-a-Porter in 2015, chief executive Federico Marchetti has invested in new technology, added services such as seaplanes to drop off rush orders to the Hamptons, and plans to expand same-day services in key markets like Dubai. Now the world leader in its field, the company has launched a television shopping app with Apple TV and is making a big push into China and the Middle East.

“One of my biggest objectives is to transform the company into a mobile-only company,” says Marchetti, formerly chief executive of Milan-based Yoox. “It’s a new luxury conglomerate of the digital era.”

Marchetti expects business from smartphones and tablets will account for three-quarters of total sales by the end of 2020. Today, it’s less than half. And shoppers using mobile devices spend big. Its 2.6 million customers shell out an average of US$366 (HK$2,838) per order.

How the merging of Yoox and Net-a-Porter could change the e-tail industry

The global luxury business has become increasingly competitive online. Neiman Marcus bought MyTheresa, a fashion e-commerce site last year, while Saks Fifth Avenue is offering more services for its online shoppers. And sites like let customers rent designer outfits.

But Yoox Net-a-Porter is optimistic. It’s laid out plans that call for net revenue growth of 17 per cent to 20 per cent every year to 2020. That’s much higher than the 2 per cent to 3 per cent global luxury growth forecast for the period by consulting firm Bain & Co.

Yoox Net-a-Porter, which delivers to customers in more than 180 countries, generated sales of US$1.88 billion in the financial year that ended in December. Marchetti says its so-called EIPs (extremely important people) make up about 2 per cent of its customer base but account for more than a third of annual revenue.

Marchetti sees Yoox and London-based Net-a-Porter, both founded in 2000, as complementary. He organised the company into three separate businesses – current season, under Net-a-Porter and the men’s brand Mr. Porter; off season, which is under The Outnet and Yoox businesses; and online flagship sites that include Giorgio Armani and Jimmy Choo.

Net-a-Porter is a fashion-magazine-themed site offering goods at regular prices, and the merchandise comes in elaborate black boxes with ribbons. Yoox and Outnet sell out-of-season goods, frequently at discounts, but Marchetti calls the experience much higher-end than shopping at a designer outlet mall.

Geographically, Net-a-Porter was much stronger in the US, Britain and Hong Kong, while Yoox’s strength was in continental Europe, Japan and Asia. The combined company’s largest market is the US, accounting for almost one third of annual sales, followed by the United Kingdom and Italy.

Yoox Net-a-Porter boss Federico Marchetti looks to China for sales growth

“Net-a-Porter is becoming a one-stop shop for fashion consumers and a source of editorial content. And Yoox is a force in technology with a deep understanding of brands and websites,” says Robert Burke, president of his namesake New York-based luxury consulting business.

Marchetti is investing in technology that will improve customer service and delivery speed. The company is adding same-day service in Dubai, Tokyo and Milan, the UK beyond London, Hong Kong, New York, and Long Island’s Hamptons. The summer seaplane service in the Hamptons did very well, he said. In China, Yoox began offering a few years ago a kind of butler service for online shoppers – a courier waits outside the door for 15 minutes so customers can try on their purchases. If they don’t like them, the items go back with the courier.

It is also fine-tuning or starting new apps. It launched an app for that features a new text search allowing shoppers to better find products. The Mr. Porter site has an app that allows Apple TV users to use their iPhones or iPads to buy merchandise that appears on videos in its weekly digital magazine. And it’s opening a new tech hub in London next year to accelerate its move into mobile shopping.

Marchetti brought in new brands like Prada and Moncler that had a limited presence on the web, and for the winter holidays he’s starting to introduce jewellery and watches at Net-a-Porter and Mr. Porter.

“We have the highest quality in terms of packaging, in terms of presentation, pictures, proximity with other brands,” he said. “We respect their pricing. We respect their markdown strategy.”

The company’s also working to integrate the experience of the physical flagship stores of the brands like Valentino’s Fifth Avenue store with their online presence.