Digitalization of Retail—E commerce, Platforms, and Omnichannel
Introduction
The 21st-century business world heavily relies on internet and technology for growth and development.
The question is no longer whether to use the internet in business strategy, but how effectively to deploy it.
The internet offers highly interactive and integrative communication systems, making businesses global.
For cash-rich, time-poor consumers, the web is a perfect channel to meet needs and wants.
Some luxury brands resisted embracing e-commerce, associating luxury with exclusivity and experience.
Digital marketing can revive declining profits and reach new targets, but some brands feared tarnishing tradition.
The pandemic challenged businesses, but digital transformation helped them survive and thrive.
Luxury brands faced the choice to digitize or perish during the pandemic, leveraging digitalization and social commerce.
The need to digitize approaches to new consumers accelerated during the pandemic.
There are two schools of thought regarding digitalization: in- house vs. outsourcing.
Luxury brands have historically evolved from focusing on creation to vertically integrating their value chain.
Digitalization of luxury retail is now an irreversible trend post- pandemic.
Gen Z's emergence as luxury consumers raises expectations for digital shopping.
Balancing exclusivity for loyal users while attracting new consumers is crucial in digitalization.
Sustainable strategies post-Covid can support long-term brand growth.
Maximizing consumer experience in the internet environment is a key strategic question.
Brands need to tailor digital experiences, considering language, currency, transportation, and explore areas like one-to-one service and VR experiences.
Evolution of Distribution and Retailing
Late 1980s: Globalization and wealthy consumers rise, making distribution key in luxury goods industry.
Previously: Focus on aspirational value, branding, and brand management.
Shift: Emphasis on efficient distribution across geography.
Distribution: Execution-focused, involving availability at right place, time, environment, and cost.
Key questions: Reaching consumers and cost efficiency.
Luxury houses: Focus on redefining distribution channels.
Distribution channels: Directly operated stores (DOS), franchises, wholesale, travel retail, and licensing.
The DOS was the most costly to maintain and had full control (e.g., LV, Chanel, Hermès 100% control of their DOS), whereas licensing was the least costly and had negligible control. (e.g., Calvin Klein, Lacoste).
1990s (era of travel): Luxury retail expanded through direct and travel retail formats.
Increased store formats: Flagship, large format, multistoried, shops-in-shops.
Minimalistic online business model developed with selective models (including duty-free areas).
Duty-free shops for travelers increased.
Production methods evolved: From few pieces to hundreds/thousands.
Innovation in supply chain and inventory turnover.
Expansion to accessories: Handbags, perfumes, cosmetics.
Strategy: Wider customer base and democratization of luxury goods.
Distribution channels categorized: Offline (big stores, franchises, wholesale, shop-in-shop, selective retailing, travel retail, licensing, outlet stores) and online (mono-brand platform, pure digital player, social/mobile commerce, department store websites, omni-channel).
Control and profitability: High control and CAPEX in DOS; low in licensing.
Challenge: Balancing broader distribution with exclusivity and brand legitimacy.
Charismatic legitimacy: Linked traditional craft skills to creative directors (Marc Jacobs for LV, John Galliano for Dior, Karl Lagerfeld for Chanel).
Strategic value: Communicated through marketing within different distribution channels.
Physical (Offline) AND Digital (Online) Distribution
Pandemic Impact: Changed consumer behavior and demand in luxury industry.
New Austerity Attitude: Decreased attractiveness of luxury due to shop closures, travel bans, and different pandemic waves.
Shifting Spending Priorities: Consumers prefer products with exclusive features and high resale value over aspirational values.
Evolving Luxury Persona: Younger and predominantly Asian consumers.
Chinese Consumers: Major market share; accounted for 35% of revenues in 2019, potentially over 50% by 2025.
Younger Generations: Gen Y and Gen Z responsible for 40% of luxury revenues in 2019, expected to grow to 60% by 2025.
Tech-Savvy Preferences: Younger consumers favor online luxury retailing channels over offline.
Characteristic of Luxury Retail
Pre-Pandemic Strategy: Integrated global retail distribution essential for global expansion.
In-Store Experience: Created satisfying, unique shopping experiences to differentiate brands and communicate unique features.
Execution Importance: Best achieved through directly operated stores (DOS).
"Retail is in the Detail": Importance of seamless transmission of product value, quality, and cultural authenticity during the retail experience.
Long-Term Traditions: Luxury focuses on long-term traditions versus fashion's short-term cycles.
Role of Retailers: Organize and govern access to luxury goods, maintaining cultural context and multi-sensory experiences.
Hedonic and Multi-Sensorial Retail: Physical outlets connect emotionally with customers, providing high intangible value.
Adoration Logic: Successful strategies relied on creating adoration and charismatic appeal.
Luxurious Shopping Districts: Mature markets saw growth in luxurious shopping areas and high-end department stores.
International Expansion: Premium department stores expanded internationally through both physical stores and online platforms, with several offering international delivery.
Physical Distribution
Rise of Flagship Stores: From 2000 onwards, flagship stores opened in established and emerging markets.
Key Locations: Initially in cities like Paris, London, Milan, New York, Tokyo; later expanded to Shanghai, Beijing, and other major cities.
Luxury Business Districts (LBDs): Flagship stores located in LBDs are designed to be sacred spaces, creating a mystical and religious-like experience.
In-Store Experience: Includes architecture, interactions with salespeople, and product layout to convey the brand's myth and luxury.
Store Significance: Reflects the personality and soul of the brand, helps build brand image and legitimacy through storytelling.
Investment in Flagship Stores: High cost (15,000-$20,000 per square meter annually) but allows full control and insights into customer profiles.
Communication Role: Retail spaces act as crucial communication vectors, maintaining cultural heritage while providing fantasy and charisma.
Consistent Brand Image: Stores must align with brand advertising and runway presentations to avoid consumer disenchantment.
Historic Brand Values: Example of Aldo Gucci's emphasis on quality over price; maintaining brand codes through successive designers.
Elegant Locations: Stores in prestigious districts (e.g., Champs Elysees, Regent Street, Ginza) reinforce perceptions of quality and exclusivity.
Future Luxury Stores: Places for enjoyment, entertainment, and time spent, integrating online experiences with physical spaces.
Innovative Features: Free Wi-Fi, digital mirrors, augmented reality, and discovery areas.
Unique Store Concepts: Berluti's salon, Tiffany and Co.'s vending machines, Gucci's "Gucci hallucination" campaign, LV's Bags Bar and lounging spaces.
Super-Sensory Spaces: Future stores will have private areas, be social hubs with enhanced digital assistance, and cater to various customer segments including millennials, Gen Y & Z, HENRYs, hipsters, ultra-VIPs, mass VIPs, and Chinese clients.
Franchises
Challenges of DOS and Big-Store Strategy:
High investment and rent costs.
Court battles with landlords during the pandemic.
Demand for financial and managerial input, including CAPEX and local market knowledge.
Franchisee Partnerships in Key Markets:
Common in Eastern and Central Europe, the Middle East, and Asia.
Managed by established luxury groups like Al Tayer, Chaloub, and Mercury.
Franchisee Operations:
Initially located in five-star hotel lobbies for easy tourist access.
Examples include Al Tayer in Dubai (owns Bloomingdale’s, Harvey Nichols) and Mercury in Moscow (owns Tsum).
Mixed Strategy Adaptation:
Some brands like Ralph Lauren rely more on franchising and licensing.
Limited retail presence in key markets may lead to brand value dilution.
Shift towards Directly Operated Boutiques or Joint Ventures (JVs):
Especially in markets like China.
Response to globalization, technology change, and competitive environment.
Franchise Model in Emerging Markets:
Still viable due to state regulations.
Option for small to medium-sized brands lacking investment capacity for directly operated boutiques.
Partner Selection Importance:
Partners should be professionally managed, financially stable, and experienced in luxury goods.
Future Challenge: Convergence of Physical and Digital Shopping Experience:
Singularity and convergence of physical and digital shopping experiences will be key in the post-pandemic era, with technology at the forefront.
Wholesale
Wholesale in the Luxury Industry:
Rare except in sectors like watches, wine, and champagne.
Luxury watches date back to the 1700s.
Brand Birth Years:
Three clusters in the watch industry: Breguet, Vacheron Constantin, and Jaeger-Lecoultre (1700s); Omega, Cartier, Patek Philippe, Audemars Piguet, Piaget, and IWC (1800s); Rolex (1900s).
Market Segmentation and Evolution:
Gaps identified in the industry led to brands targeting emerging segments.
Segmentation based on watch complications, technology, and consumer preferences.
Importance of Heritage and Legitimacy:
Vital for the watch industry's credibility.
Wholesale Strategy:
All watch brands follow a wholesale strategy alongside owned stores.
Book orders at watch fairs like Basel Watch Fair (now Watches & Wonder).
Distribution Reach:
Utilize owned stores and multibrand retail chains to reach customers globally.
Presence in Key Markets:
Brands like Rolex, Cartier, Vacheron Constantin, Patek Philippe, IWC, and Jaeger-LeCoultre have strong presence in both owned stores and multibrand stores in mainland China.
Patek Philippe's Unique Strategy:
Consistent US-centric retail strategy, with limited expansion plans in Asia compared to competitors.
Travel Retail and Duty-Free Stores
Impact of Pandemic on Travel Retail:
Travel retail, including airport and duty-free shop sales, severely impacted.
Also includes shopping on airlines during flights and on cruise ships.
Pre-Pandemic Growth Story:
Consistent growth since the 2000s, except for occasional dips due to travel restrictions.
High taxation on luxury goods in frontier markets drove customers to shop overseas.
Significance of Overseas Consumption:
Significant portion (20-30%) of industry revenue from overseas consumption.
Chinese outbound tourists exceeded 150 million in 2018, with luxury purchases abroad contributing to over half of total luxury expenditure.
Shopping as Travel Experience:
Shopping abroad became an integral part of travel experience for many, especially in Europe.
Impact of Travel Restrictions:
Engine of luxury consumption suddenly stalled due to continuous travel restrictions in 2020.
Chinese Government Strategy:
Shifted focus to local consumption to capture trapped luxury spending on mainland.
Hainan Island became a popular duty-free shopping destination during the pandemic.
Trinity Stakeholders in Duty-Free Sector:
Three major actors: landlord, retailer, and supplier.
Relationships among these stakeholders crucial for retail success
Licensing
Licensing in the Luxury Goods Industry:
Preferred option for entering new markets with ease and minimal investment during retail expansion.
Initially contributed significantly to total revenues for many luxury goods companies.
Companies disclose data on owned, franchised, or licensed operations selectively, as investors carefully review this mix.
Examples of Licensing Strategies:
LVMH has no strategic licenses, while Gucci had limited strategic licensing partners.
Polo Ralph Lauren and Armani rely more on licensed sales.
Hermès has no licenses, and Chanel only licenses eyewear.
Challenges and Risks:
Risk of tarnishing brand image if licensing activities are overextended.
Dilution of brand over time if license agreements cannot be controlled or trusted partners are not chosen.
Trust Issues:
Trust emerges as a significant issue in licensing agreements, impacting brand value.
Importance of Licensing Mix and Structure:
Crucial for success in the luxury goods industry.
Companies mature seek full ownership of licensed business for increased control and value extraction.
Examples of Well-Known Licensing Companies:
Safilo and Luxottica for eyewear, Fossil and Swatch for watches, L’Oreal for beauty and cosmetics.
Infamous Cases:
Gucci, Polo Ralph Lauren, Calvin Klein, Lacoste, among others, faced brand value destruction through licensing issues.
The Digital (Online) Era in Luxury
Impact of Pandemic on Luxury Goods Trade:
Strong impact on physical trade due to store closures and tourism shutdown.
Considerable share of luxury sales linked to tourism in Europe, with 70% of purchases in France made by foreigners, including 30% by Chinese consumers.
Unstable economic conditions led to around 8% recession in the Eurozone, impacting purchasing power.
Shift to Online Market:
Only way for luxury players to save sales amid pandemic-induced challenges.
Generalized increase in online purchases of luxury goods by 18% globally.
Challenges in Luxury Digitalization:
Luxury sector traditionally viewed digitalization as incompatible with exclusivity and scarcity.
Consumer habits in luxury goods different, emphasizing emotional connection, customer experience, and product touch and feel.
Changes in Online Luxury Purchases:
Conversion rate exploded on luxury online sales sites.
Shift in type of products purchased, especially in China, with more focus on products priced below 1,000 yuan at the expense of higher priced products.
Change in Buyer Profile:
Share of buyers over 30 years old increased from 49% to 60% during crisis, indicating changing mentality towards online commerce and increased confidence, especially in non-essential luxury goods.
Digital Development Plans:
Many luxury brands, including conglomerates like LVMH, Richemont, and Kering, as well as independent ones, had implemented digital development plans in recent years.
Objectives achieved in just a few weeks due to accelerated digitalization during the pandemic.
Examples of Success:
Chanel doubled its online sales, while brands like Celine and Bulgari also experienced significant growth in online sales.
The Transformation of Online Distribution and E-Commerce
Definition of E-commerce:
E-commerce refers to a business model involving the buying and selling of goods or services over the internet, encompassing transactions between companies and consumers as well as among corporations.
It can be conducted via smartphones, tablets, or computers, resembling a digital version of traditional mail-order catalog shopping.
Challenges for Luxury Industry Leaders:
Maintaining ambidexterity, or the balance between exploration and exploitation, clarity and disparity, resilience and rigidity, stability and agility, is a significant challenge, especially in the digital realm.
Growth of Internet Retailing in Luxury Sector:
Internet retailing is experiencing growth in the luxury sector, particularly accelerated during the pandemic.
North America and Western Europe are prominent internet consumption markets, but China leads the way with significant potential for growth.
Luxury vs. E-tailing Paradox
Historically, luxury brands have been hesitant to embrace e-commerce, fearing it may cheapen their brand's image: elegance and exclusivity in physical stores, which may not translate seamlessly to the online space.
Opportunities of E-tail for Luxury Brands:
Despite reservations, e-commerce presents opportunities for luxury brands to engage in efficient niche marketing and reach a broader audience.
Well-designed websites can extend the exclusive service experience of luxury purchasing online and provide a platform for customization.
Help combat counterfeit products.
Key Challenges in E-tail:
Telling the brand's story effectively, providing a sense of touch-and-feel, conveying the brand DNA, and transferring a unique service experience are significant challenges in e-commerce for luxury brands.
The experience factor: Design and Concept in E-tail
Proponents of e-commerce argue that design and concept are crucial in creating a compelling online shopping experience.
Online and offline experiences differ, with the same goal: to provide a unique and memorable experience for affluent customers.
Both boutique stores and websites aim to reflect the exclusiveness of the brand to entice customers into a world of aspirations.
Common Features in Luxury E-commerce Sites:
High-quality images, multimedia content, elements of surprise, and appeals to the user's imagination.
Storytelling plays a significant role, with brand rituals and ceremonies celebrated through videos, short films, and images.
These features provide consumers with opportunities for interpretation, reflection, and dreaming, particularly in markets where consumers are still being educated about luxury brands.
Overcoming Limitations of Online Shopping:
Embedded video features and streaming enable customers to view products from multiple angles, compensating for the inability to feel the fabric or examine items physically.
Examples like Chanel's podcasts and videos add narrative elements to the online shopping experience.
Innovative Approaches by Luxury Brands:
Gucci, for instance, replicates the sensation of the in-store experience on their website by displaying products on shelves, mimicking their offline shops.
This approach aims to evoke the same emotions and engagement that customers would experience when shopping in person.
Gucci's Online Sales Presence:
Gucci offers online sales for consumers in various countries, including France, Germany, Austria, Belgium, the Netherlands, Ireland, the UK, and the USA.
The accessibility factor:
E-commerce sites like Yoox and Marc Jacobs offer global access to customers
They cater to emerging markets where physical stores may be limited
Features like zoom-in options provide detailed views of fabric and product
Interactive experiences mimic the atmosphere of physical retail locations
Marc Jacobs' site, for example, greets visitors with a playful, whimsical storefront, enhancing the online shopping experience
The analytical factor:
Luxury brands often prioritize their in-store experiences over integrating e-shopping convenience fully.
Consumers experience virtual stores with extensive information, allowing them to compare and decide at leisure from home.
Brands like Apple provide detailed product information on their website, allowing customers to make informed decisions about purchasing online or visiting a physical store.
The risk of cannibalizing sales from brick-and-mortar stores is a concern for luxury brands considering e-commerce.
Another concern is the discount-oriented stigma associated with e-commerce, which could potentially dilute the prestige of the brand.
Digital and mobile internet channels are rapidly growing in retailing, prompting luxury brands to have informative websites without directly selling products online.
Some luxury brands, like Louis Vuitton, collaborate with platforms like JD.com to create Mini Programs catering to specific consumer markets, providing a seamless online shopping experience.
E-Retail and Platforms
The pandemic has accelerated the digital transformation, leading to changes in consumer habits that are likely to persist post-reopening.
Companies like Farfetch, operating as luxury pure digital players, have experienced continuous stock growth during the pandemic, highlighting the strength of their platform business model.
The platform business model of e-tail companies connects luxury brands and sellers with their customers, utilizing marketplace, consignment, or hybrid models.
Platform models generate network effects, where the value of the platform increases as the number of users expands.
Direct network effects occur among the same stakeholders, while indirect network effects involve interactions between different stakeholders.
More users lead to more reviews and comments, creating higher value for other users engaging in comparative experiences.
Indirect externalities encourage brands to join the platform, attracting potential clients, and increasing convenience for users by offering a variety of brands.
Negative network externalities exist but are usually minor compared to the reinforcing mechanisms that strengthen platforms as they grow.
To harness the network effect effectively, platforms should strive to have a diverse range of brands to attract a similar clientele.
The pandemic has highlighted the importance of local markets and their specificities, despite the global nature of digital platforms.
Overview of the Current Luxury E-Commerce Platforms
Benefits for Luxury Brands: Luxury brands lacking online capabilities or logistics networks could partner with online platforms to continue operations during store closures, offering an efficient and cost-effective alternative to developing in-house expertise.
New Era of Inclusivity: Partnering with online platforms signals a more accessible and balanced attitude from luxury brands, catering to the needs of young, hyperconnected consumers, particularly Chinese consumers.
Types of Online Platforms:
Third-party multibrand luxury online retailers: Examples include Yoox Net-A-Porter (YNAP) and Farfetch, which have experienced rapid sales growth.
Luxury brands' own official websites: Brands are investing in content creation, storytelling, and driving online sales through their monobrand websites and social media.
Multibrand e-commerce portals owned by offline department stores: Offline retailers are investing in their digital platforms to compensate for losses from physical store closures and decreased tourism, adopting innovative strategies in response to the pandemic.
Cooperation with Pure Digital Players: Luxury brands lacking digital development experience have partnered with pure digital players like Farfetch. Chanel, for instance, signed an innovation partnership with Farfetch to develop digital initiatives to enhance the attractiveness of its physical stores, without directly selling on the Farfetch marketplace.
Benefits and Challenges of the Three Models: Table 11.1 details the benefits and challenges of each model, highlighting the diverse approaches taken by luxury brands in navigating the digital landscape.
Farfetch
Founding and Vision: Farfetch, founded in 2007 by Portuguese entrepreneur Jose Neves, aims to be the global platform for luxury fashion, connecting creators, curators, and consumers.
User Base and Reach: As of 2021, Farfetch had 2 million active users, 4 million visitors per month, and offered products from over 1,300 boutiques, brands, and department stores to customers in more than 190 countries.
Revenue Growth and Pandemic Impact: The pandemic accelerated Farfetch’s acceptance in the luxury industry, with notable partnerships including Harrods and Harvey Nichols.
Core Competencies:
Logistics Technology: Farfetch developed a technology to track retail inventory worldwide, ensuring quick delivery, facilitating logistic work, and reducing costs without holding inventory.
Unique Product Selection: Utilized predictive data analytics and big data to curate unique products, maintaining only a 4% overlap with competitor Net-a-Porter.
Weekly Drops: Introduced around 1,000 new items weekly to avoid market saturation and encourage repetitive purchases.
Acquisition and Collaboration Strategy: Acquired Browns, Stadium Goods, and New Guards Group, and formed strategic partnerships with JD.com, Alibaba, and Richemont.
Strategic Acquisitions and Partnerships:
JD.com: In 2019, JD.com bought a stake in Farfetch for US, merging Farfetch’s Chinese business with JD.com.
New Guards Group: Farfetch acquired this group, including brands like Off-White, Heron Preston, and Palm Angels.
Alibaba and Richemont Partnership: In 2020, a partnership with Alibaba and Richemont to accelerate luxury digitization, forming a China joint venture with US investment.
Innovative Technologies:
Store of the Future: Leveraged AR shopping experiences, emotion-scanning software, and innovative payment solutions to bridge online and offline shopping.
Customer Interaction Enhancements: Technologies like scanners for sales associates to read client profiles and holographic displays for self-creation, customization, and virtual try-ons.
Financial Status and Growth Potential: Despite not reaching breakeven, investments by luxury conglomerates and the growing online luxury market indicate promising growth prospects for Farfetch.
YNAP
Founding and Vision: YOOX was founded in Milan by Federico Marchetti, and Net-a-Porter was founded in London by Nathalie Massenet, both launched in 2000 as pioneers of the online luxury marketplace in Europe.
YOOX: Represented men (Y) and women (X) linked by infinity (OO), specializing in selling renowned fashion brands’ overstock at discounted prices without undermining the brands' images.
Net-a-Porter: Published fashion magazines online where clients could click to buy the products featured.
Merger and Acquisition: In 2018, YOOX and Net-a-Porter merged into YOOX Net-a-Porter Group (YNAP), which was subsequently acquired by the Richemont group.
Multibrand Online Stores: Operated four multibrand stores—Net-a-Porter.com (women’s luxury goods), MrPorter.com (men’s products), Yoox.com (discounted products from fashion to art and design), and Outnet.com (discounted high-end luxury).
Global Reach: Served 4.3 million active customers in 180 countries.
Core Competencies:
Technology and Logistics: One integrated technology and logistics platform that balanced technological innovation with a human touch to redefine luxury experiences.
Personalized Experience: Provided personalized experiences through its NEXT ERA model, including personal shopping.
Localized Approach: Strategic joint ventures and localized approaches to connect better with customers.
Strategic Partnerships and Services:
End of Kering Partnership: In 2018, Kering ended its partnership with YOOX to create its own shopping sites and invested in Farfetch.
Notable Clients: Armani.com, Valentino.com, and jimmychoo.com joined YNAP for services like setting up online stores, customer care, shipping, and invoicing.
Chinese Market: Net-a-Porter was launched on Alibaba’s Tmall Luxury Pavilion as part of a joint venture with Alibaba.
Technological Expertise: Known for establishing online stores for luxury brands and eliminating the gap between online and offline experiences through investments in AI, AR, voice, and visual search technologies.
Leadership and Innovation: Federico Marchetti, before stepping down as CEO in 2021, emphasized YNAP’s identity as both a tech and a luxury company, highlighting the 50% focus on technology and 50% on luxury.
Alibaba Tmall Luxury Pavilion
Origin: Spin-off from Taobao, founded by Alibaba Group in 2008.
Platforms: Tmall Classic, Tmall Global, and Tmall Luxury Pavilion.
Focus: China-focused B2C platform for brands to sell in China.
Tmall Luxury Pavilion
Launch: Introduced in 2017.
Brands: Hosts over 200 luxury brands, including Cartier, Prada, and Burberry.
Luxury Soho: Offers an outlet version for luxury brands.
Strategy and Technology
Attracted over 100,000 users and 50 luxury labels within a year of launch.
Non-interference: Enhances brand value without altering brand DNA.
Exclusive Collections: Promotes China-limited editions.
Integration: Utilizes Alibaba’s ecosystem (live streaming, Alipay, GPS).
Uni Marketing: Analyzes customer behavior using big data.
Strengths and Services
Support: Marketing tools, loyalty programs, and campaigns.
Member Benefits: Priority delivery, personal shopper services, concierge services.
Operational Support: Customer service, logistics, e-commerce operations.
Fees: Annual fee and sales commission.
24S
Launch: Initiated in 2017 by LVMH Group to compete with platforms like YNAP and Farfetch.
Name: Initially 24 Sèvres, referencing Le Bon Marché's address, simplified to 24S for international recognition.
Features and Offerings
Capsule Collection: Introduced a collection with Le Bon Marché and 68 other brands, featuring 77 limited-edition pieces.
Brands: Offers over 300 fashion and beauty brands, including exclusive access to Dior, Celine, Moynat, and Louis Vuitton.
Emerging Brands: Includes a mix of established and emerging brands.
Customer Service: Provides shipping to over 100 countries, live video consultations, live chat, and a Style Bot on Facebook Messenger for personalized recommendations.
Shopping Experience
Packaging: Customized and inspired by different visions of Paris, updated quarterly.
Loyalty Program: Shared with Le Bon Marché, offering bespoke services, private events, and member days.
Delivery Services: Express shipping to over 100 countries, 24-hour delivery to major cities, and same-day delivery in Paris.
Return Service: Simplified with a valet service in Paris for trying and returning products.
Strategic Positioning
Complementarity: Designed to enhance the offline shopping experience at Le Bon Marché.
Restructuring: Post-pandemic changes in top management with ongoing discussions about the platform's strategic positioning.
Optimism: Bernard Arnault expressed confidence in the platform's potential for future growth, despite current profitability challenges.
JD.com
Founding: Founded in 1998 as 360Buy, JD.com is a prominent Chinese e-commerce platform headquartered in Beijing.
Market Presence: Holds a significant market share of 24.4% in China with over 362 million active users.
Luxury Segment: Offers luxury products from brands like Delvaux, Salvatore Ferragamo, Gucci, and Prada.
Initiatives: Collaborated with Farfetch in 2019 and Louis Vuitton in 2021 to strengthen its luxury offerings.
Technological Advancements: Invests in advanced logistics technologies, including autonomous delivery and drones.
Competition: Faces fierce competition from Alibaba's Tmall and social e-commerce platforms like Pinduoduo.
Mytheresa.Com
Founding: Established in 1987 by Susanne and Christoph Botschen as a women's multibrand luxury boutique in München, Germany.
Expansion: Launched mytheresa.com in 2006, becoming renowned for offering a curated selection of luxury fashion brands like Prada, Saint Laurent, and Balenciaga.
Global Reach: Delivers to 120 countries worldwide by 2021, with plans to expand into the Asian market.
Product Portfolio: Hosts a restricted portfolio of 250 international luxury brands, focusing on clothing, bags, shoes, and accessories.
Service Excellence: Prioritizes superior service with quick checkout, authentication of products, fast delivery, and exceptional customer service available in multiple languages.
Diversification: Expands into new categories such as activewear, skiwear, children's wear, and menswear to support international growth.
Acquisition and IPO: Acquired by Neiman Marcus in 2014, mytheresa.com successfully completed its IPO on the New York Stock Exchange in early 2021, with a valuation of .
Matchesfashion.com
Founding: Opened in 1987 by Tom and Ruth Chapman in Wimbledon Village, offering global luxury retail for both men and women.
Expansion: Opened new boutiques across London in the 1990s, featuring high-end luxury brands like Versace, Prada, and Bottega Veneta.
E-commerce Transition: Launched its e-commerce platform in 2007, rebranding as Matchesfashion.com.
Sold stakes to Scottish Equity Partners and Highland Partners in 2012, then to private equity firm Apax in 2017.
Online Presence: Represents over 450 brands, delivers in 176 countries, with 95% of sales made online.
Customer Focus: Hospitality remains a key pillar of the company's strategy, with personalized service and outreach to top customers who contribute significantly to revenue.
Innovation: Invested in research and digital innovations, including social shopping integration with Style Social, allowing direct purchases from Instagram and Twitter.
Publishes The Style Report weekly, showcasing designers and trends.
Resilience and Success: Despite challenges, the digital strategy has been successful, with clients spending an average of 778 euros per purchase and increased resilience during the health crisis.
Physical Stores: Despite digital success, Matchesfashion maintains physical stores, recognizing the importance of a multi-channel approach to luxury retail.
SSense
Founding: Founded in 2003 in Montreal, Canada, by brothers Rami, Bassel, and Firas Atallah, aiming to blend streetwear and luxury fashion in a cohesive manner.
Philosophy: Rejects traditional categorization, focusing on coherence of offerings.
Prioritizes accessibility in luxury e-commerce.
*Expansion to E-commerce: Launched website in 2006, initially focusing on menswear and offering confidential and original fashion labels like Marine Serre, Vetements, and Off-White.
*Focus on Relationship Building: Prioritizes building relationships with potential clients through content related to fashion, music, art, and architecture, rather than solely focusing on sales.
*Target Audience: Primarily targets millennials, with pricing and employee demographics aligned with this demographic.
*Physical Store: Opened a five-floor physical store in Montreal in 2017, featuring an ultramodern design and innovative personal shopping service, blending physical and digital experiences (phygital).
*Mobile Application: Launched mobile app in 2019, offering personalized experiences to customers.
*Global Reach: Delivers to 150 countries, generating an average of 88 million page views, with a focus on innovative content to enhance relevance and meaning for customers.
Secoo
Founding: Founded in 2008 by Richard Rixue Li and Zhaohui Huang to sell second-hand luxury accessories and clothing for men and women.
Expansion: Started with 10 shops in Chinese provinces in 2011 and opened its first flagship store in Beijing.
Launched website in the same year and mobile app two years later.
Recognition: Recognized as the largest website in China for buying and selling luxury goods in 2014.
Strategic Partnerships: Collaborated with Parkson Retail Group in 2018 and received investments from LCatterton and JD.com.
Physical stores in Shanghai, Hong Kong, Tokyo, NYC, and Milan.
Omnichannel Strategy: Initially focused on second-hand luxury products, expanded to lifestyle offerings including luxury cars, yachts, personal jets, and travel packages.
Membership System: Built a loyal customer base with 18.7 million registered members, offering benefits based on spending.
High-Quality Service: Offers same-day delivery by courier in costume and white gloves, resulting in an average spend of 570€ per customer.
Partnerships and Innovation: Signed partnerships with various brands to enhance product and service offerings, maintaining position among e-retail luxury leaders.
Financial Challenges: Expressed intent to secede from NASDAQ in 2021 due to declining net income amidst intensified competition.
Discussion on the evolution of e-commerce platforms
Leading Players in 2021
Farfetch, YNAP, and JD.com lead the online luxury retail market