YNAP Group in for the long run

The on­line lux­ury goods re­tailer is con­fi­dent of achiev­ing suc­cess in China’s mas­sive e-com­merce scene though it doesn’t ex­pect to reap re­wards any­time soon

China Daily (Canada) - - SHANGHAI - By XU JUNQIAN in Shang­hai xu­jun­qian@chi­nadaily.com.cn

China’s e-com­merce mar­ket may have proven to be dis­mal hunt­ing grounds for some of the world’s largest lux­ury brands but Fed­erico Marchetti, the co-founder and CEO of Yoox Net-a-Porter (YNAP) Group, be­lieves that the on­line re­tail em­pire he is build­ing will not fal­ter as oth­ers have.

“China has fan­tas­tic e-com­merce com­pa­nies. But we are in a seg­ment where lo­cal Chi­nese com­pa­nies are still strug­gling to get ac­cess to the lux­ury brands, mainly be­cause the lux­ury brands are very pro­tec­tive about their im­age,” said the for­mer investment banker who founded Yoox Group in Milan in 2000.

“YNAP has the best re­la­tion­ship with lux­ury goods in the world. That’s why in China, we are adopt­ing a long-term plan. I still see a lack of com­pe­ti­tion in sell­ing lux­ury prod­ucts at full price in China. Frankly speak­ing, I haven’t seen or heard of any big play­ers suc­ceed­ing in that.”

In De­cem­ber 2011, Coach be­came the first lux­ury and life­style brand to set up a store on Taobao.com, China’s most vis­ited and largest on­line shop­ping plat­form. But the store was closed af­ter just a month. The of­fi­cial ex­pla­na­tion given by the com­pany was that the store was merely a part of a cam­paign cel­e­brat­ing the New York brand’s 70th an­niver­sary.

Less than three years later, Burberry opened its first flag­ship on­line bou­tique store on Chi­nese e-com­merce plat­form Tmall.com, which is un­der the Alibaba Group. Re­cep­tion was ev­i­dently un­der­whelm­ing — there was just one re­view on the sales page of one of the brand’s sig­na­ture trench coats. The Bri­tish com­pany de­clined to comment about its foray into the e-com­merce scene and has not re­vealed how its on­line sales are far­ing.

De­spite th­ese ex­am­ples, Marchetti be­lieves that the trend of buy­ing lux­ury prod­ucts on the In­ter­net will soon be­gin.

“We are prob­a­bly just at chap­ter two of a 10-chap­ter book. YNAP is the mar­ket leader in a fast-grow­ing in­dus­try that is not ex­pe­ri­enc­ing any slow­down. In China, es­pe­cially, we are even more at the be­gin­ning of the story, sim­ply be­cause young Chi­nese cus­tomers were not ex­posed to on­line lux­ury full price goods un­til 2010. We don’t ex­pect to reap im­me­di­ate gains in China. We’re here for the long term,” said Marchetti.

Yoox merged with Net-aPorter, which was es­tab­lished by for­mer fash­ion jour­nal­ist Natalie Massenet in 2015 and the deal was viewed as one of the most sig­nif­i­cant in the global fash­ion in­dus­try in the past decade. YNAP reg­is­tered a growth rate of 38 per­cent in Asia last year, with China be­ing its fastest-grow­ing mar­ket in the world.

YNAP has al­ready suc­ceeded in at­tract­ing big names to its plat­forms. In May, Gucci in­tro­duced a 20-piece cap­sule col­lec­tion that was ex­clu­sive to Net-a-Porter.com.

“Net-a-Porter has set the stan­dard for on­line lux­ury fash­ion re­tail­ing, in­ter­pret­ing col­lec­tions and bring­ing fash­ion to life in a uniquely en­gag­ing and com­pelling way. As a re­sult, its clients are un­ques­tion­ably some of the most knowl­edge­able and so­phis­ti­cated in the mar­ket­place,” said Marco Biz­zarri, Gucci’s Pres­i­dent and CEO.

Come Septem­ber, Yoox will launch a com­pletely new and lo­cal­ized web­site, Yoox.com.cn, that will fea­ture mer­chan­dize and con­tent cu­rated spe­cially for Chi­nese cus­tomers.

“We see China also as an ex­per­i­ment and a school to learn some­thing that we can ex­port to the rest of the world, be­cause the Chi­nese are def­i­nitely the most ad­vanced and so­phis­ti­cated in terms of mo­bile e-com­merce,” said Marchetti.

A PayPal con­sumer re­search re­port that sur­veyed 29 mar­kets around the world showed that more than one-third of Chi­nese on­line shop­pers had done cross-bor­der shop­ping in 2015. Based on re­sponses from 23,000 peo­ple aged be­tween 18 and 34, the re­port con­cluded that China and the US are the two most pop­u­lar cross­bor­der des­ti­na­tions. Cloth­ing, footwear as well as ac­ces­sories are the most-pur­chased items for global shop­pers, ac­count­ing for more than half of the trans­ac­tions.

The re­port also found that while ship­ping costs are a prime con­sid­er­a­tion for global shop­pers, prod­uct au­then­tic­ity still ranks as the big­gest pri­or­ity for 65 per­cent of Chi­nese shop­pers.

The Chi­nese Min­istry of Com­merce es­ti­mated that the trade value of cross-bor­der e-com­merce would reach 6.5 tril­lion yuan ($972 bil­lion), up 30 per­cent year-on-year, by the end of 2016. By 2018, the num­ber of reg­u­lar shop­pers on cross-bor­der sites is ex­pected to sur­pass 35 mil­lion, and th­ese in­di­vid­u­als will gen­er­ate 1 tril­lion yuan in con­sump­tion.

Marchetti noted that the com­pe­ti­tion in the re­tail world is no longer be­tween off­line and on­line busi­nesses, but rather, be­tween brands that can of­fer a syn­chro­nized on­line ex­pe­ri­ence and those that can­not.

“It’s not two dif­fer­ent worlds. Th­ese days, on­line and off­line busi­nesses are con­verg­ing into one. I think China is the only coun­try that has a fan­tas­tic syn­ergy be­tween on­line and phys­i­cal stores in this in­dus­try,” said Marchetti.

I think China is the only coun­try that has a fan­tas­tic syn­ergy be­tween on­line and phys­i­cal stores in this in­dus­try .” the co­founder and CEO of YNAP Group

PRO­VIDED TO CHINA DAILY

YNAP Group CEO Fed­erico Marchetti.

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