Net-a-Porter's Acquisition by Richemont Will Accelerate Luxury e-Commerce
Maybe you've never heard of Richemont, a Swiss luxury goods group, but you've certainly heard of (and perhaps coveted items from) the brands it owns: Cartier, Van Cleef & Arpels, and Montblanc, among others. While owning such time-honored "maisons" of fine jewelry and accessories, Richemont also sagely took a 33 percent stake in Net-a-Porter, one of the first global online purveyors of posh frocks and other haute designer items.
The stylish e-commerce site continued to grow and post profits despite the downturn, and Richemont took note. First it launched an online shop for Cartier. Now it's snapping up the remaining shares of Net-a-Porter. Becoming a majority stakeholder will cost Richemont $341 million, but the potential to grow market share and change the way consumers buy luxury goods is huge. Here's why:
Net-a-Porter's savvy founder Natalie Massenet will continue to helm operations. The 44-year old former fashion journalist is touted by the press on both sides of the pond as having her manicured finger on the pulse of the retail zeitgeist. When she started Net in 2000, Massenet had difficulty getting funding from private-equity companies because they thought "women would never shop online." Look who's shopping now. Ten years later the company employs 600 in London and New York and the site gets an estimated 18,500 visits per day. What's more impressive are the sales numbers which jumped from $84 to $183 million during these last two very lean recessionary years.
Net's got a sister site that is just as popular, TheOutnet.com, which caters to that fashion-hungry yet bargain-conscious woman who wants to look like a million (and sport the labels to prove it) without breaking the bank. The key to the deep discounts is the fact that TheOutnet offers items from seasons past -- vastly different from Net-a-Porter's lightning-quick runway to retail availability. The site may also provide a handy -- but still entirely covet-worthy -- repository for underperforming items from other Richemont brands.
Customer care is still a premium. Cartier and Richemont's future luxury sites can (and should) take a lesson from Net-a-Porter's success with customer service. Until recently, the dazzle of Van Cleef's flawlessly faceted jewels and the heft of a Cartier tank watch have been reserved for those who have the time (and money) to shop in person, under the care and feeding of experienced sales associates. Net's commitment to translate the expertise and customer care of the best sales people is found in frequently updated editorial content, live online runway shows, exclusive designer collections, and same-day delivery in London and New York. Oh, and there are those lovely boxes dispatched with handsome tissue papers and silk ribbons.
The online luxury goods market is projected to grow by 20 percent this year as younger consumers and working women shop by clicks rather than bricks according to research by Bain & Co. 'Nuff said.
Image via Net-a-porter.com