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Net-a-porter Opens U.S. Headquarters

Founder and executive chairman Natalie Massenet spoke to WWD while in New York for the opening of the company's new 32,000-square-foot offices.

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Stephanie Phair

Stephanie Phair

John Aquino

Jeremy Langmead

Jeremy Langmead

Courtesy Photo

Net-a-Porter's distribution center in Mahwah, New Jersey.

Net-a-Porter's distribution center in Mahwah, New Jersey.

John Aquino

NEW YORK — By 9 a.m. here, Net-a-porter has already racked up millions of dollars in sales from the far reaches of the globe. But the day has only just begun on the pure-play retailer’s biggest market of all, the U.S., where Monday the company opened its first headquarters outside the U.K.

This story first appeared in the June 26, 2012 issue of WWD.  Subscribe Today.

Although exact turnover is confidential, both headquarters and distribution centers have screens mounted all over their respective spaces with a live ticker of what’s selling at every second worldwide, with a running tally of up-to-the-minute sales for each of the brands under the Net-a-porter umbrella, which include Mr Porter and The Outnet.

Founder and executive chairman Natalie Massenet, in town this week to open the U.S. facilities, maintains the company has seen 73 percent growth year-over-year in the U.S., accruing 25,000 new customers and more than 6.5 million unique users per month globally (across all three brands). Buying for the U.S. — the fastest-growing and largest market for the e-tailer, comprising more than 30 percent of overall business — has grown six times since the company put down roots here in 2006 (or eight times including The Outnet and Mr Porter).

Mobile shopping has become increasingly important as well. Sixty percent of customers actively use a smartphone, and between 20 and 30 percent of all transactions are conducted on either a smartphone or tablet. In late February, Net-a-porter updated its “What’s New” app, and has seen more than a doubling in downloads from 300,000 to more than 700,000.

Massenet said a whole mobile team has been put in place to focus on mobile marketing and commerce and she expects even more significant growth in the category by 2015.

Sources estimate sales volume for Net-a-porter at $500 million, following a rapid rate of growth.

Clearly, Massenet knew what the luxury consumer would respond to when she brought her “shop-able magazine” vision to life in 2000. This was nearly a decade before fashion’s adoption of everything digital — elaborate editorial content, interactive e-commerce platforms and high-end fashion houses’ aggressive embrace of social media included. And since its onset, Net-a-porter.com has possessed one of the most well-curated collections of designer apparel and accessories for purchase online, delivered alongside a relevant and compelling weekly digital magazine. “Because of the Internet, consumers were able to see product at the same time as editors and buyers and were no longer limited to local tastes. I would go to the stockists [while working at Tatler] in London and see that they hadn’t even bought the coolest pieces from the runway,” an Oscar de la Renta-clad Massenet told WWD Monday of the impact globalization has had on e-tailing just moments before the official opening of the 32,000-square-foot space located in the Flatiron District here, where she posed for pictures at a company-wide ribbon-cutting ceremony.

Massenet went on to explain that in her previous role as a fashion editor, there was a disconnect between what magazines were telling consumers to buy and the merchandise that stores actually carried. She received quite a bit of flack from readers who were unable to find the items they were reading about. Her answer was to create a pure-play luxury shopping destination on the Internet, Net-a-porter.

“Magazines are the marketing arm of the retail industry, and retailers weren’t able to reach out to their consumers in the same way that magazines could,” said Massenet of the impetus behind starting the company, built upon the merger of content and commerce. “I’ve always said that stores will become magazines and magazines will become stores. Now you see it everywhere.”

There are three brands under the Compagnie Financière Richemont SA-owned Net-a-porter umbrella that will work out of the new space: its discount counterpart; The Outnet, and its men’s site Mr Porter (The luxury firm purchased Net-a-porter in its entirety in April 2010, as it held a 33 percent stake in the company before acquiring the remaining 67 percent).

In addition to the corporate office in Manhattan, the brand recently opened a renovated 250,000-square-foot distribution center in Mahwah, N.J., that houses customer care, desktop support, strategic programs, operations, finance, human resources (a department that grew 100 percent from a head-count perspective in the past year and receives 3,000 job applications a week) and every single piece of merchandise available on the U.S. Web sites for Net-a-porter, The Outnet and Mr Porter. A quarter of the company’s global staff of 2,000 works in the U.S. — 435 in New Jersey and 65 in beauty, personal shopping, public relations, product editorial, marketing and retail departments in Manhattan.

“You should be able to be blindfolded and plunked down in any of our locations and know where you are, whether it’s this distribution center or our headquarters in Westfield (London),” said Net-a-porter managing director Alison Loehnis last week, nestled in a tufted, white leather walled booth overlooking a staff meeting space with a movie theater-sized screen and stadium seating that projects branded image and video content. “The brand experience is the same for everyone. From the retail team, to the studio, to the premiere delivery drivers — the experience is the same.”

Upon entering the facility, visitors are greeted with a massive black door leading into a sleek black, white and glass walled space (for “complete transparency”) with a massive chandelier and front desk with the names of all three brands neatly printed on the back wall. There’s a gym, a sleekly designed cafeteria and even a break room for the same-day delivery drivers that contains TVs with live city cameras and traffic maps of the day’s routes.

But it’s the soon-to-be automated warehouse — it’s expected to be completed by spring, and was already implemented in the London distribution center a year ago — that the executive is most keyed up about. So much so that Loehnis, outfitted in a vibrant green, Victoria by Victoria Beckham dress with navy collar detailing, posed for a photo on the conveyor belt, at the same time explaining that orders will be packed and shipped six times more efficiently than the current rate.

She reveals that a Hong Kong office and distribution center will open early next year, which will bring the global headquarter count to three. This, in addition to the rollout of fully translated Web sites in the next six months, are a major focus for the company. In fact, Hong Kong is neck-in-neck with the U.S., the Middle East, Russia and Australia for the business’ fastest-growing markets. Loehnis pointed out that the customer is always the starting point — and providing expedited express shipping and same-day delivery service to this region is vital for growth in the market. She said there is the capacity to ship to 170 countries, but they’ve only shipped to 155 countries to date (Cameroon, Tahiti, Belarus and Turkmenistan are among the 15 countries that the company hopes to ship to soon.)

The business has grown on the same trajectory since its inception — but it’s broken down in different ways than several years ago, according to Loehnis. Net-a-porter is a mature brand in its native U.K., and she said although business is still good in Europe, it’s the above regions that are seeing the most traction. In the U.S. specifically (also the e-tailer’s largest market), there’s been a conscious effort to grow the brand beyond the core New York and Los Angeles regions to San Francisco, throughout New Jersey, Dallas, Houston and Miami.

When asked if customer clothing preference varies by city — despite a minimalist, black Lanvin maxiskirt purchased in New York and an Hervé Léger bandage dress purchased in Miami flashing across the Net-a-porter live camera just moments prior — Loehnis said it’s less about market-to-market differences and more about the individual tastes of the customer.

“The edgier customer wants something different, whether she’s in Qatar or New Jersey. It’s a type, rather than defined by geographical location. The designer affinity is similar, but the Middle East and Latin America love color, the U.S. is big on tailoring and in Hong Kong, the cooler the shoes, the better,” Loehnis said, adding that Australians still want current product now, even though there’s reverse seasonality in the region.

For Loehnis, the ethos of the early days remains and the culture instilled company-wide that emphasizes the convergence of commerce and content is still paramount. Net-a-porter’s weekly magazine is fundamental to the brand’s core values and production will continue in the same capacity, she said, but content will undergo significant expansion in the coming months with the help of new editor in chief Lucy Yeomans.

The same holds true for its three-year-old discount sister Web site, The Outnet.

According to Stephanie Phair, director of The Outnet, the dedication to interesting, engaging editorial content (as well as 24-hour-a-day, live customer service) sets the site apart from other off-price retailers, in the online space or otherwise.

The site’s DNA is its content, and it’s never been about “full-price or discount.” She said theoutnet.com delivers storytelling with a focus on video (with its “Chic Chat” or “Style Spot” series, for instance) or blogger collaborations (such as “Play Dress Up With The Outnet”), and like parent brand Net-a-porter, integrating this with commerce is key.

Similarly, the U.S. is also The Outnet’s largest market, and Phair calls growth “rapid,” citing 86, 65 and 54 percent growth from 2010 to 2011 in Russia, the U.S. and Hong Kong, respectively. The e-tailer has always shipped internationally, but to keep up with the demand in Hong Kong, a translated version of the site launched on March 19.

“The Net-a-porter team had already conceptualized the [Outnet] brand. The idea was to have a sale section that was marketed to the consumer,” Phair told WWD, sifting through a rack containing printed Peter Pilotto dresses, tweed Emanuel Ungaro jackets and a draped Helmut Lang T-shirt (all from The Outnet, of course) in a glass-walled office in the New Jersey distribution center. “We wanted to launch a business, but with the prestige and backing of Net-a-porter. But it needed to be a spin-off with its own brand with customers that paid attention to it for its own merits.”

Upon its launch in April 2009, the company predicted that the target consumer would be younger with considerably less money to spend than the Net-a-porter shopper — but this wasn’t the case. Surprisingly, the average customer’s income on The Outnet is $175,000 — which is not your average discount shopper.

Nor is it your average discount retailer.

The Outnet became the first official channel to offer Azzedine Alaïa discounted online in Sept. 2009, several months before Net-a-porter starting carrying the full-price collection in the spring of 2010. It also regularly works with designers like Sara Berman, Karl Donohue or Julie Haus to develop exclusive collections. For its first anniversary, the site held a first-come, first-serve “$1 Sale,” with a response so overwhelming that theoutnet.com crashed (precautions were taken for the “$2 sale” last year to avoid the same fate).

As for Mr Porter, the newest addition to the Net-a-porter family at just under one-and-a-half years old, editor in chief Jeremy Langmead also said the U.S. is the top-performing market for the men’s arm of the company. The U.K. is the second best market for the site, followed by Germany, Hong Kong and Singapore.

Mrporter.com receives 1.2 million visitors and 80,000 customers a month, and Langmead said the goal is to double the latter. Additionally, the brand is concentrating on translating content and product information on the site into Chinese, German and French, which is set to go live in the first quarter of 2013.

Aggressive local outreach is another area where the brand will direct its energies. According to Langmead, the brand has seen a positive response from its print publication, Mr Porter Post — which comes out six times a year — and plans to increase frequency to seven issues with more region-centric publications tailored to specific projects. For example, an issue with Mr Porter-specific content will come out in Ibiza mid-August, targeting consumers in a relaxed surrounding and talking to them about their experience there.

“We do the same buy for each location, but we reach out regionally by working on local projects such as the recent ‘Suits’ collaboration with USA Network, hosting a dinner for a targeted group of men in Chicago or even a tie-in with a magazine in Los Angeles,” Langmead said. “We try to talk in one language to everyone, but even though we have a slight Anglo feel, we don’t really want people to think that we’re too far away. People like it when you talk to them where they are.”

 

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