Prada sneakers on saks.com.

Saks.com will test the marketplace format in an effort to accelerate growth and expand “the breadth and depth” of its offerings to customers.

“We are making headway in evolving the business model we share with you on saks.com. To that end, in the coming weeks, we plan to begin testing the marketplace concept within our platform,” Marc Metrick, chief executive officer of saks.com, wrote in his quarterly letter to vendors, a copy of which was obtained by WWD.

Metrick indicated that testing a marketplace format “will allow for us to better understand and refine the experience for customers and brand partners as we identify opportunities to expand the breadth and depth of our assortment while maintaining the curated experience for which Saks is known.”

“Since separating Saks as a stand-alone e-commerce company nearly three months ago, we’ve already accomplished a lot and are energized by the significant opportunities for innovation,” Metrick wrote.

Express, Best Buy, Stadium Goods, Lands’ End, Crate & Barrel, Urban Outfitters and StockX are among the scores of marketplaces that have been launched in recent seasons, providing rocket fuel for digital growth. Hudson’s Bay in Canada, which like Saks is part of the Hudson’s Bay Co., also converted its website into a marketplace that launched last March. Macy’s website is engaged in drop shipping in certain categories, and management is considering converting it to a more formal marketplace format.

In creating a marketplace, Saks will be challenged to determine what brands and products, not previously carried, will resonate with the retailer’s audience and will buoy, not detract from, the Saks luxury image.

Typically, marketplaces involve companies listing brands and products on their websites and drop shipping, but not traditional wholesale arrangements. Often marketplaces take a hybrid approach, meaning listing certain products and drop shipping, while procuring other products through wholesaling.

Saks.com is rapidly evolving. Last March, the parent HBC split the Saks Fifth Avenue stores and saks.com operations into stand-alone companies. Insight Partners, a venture capital and private equity firm, made a $500 million minority equity investment in the Saks e-commerce business, valuing it at $2 billion. Saks.com generates roughly $1 billion in annual sales. As stand-alone companies, Saks Fifth Avenue’s e-commerce business is now known as simply Saks. The 40-store Saks Fifth Avenue fleet is known as SFA, which remains wholly owned by HBC.

With the split-up, Metrick, who was president and CEO of Saks Fifth Avenue, became CEO of the Saks e-commerce business. Larry Bruce, formerly director of Saks stores, became president of the SFA stores.

Executives at Saks and Insight Partners have told WWD that the restructuring of Saks Fifth Avenue means investing in its e-commerce like HBC could never do before, to spur the business. Increased spending on technology, contact centers, marketing, and to enhance styling, personalization, shipping and return capabilities are seen. Last year, saks.com was re-platformed with Salesforce Commerce Cloud to capture more data on users, leading to messaging that furthers personalization. Men’s wear got its own homepage, which leads to a designated men’s section, and the overall look and feel of the website were upgraded.

Transforming the Saks Fifth Avenue stores and e-commerce businesses into separate companies is a prelude to potentially spinning off the e-commerce operation into a public company.

“Since March, we’ve been working quickly to drive rapid growth, and key to that is our laser focus on creating an online luxury shopping experience that is both exciting and easy for customers,” Metrick said in his letter to vendors.

He listed some changes to the experience since March, including launching everyday free shipping and free returns, advancing the digital stylist program which offers personal styling online; expanding Saks Limitless, an invitation-only program providing top saks.com shoppers with exclusive benefits and perks, and launching Saks Live, a livestream events platform.

He also said that the company has been ramping up marketing spend online and “prioritizing investments in channels and tactics that over-index in acquiring new customers. These actions have led to increases in key traffic-driving channels while also supporting the rapid growth of our customer base.

“Our team has also been growing with new talent joining every week to ensure we’re on a path to achieve our goals and scale quickly, particularly within our technology organization. Their fresh perspectives and digital-first mind-sets will be instrumental to our growth strategy.”

He did say that the Saks Fifth Avenue stores “remain a vital part of the Saks Fifth Avenue ecosystem, and we continue to work together to deliver an easy shopping experience.” Stores continue to provide buy online, pick up in store service, and handle exchanges, returns and alterations. “Additionally, style advisers across the 40-store fleet continue to leverage saks.com to serve their customers and drive sales,” Metrick wrote.

Marc Metrick

Marc Metrick  Lexie Moreland/WWD

Discussing the first quarter, Saks Fifth Avenue had “strong performance across all channels with total sales up significantly over 2019, as customers began to update their wardrobes in anticipation for the world to reopen,” Metrick said.

Specific to the e-commerce business, Saks’ gross merchandising value exceeded expectations, up double digits versus 2019, with signs of an ongoing upward trajectory, Metrick said. “Since March, site traffic is up 79 percent, leading to an unprecedented number of orders, and new customer counts are up 84 percent to 2019.”

He said the Saks stores surpassed projections, with total sales higher than those in 2019, though no figures were disclosed. Key markets, including Atlanta, Houston and Chicago, were up double digits compared to 2019, Metrick said.

“We’ve started to see improvement in sales and traffic at the New York flagship and expect that as New York City fully reopens, business should ramp up through the remainder of the year.”

Men’s, women’s handbags and shoes were cited as top-performing categories both online and in stores. “Additionally, women’s apparel is trending toward a turnaround of the category as our core customer plans for a return to the office, events and travel,” Metrick said.

To strengthen the dot-com’s capital structure, two financial steps — a syndicated $350 million asset-based, five-year revolving credit facility and a $115 million senior secured term loan — were completed. “This financing, combined with our cash on hand, ensures we have substantial liquidity and flexibility to drive growth,” Metrick said in the letter. “Additionally, the stores business is well capitalized with substantially more liquidity than one year ago, primarily driven by its continued strong business.”