The new payment terms will apply to any Net or Mr Porter brand partner not already on those terms with immediate effect from spring 2022, including any purchase orders already raised for the season.
The e-commerce giant said the move aims to “standardize the payment terms applied by Net-a-porter and Mr Porter” across their distribution centers in order to maintain payment dates, and to reflect some of the already agreed commercial terms with brand partners.
In the memo, Lea Cranfield, chief buying and merchandising officer, said the majority of its brand partners across the group already operate on payment terms of 90 days net, or longer.
Cranfield added that if the new terms present a “significant challenge” for any brand, it may be possible to use an Amex payment facility, which would allow for faster payment, although it will incur a fee.
The new terms could be challenging for the smaller brands, many of which already have problems with cash flow.
While payment terms vary widely depending on the brand and the retailer. Most brands on average will receive payment between 30 to 60 days from retailers. It’s not uncommon for smaller brands and start-ups to get as much as a 30 percent deposit to help with production, with the remainder paid upon delivery.
One designer who asked not to be named and whose brand is on 60-day terms with YNAP, said the change in payment times will not impact their business too much. However, they said they are concerned that emerging brands will face great difficulties with a 90-day pay window. It means they will have to shoulder the risks and costs of producing a collection for a longer period of time.
“For small brands, this change is very bad. They are holding a season of cash flow,” the designer said.
A creative director of a London fashion label who asked not to be named told WWD that “90 days is a joke. If they don’t pay the deposit, you have to invest money in production in advance. After delivering, which is usually before the [runway] show, your cash flow will be very vulnerable.”
Separately, a showroom manager argued that the new terms could be up for negotiation. “Of course, [YNAP] will offer harsh terms, but it doesn’t mean you can’t push them and negotiate. Not all power is with retailers, brands have quite a bit as well,” the manager told WWD.
WWD has reached out to YNAP for comment.
Coincidentally, Net-a-porter said during its fall 2021 update back in May that it will put a renewed focus on the retailer’s top-end luxury offering, with more runway pieces and wider assortments of top brands in the luxury realm, be it heritage names like Bottega Veneta and Saint Laurent or younger ones like Khaite.