MILAN — Federico Marchetti always believed the digital channel would grow exponentially.
“I wouldn’t have merged with Net-a-porter otherwise,” the founder and chief executive officer of Yoox Group said Tuesday during a conference organized here by Fondazione Altagamma to present the latest study by McKinsey & Co., which predicts luxury digital sales will triple by 2025.
“We ship to 100 countries,” Marchetti pointed out.
Yoox is celebrating its 15th anniversary this year and is the only e-tailer that is a member of the Altagamma luxury goods association. The merger between Compagnie Financière Richemont SA’s Net-a-porter and Yoox is set to be finalized in September, creating the new Yoox Net-a-porter Group with revenues of 1.3 billion euros, or $1.43 billion at current exchange, and to be publicly listed on the Milan Bourse.
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Referring to the potential of a global digital business, Marchetti said he invented the Yoox name because he “did not want it to be associated to a specific geography. It was almost a Martian name — think of a spaceship landing on earth, so that a Japanese would think it were Japanese, an Italian believes it’s Italian and likewise for an American.” The entrepreneur explained that 15 years ago, he “thought it would be important to be a chameleon to respond to different customers, as a company that would locally be perceived as very close to local customers.”
The merger with Net-a-porter will allow the group to be “even more international,” and even stronger in the U.S. and Asia, he said.
Asked by Armando Branchini, vice president of Fondazione Altagamma, how he felt about Amazon and Condé Nast and their efforts in the luxury goods sector, Marchetti said he had “great respect “ for Amazon, “a benchmark” in the digital arena, but said that “of their own admission, Amazon has little to do with luxury,” and is rather “more interested in accessible luxury. It’s a giant generalist.”
Condé Nast, which is turning Style.com into an e-commerce site, is “a venture that can be useful to the companies in the sector as an accelerator of business,” but Marchetti underscored that it will have no warehouse.
Remarking on the activity in the sector, he said that “every day there are new sites,” pleased that “two big rivals are together now,” seeing continued growth in the future.
Speaking of the initial reluctance of luxury goods firms to venture into e-commerce, Marchetti said they “did well to wait and see.”
Pointing to the perils of the business, he said he “learnt in the first 15 days after the launch of Yoox in June 2000 about tracking down U.K.- based thieves with Scotland Yard.” Marchetti expects the scenario in the digital luxury segment will be “increasingly outlined, more and more [about] good and bad guys, and the gap will open more and more. You must stay away from the bad guys, to make a mistake on the Internet is very painful in luxury, you must protect and increase the value of the brand with a long-term attitude, as an entrepreneur and a team. You must not be enticed by short-term results as you pay for them in the long-term.”
To this end, Fabio Gnocchi, commercial director at Brunello Cucinelli, said “each company must make its own choice. We have built our company on exclusivity and our approach is prudent.” Gnocchi said the brand’s customers even caution against opening too many stores. The label’s e-commerce site, operated by Yoox, is “growing at a sustainable pace, in line with our company’s strategy, and we don’t want to push too much with the Web,” added Gnocchi.
As reported, McKinsey’s latest study on e-commerce in the luxury market found that online sales currently account for 6 percent of total revenues in the sector, or 14 billion euros, equivalent to $15.45 billion. By 2025, the study predicts that figure will triple to an average of 18 percent, or 70 billion euros, or $77.3 billion.