Who will get there first?
The question is preying on the minds of the big online luxury groups, which are fighting to outdo each other with customer service, speed to market, exclusive merchandise and tech advances.
YNAP has just unveiled a new tech hub in West London, a 70,000-square-foot space designed by Sir Nicholas Grimshaw that’s meant to be a locus of luxury innovation around mobile, artificial intelligence, big data and image recognition technology.
Late last year, Matchesfashion.com became the first fashion e-tailer to offer a 90-minute delivery service across London. It also delivered 165 tech products and launched a stand-alone French language site — with more country-specific sites to come.
In June, Farfetch bought Style.com and scored $397 million in investment from JD.com to expand its business in China. A few months earlier, it revealed an exclusive partnership with Gucci, allowing customers to shop from a range of the brand’s pieces, with 90-minute delivery in 10 cities worldwide.
Thanks to the JD.com deal, the 90-minute service will be extended to the Saint Laurent brand in China. As of October, Saint Laurent will become the first luxury label to offer 90-minute delivery in China, via Farfetch, to customers in Shanghai and Beijing, followed by Hong Kong.
In Germany, Mytheresa.com has more than doubled the space of its previous facility, with a new state-of-the-art logistics center that provides the luxury e-tailer owned by Neiman Marcus Group with room for future growth.
The center occupies almost 350,000 square feet of rack storage area on four levels and has 160 full-time employees. A new conveyor belt system connects all four levels of the warehouse with the dispatch stations, cutting back on walking time.
The relentless pace of innovation, deal making and one-upmanship is proving exciting for customers, and more importantly, for investors.
“They are retailers, and do the same job as Harrods or Galeries Lafayette, but they are born online with a perfect understanding of digital tools. As pure players where the growth lies, they have a strong edge,” said Ludovic Grandchamp, partner at Savigny Partners, the boutique M&A firm based in London.
“As tech players, they indeed attract tech investors, but they also benefit from the interest of regular retail investors keen on joining the digital party. Nonetheless, it has become more challenging to raise money for e-commerce should a company not be among the top players of its category.”
It’s no surprise these large players are making big news on the financial front, too. Earlier this month YNAP broke through the one billion euros barrier for half-year sales. In the six months ended June 30, revenues grew 15.3 percent to 1.03 billion euros, while adjusted net profit was up 2.7 percent to 38 million euros.
All its divisions registered strong growth in every geographical market as the company continues to invest in new technologies and attract more and more brands.
This year, revenues at Matchesfashion.com could exceed 300 million pounds, with profits heading toward 40 million pounds.
According to sources, the founder owners Tom and Ruth Chapman have begun testing the waters for a sale, which could see the company valued at anywhere from 650 million pounds to 770 million pounds, with a host of private equity companies said to be interested.
Although Farfetch has denied reports of an imminent IPO, it is also a very hot property for investors. According to reports, it could be valued at up to $5 billion if it decides to seek a listing. Mytheresa.com, meanwhile, chalked up a 40.6 percent gain in turnover, which reached 169 million euros, last year.