- Vivian Hendriksz |
By now, nearly everyone within the industry has heard of the merger of two of the largest online fashion destinations (unless they have been living under a rock) to form a new entity known as Yoox Net-a-Porter Group. With the new company officially launching on October 5, 2015, the Group now holds what can be seen an unrivalled client base of over 2 million high-spending customers and 24 million unique monthly visitors worldwide. Together, these two former competing market leaders now hold full coverage of all luxury customer segments across the entire product life cycle, with a broader global reach than any other online fashion retailer.
Now, the question is - what comes next for Yoox Net-a-Porter Group? FashionUnited takes a closer look at both companies, the reasons behind their merger and predicts what the future may hold for the new Group. (No time to read the whole article? Click here for the 20 second version.)
Unsurprisingly, Yoox and Net-a-Porter used to be competitors, although the former was known for its wide assortment of last season designer ware and the latter for its current luxury offer. However, due to the quickly changing, growing and resilient market both companies needed to continuing growing in order to hold onto their advantages and stay ahead of competition. As both fashion e-tailers were held in high esteem because of their refined audience, necessary creativity when it comes to content as well as use of innovation to stay ahead of peers, it became clear to their respective owners it was time to seek out an independent form to support them both.
Yoox and Net-a-Porter merge to "protect the uniqueness of the luxury industry"
“Established business are being increasingly disrupted by the technological giants,” said Johann Rupert, Chairman of Richemont when the merger was first announced earlier this year. “It is with this in mind that we believe it is important to increase leadership and size to protect the uniqueness of the luxury industry. The merger of the two leaders will further enhance an independent, neutral platform for a sophisticated clientèle looking for luxury brands.” Taking a closer look at the growth within each company’s market value over the years, the reason behind the merger becomes even more clear.
When Yoox was first listed on FashionUnited Top 100 Index in 2009, it held a market value of 217 million euros. However, by October 1, 2015 this had grown over eight times to hit 1.7 billion euros. Net-a-Porter was first listed on the Top 100 Index in 2010, with a market value of 494 million euros. By October 1, 2015 this amount nearly tripled to reach 1.4 billion euros. As of November 2015, the merged company holds a market value of 3.9 billion euros. With the reasons behind the merger clarified, the question remains if the move will boost sales for all of the companies sites?
According to the Group’s new CEO, Federico Marchetti, the newly formed Group is currently growing in leaps and bounds and is on track “to deliver on its significant potential.” The luxury e-commerce group published its financial results for the first nine months of the year, the first since the merger, which indicated that the integration of Yoox and Net-a-Porter was “progressing very well” as the “synergies of the merger” had exceeded expectations.
Yoox Net-a-Porter is on track "to deliver on its significant potential"
In fact, Marchetti revealed that the merger is doing so well that the company had decided to raise its target for potential annual run-rate synergies from 60 million euros to 85 million euros in terms of EBITDA. According to FashionUnited’s prediction YNAP will have an expected revenue of 1.55 billion euros by the end of fiscal year 2015, with 27.5 million unique monthly visitors leading the way for 2.35 million active customers to place a total of 6.5 million orders. By 2016, FashionUnited expects revenue for the Group to hit 1.8 billion euros , with 31 million unique visitors.
It seems likely the Group as a whole will benefit from the merger, but what are the advantages and risks for both Yoox’s and Net-a-Porter’s sister sites? For example, the merger with Yoox will likely offer the brainchild of Natalie Massenet, Net-a-Porter.com numerous advantages such as better marketing resources, ad ditional distribution centres for faster shipment, larger customer service division, wider global reach as well as more customers from Yoox's additional websites.
But the merger also brings a number of risks for Net-a-Porter.com. The merger may lead to a loss of exclusivity if any of its product ranges changes or is offered on other Group sites. Or the merger may cause potential harm to Net-a-Porter.com image if it is constantly presented alongside Yoox. But the biggest risk revolves around Net-a-Porter.com e-commerce - if this is translated to other sites within the Group, it could led to a large share of public interest. Yoox.com on the other hand may benefit from Net-a-Porter.com, as the link will likely boost its image and fashion credentials around the globe and lead to more active customers purchasing from the e-tailer.
Yoox.com to benefit most from merger with Net-a-Porter Group
However, the merger may also see a dip in traffic to Yoox.com as shoppers may jump ship to Net-a-Porter’s discount corner, TheOutnet.com, which has a similar offering of past season designer wear as Yoox.com. But this risk could flow the other direction as well, as Net-a-Porter’s Outnet may lose traffic to Yoox.com. The similarities of product offering could also damage TheOutnet.com image as the luxury discounter corner if product choice is too similar to Yoox.com.
By studying the pros and cons of the merger, FashionUnited believes that Yoox.com is likely to benefit the most from the merger whilst TheOutnet.com is the website most at risk. In addition, FashionUnited believes that if Net-a-Porter.com continues to do well and keeps on delivering current fashion the way they do, it will only benefit from a larger scale platform as it enables them to deliver fashion faster to their customer’s front door. Yoox.com is set to profit from the expansion as well, whereas it will attract new (Net-a-Porter) visitors and gain a more higher-end status as many customers will be linked to them via Net-a-Porter.
This is the ninth episode of a new series based on FashionUnited's unique business intelligence Top 100 Index. Stay tuned next week's episode on November 20, which focuses on Victoria's Secret