The rise of ecommerce and online shopping is one of the greatest challenges facing the fashion and luxury industries today. Brands want to tap into the growing online market and offer the convenience that the modern consumers want, without diluting their brand. When done properly, though, luxury ecommerce can be very profitable, and it’s only going to grow. Last year McKinsey estimated that global luxury ecommerce will be worth up to US$20bn by 2018, after online luxury sales grew by 20% in 2013, compared to 2% growth overall. Some businesses have already cracked it.
Last month Yoox announced that first-half revenue was up 19.6% to €284.6m, ahead of its merger with Net-a-Porter. Last week, Fortnum & Mason built on their impressive ecommerce pedigree with the launch of a personalised ‘build your own hamper’ service on the website, to match the one that already exists in store. I’ve said before that F&M has got luxury ecommerce exactly right, and the company’s most recent move is no different. The website’s ergonomic design means that convenience is paramount, while the bespoke services it offers are a natural extension of the brand.
I think it is the personalisation element, though, that is so impressive. In fact, I think personalisation is key for the future of luxury ecommerce, particularly in fashion, where personal shopping is the height of the pampered experience that many brands strive to give their customers. The big fashion news this week came when personal shopping start-up Thread announced on Monday that it had raised US$8m in new funds.
The funding was led by VC firm Balderton Capital, and included some serious fashion and tech heavyweights, including Andrew Jennings, former president of Saks Fifth Avenue (who’s been behind the business for a while) and Demis Hassabis and Mustafa Suleyman from Google DeepMind.
I touted Thread to be successful in a blog last year, so was particularly pleased to see that people agree with me. Thread’s business model is simple but incredibly effective. Potential customers sign up to the website and fill in some simple details such as their favourite brands, price points and any specific items they’re looking for. Then, in a brilliant marriage between the power of technology and the personal touch of luxury shopping, an impressive algorithm suggests products you might like while a human being suggests which items will go well together, and how to wear them. Unsurprisingly, the service is very popular with men, and has managed to attract some 200,000 of them since launching in 2011.
The products themselves are available for the same prices as they are in the shops, as Thread makes bulk orders to retailers every day, allowing it to make money without marking up or squeezing suppliers. Alongside the fundraising news Thread announced the hire of Terry Betts as head of business development. Previously of Selfridges, where he served as buying director for the menswear department, Terry will be a big part of the next phase of growth. Thread is the perfect coming together of the personalised, pampered nature of luxury shopping and the power and immediacy of modern technology and ecommerce. I can’t wait to see how big it becomes!
What do you think the future holds for luxury ecommerce? Let me know your thoughts at firstname.lastname@example.org and have a fantastic weekend.