Contact Us

Please use the form to quickly contact us.

Phone *
Phone
           

123 Street Avenue, City Town, 99999

(123) 555-6789

email@address.com

 

You can set your address, phone number, email and site description in the settings tab.
Link to read me page with more information.

News Blog

From Local Boutiques to Global E-tailers

Administrator Ftccc

By Robin Mellery-Pratt 18 December, 2014

E-commerce enables local fashion boutiques to tap global markets. Or so the theory goes. What does it take to put it into practice?

MyTheresa.com warehouse in Munich | Source: Courtesy

LONDON, United Kingdom — In recent years, several influential European fashion boutiques, including Colette, Luisa Via Roma, Browns, MatchesFashion and My Theresa have launched global e-commerce, building “a window to the world rather than just a window to the street,” as Andrea Panconesi, chief executive of Luisa Via Roma — once a single Florentine boutique, now one of one of Italy’s biggest fashion e-commerce players — put it.

The opportunity was clear. Not only could these retailers — many of which began as single-store businesses — dramatically extend their reach, tapping new geographies, but the online luxury market offered significant growth potential. In the last four years, online luxury sales grew by 28 percent, according to Bain & Company, a global consultancy. In fact, digital could be “the next China,” as Exane BNP Paribas analyst Luca Solca told Bloomberg Businessweek, last month, forecasting $43 billion in online luxury sales through 2020.

“The opportunity is absolutely enormous for us,” said Tom Chapman, chief executive of MatchesFashion, which operates a network of 16 stores across London alongside an online store which ships to over 190 countries and generated revenues of over £80 million (about $130 million) in 2013. About 75 percent of this came from digital sales.

“There was a transition point two to three years ago, when we felt that this was an awful lot of work and we were trying to get the teams to work across two types of businesses and there needed to be a decision. We realised that we were no longer a bricks-and-mortar store with an online business, we were now an online business with bricks and mortar opportunities,” added Chapman.

“We consider South Molton Street [in London] our flagship store and we don’t intend to open in other provinces. That’s not what our brand is about. Our opportunity to reach out to other customers is through the Web,” said Simon Burstein, chief executive of Browns, which operates 6 stores in central London as well as a website, which currently generates 25 percent of the company’s total revenue. “We’ll probably see it grow, in the next few years, to 50 percent, if we get it right,” he added.

But the path from boutique to global e-commerce player is cost-intensive and fraught with operational complexities.

“Being online is a very, very risky business. And very expensive,” said Panconesi. “To operate multibrand e-commerce is very difficult; it is not like monobrand, we deal with 500 suppliers and to put them all on the same e-commerce [site] is very, very complicated and very expensive.”

“To do it well, you really have to invest,” said Chapman. In 2012, MatchesFashion raised £20m from Scottish Equity Partners and Highland Europe to expand online sales. “It’s a completely different type of business model. I think some people underestimate that. They think they can just photograph product, put it online and wait and see what happens. That’s not the reality,” he continued.

“We had to hire people in every department. Not just technology and development, but buying, marketing, customer service, everything. Our business changed completely,” said Panconesi.

Buying for a global e-commerce site is a very different and far more complex job than buying for a single boutique. “It’s a much more analytical experience,” said Justin O’Shea, buying director of MyTheresa.com, a Munich boutique that became a fashion e-commerce destination that now generates $130 million in annual revenue and was acquired by Neiman Marcus in September this year. “It’s not analytically guiding your taste, it’s guiding you to quantify in the right way,” he continued, “because you are either quantifying for Asia, Middle East all these different heights, weights, sizes. You can’t say you’re servicing the world and not buy 34s for Asia, people who aren’t so used to that might be like, ‘You know what? 34s don’t exist,’ yet from certain brands we buy as many 34s as we do 37s.”

In addition, retailers face the challenge of localising for language and pricing. “We’ve just launched what we call geo-pricing. Now, when you go onto Browns website, you can see prices in euros and, in January, it’ll go into US dollars and then into Australian dollars. Language is the next one. The opportunity to have your website in different languages is one of the things we’ll be doing next year,” said Burstein.

Customer acquisition is yet another hurdle. “E-commerce is expensive to run, but it is even more expensive to market. We have to keep up with our biggest competitors, which are in the US — Neiman Marcus, Saks Fifth Avenue — they are much, much bigger than us in real life, but not so big on the web in e-commerce, but they have much more power in terms of investing power,” said Panconesi.

Then, there are the logistical challenges. “I said to somebody the other day that retail used to be so damn simple,” said Chapman. “I didn’t consider for one minute that MatchesFashion shouldn’t be an international business. But, today, the expectations of logistics! I remember when Amazon took 28 days! Now we’re looking at how we can get product to the East Coast of the US within 24 hours and how we can reduce that.” Global e-commerce businesses must also deal with the complexities of customs and duty regulations across a wide range of jurisdictions.

Given the hurdles, it’s not surprising that some retailers are exploring an alternative to building their own e-commerce sites, partnering with platforms like Farfetch, an online marketplace that connects consumers with over 300 independent boutiques and generates annual sales of $325 million. Alongside its own site, Browns, for one, has established a presence on Farfetch.

“Customers want great product, great service and a great experience, and that is all they care about,” said José Neves, founder and chief executive of Farfetch. “If you are a small independent fashion retailer it is just impossible — it is just not economical to have a huge team of people doing this stuff. You need investment and scale to be able to build global teams that have global reach.”