On 14 June, it was reported that luxury e-tailer Net-a-Porter would exit China. The news came just shy of 6 years after the announcement of the joint venture between YOOX Net-a-Porter Group (YNAP) and Alibaba, managed by Feng Mao. Wu Yating, chief executive of Feng Mao, announced to employees that the company would dissolve shortly.
Multiple fashion brands on the platform also received notice from Net-a-Porter that its Chinese business would face liquidation. The platform will stop ordering merchandise from SS25 onwards but the online service will continue until March next year. Net-a-Porter and its menswear platform Mr Porter entered China via Alibaba’s Luxury Pavilion in 2019 and has been operated by Feng Mao.
Last December, YNAP owner Richemont scrapped the deal to sell 47.5% of the platform’s stake to its major competitor Farfetch. Farfetch narrowly escaped administration last year after being acquired by South Korean e-commerce giant Coupang. Alibaba and Richemont formed a global strategic partnership in November 2020 and each invested 250 million USD in Farfetch, each holding a 25% stake in a new joint venture that operates Farfetch in China.
Currently, the luxury e-commerce sector is in a turbulent state. Richemont classified YNAP as a “discontinued operation” and said it had made progress on the sale, after the sales on the platform dropped by 14% during FY 2024. Meanwhile, competitor Farfetch is still making losses after the acquisition, causing parent company Coupang’s net profit to drop from 91 million USD to 5 million USD in Q1 2024. Matches entered administration after only 3 months following the purchase by Frasers Group in December. Mytheresa, on the other hand, performed well with its net profit growing from 1.4 million EUR (1.50 million USD) to 4.1 million EUR (4.38 million USD).
After the boom during the pandemic, how luxury e-commerce platforms can provide a luxury experience when competing with physical stores and brand websites is the main problem. Platforms are upping their game with technology and community-building to provide the experience and “emotional value” for their customers. How the battle for luxury e-commerce 2.0 will be fought is worth watching.
