The Yoox Net-a-Porter Group has plans to outpace the projected growth of the luxury market in the next five years, and it’s going to do it on mobile.
“One of my biggest objectives is to transform the company into a mobile-only company. It’s a new luxury conglomerate of the digital era,” said Yoox Net-a-Porter CEO Federico Marchetti to the Associated Press.
While the market is predicted to grow at a rate of 2 to 3 percent by 2020, Yoox Net-a-Porter’s expected revenue growth in that time period is 17 to 20 percent annually, according to its five year plan. In 2015, the Group reported $1.7 billion in sales, an annual lift of 30 percent. That year, 40 percent of sales were mobile. According to Marchetti — formerly the CEO of Italy-based off-season luxury retailer Yoox prior to the company’s merger two years ago — the goal is to increase that to 75 percent by 2020.
The company has taken several steps to improve its mobile commerce capabilities in the past two years, including announcing a partnership with IBM in March that incorporated the company’s technology into its desktop and mobile platforms. In September, Yoox released a native mobile app and iOS 10 integrations. And this month, a new Yoox Net-a-Porter Technology Hub opened in London that increased the company’s technology team by 20 percent, or to 1,000 employees. The tech center is focused on furthering the company’s “mobile-centric culture,” according to a Yoox Net-a-Porter representative.
“To say ‘mobile-only’ is to some extent hyperbole,” said Jason Goldberg, svp of content and commerce at the agency Razorfish. “But, it’s a smart retailer who says ‘Let’s offer everything on mobile, because we’re seeing that customers are dramatically shifting to mobile, and eventually, maybe they’ll be all mobile.”
Goldberg called Yoox Net-a-Porter the “tallest dwarf” in terms of a luxury company being adept at mobile and e-commerce, as many luxury groups continue to debate whether a digital presence makes sense for them at all. But following the merger, the company’s technology push touches a lot of luxury online experience. The group includes Yoox, Net-a-Porter, men’s retailer Mr Porter, and off-season retailer The Outnet, as well as hundreds of luxury brands’ online stores that are powered by Yoox Net-a-Porter, including Prada, Jimmy Choo, Alexander Wang and Stella McCartney.
“Luxury is startlingly digitally immature. By embracing the digital shopper, Yoox Net-a-Porter is already ahead,” said Goldberg. “And on mobile, the clear differentiator is that mobile does not feel like an adjunct to another channel.”
The company has built out mobile capabilities for its retailers on both the web and in native apps, the latter of which speaks to their focus on their most loyal customers. According to Marchetti, while only 2 percent of customers are identified as highest value, they drive more than one-third of Net-a-Porter’s purchases.
“Mobile first and mobile only is a buzz term — it’s about being mobile right,” said Brendan Witcher, principal analyst of channel strategy at Forrester. “The high-end purchase requires a final push especially on mobile, and Yoox Net-a-Porter understands their customer needs and have an outside the box way of thinking about it. They’ve done it well.”
In order to shift 75 percent of its business to mobile in the next five years, the company’s new Technology Hub is going to focus on rolling out new technologies to different regions. With its partnership with IBM, a Yoox Net-a-Porter spokesperson said that the company has been able to develop better native apps, deliver better customer insights and improve personalized messaging.
“This move is to send a focus of a direction to one place — mobile,” said Goldberg. “But that’s different for different regions. They’ll have to demonstrate a true understanding of shopper habits all over the world.”