Yoox proves resilience of luxury goods

Federico Marchetti, founder and chief executive of Yoox.com, the global internet retailer behind many top luxury brands, is in an upbeat mood.

Less than a year after the Italian entrepreneur signed a deal to administer the global ecommerce operations of PPR, Mr Marchetti is celebrating success of another kind.

In its full-year results reported on Tuesday, net revenues at the Italy-based group rose by a better than expected third to €375.9m. Average number of monthly unique visitors to its sites, including thecorner.com, yoox.com and shoescribe.com, rose by a quarter to 13m. Meanwhile, order numbers rose 13 per cent to 2.3m and value per order rose to €206. Its profits, when many internet competitors are still recording a loss, rose to €14m.

The jump was led by a surge in sales in its number one market in the US, but also, surprisingly, in recession-mired Italy and in new markets led by China, where revenues rose 140 per cent compared with 2011.

For Mr Marchetti, the rise in sales is partly down to a “big sociological shift”. The advent of “tablets, smartphones and iPhones” has boosted sales of luxury goods online, even in Italy where sales from retail stores are slumping amid a nearly two-year long downturn. In total, a quarter of Christmas season visits to Yoox were through mobile and tablets.

It’s also the latest indicator of the resilience of sales of luxury goods in the face of economic gloom in Europe, a natural disaster in the case of Hurricane Sandy in the US and even the traditional resistance among the Chinese to shopping online for full-price luxury goods.

“What we are finding after two years of hard work in China is that it is finally taking off. We were like a plane that was stuck on the runway. Now we are airborne,” Mr Marchetti says of the surge in Chinese sales on its multimarket platform Yoox.com as well as the monobrand sites it runs in China such as Armani.com.

After years of trepidation, both consumers and luxury brands are embracing the online world. In this mix, few companies are navigating the new frontier as Yoox does.

Yoox’s advantage, as analysts see it, is that while competitors such a Net-a-Porter or Gilt Group do some of the same business they do not do it all. Analysts say its business model, which runs the so-called monobrand sites for 33 luxury brands alongside its own multimarket estores, means Yoox is better able to ride the increasingly volatile trade that selling luxury goods has become.

Yoox makes a third of its revenues from monobrand stores and the rest from multibrand sales.

Mr Marchetti expects 2013 to be a year of consolidation where perfecting its joint venture with PPR – which includes getting the estores of Bottega Veneta, Stella McCartney, Balenciaga, YSL, Sergio Rossi and Alexander McQueen online – is top of the list.

Once that is achieved, Mr Marchetti says Yoox “will have the ability to do other projects, whether for more groups or for single brands” as well as looking at new geographical markets.

And in what may turn out to be a whole new opportunity for the group, Mr Marchetti also does not rule out harnessing all that data at his fingertips. “Data are a potential source of wealth for us,” he says with a smile.

“This is typical of ecommerce, in my opinion, you have monstrous data capabilities but you are not yet sure how to use it. We are investing a lot in business intelligence.”

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