Kering sheds Yoox Net-a-Porter, but is it ready to take on ecommerce solo?

What happened

  • Kering, the global luxury conglomerate, ended its six-year partnership with Yoox Net-a-Porter, which launched in 2012 to manage the holding company’s ecommerce business, aside from Gucci, its star brand. Though ecommerce is the fastest-growing channel for Kering’s portfolio, it only comprised 6% of H1 2018 revenue, and 10% of revenue in 2017—something Kering must work to improve as it brings the channel fully in house (a process that likely won’t be completed until 2020).
  • Kering is not alone—luxury brands and holding companies have largely floundered in the shift online. At LVMH, for instance, ecommerce revenue rose 30% in 2017, but accounted for only 5% of sales—the conglomerate effectively acknowledged the challenge when it launched La Maison des Startups, its luxury startup accelerator, in 2018. The accelerator arguably benefits the holding company more than it does the brand partners, which are helping to infuse greater digital knowhow into LVMH—a similar reason behind Kering’s outsourcing of ecommerce operations to Yoox in 2012.

Why it matters

  • However, after the Kering-Yoox joint venture launched, Yoox merged with the luxury ecommerce retailer Net-A-Porter—then, Yoox Net-a-Porter was acquired by Richemont, a Kering competitor, in 2018. This complicated Yoox’s partnership with Kering, though the end of the partnership might be a blessing in disguise, Kering was already handling ecommerce for Gucci and the brand was excelling. While legacy brands and luxury conglomerates are keen to outsource major aspects of their businesses—Rimowa, for instance, launched a new site created by R/GA, as well as collabs—looking to external actors to rejuvenate a company can only last for so long until the vision becomes scattered and the company can no longer wield control over its own evolution. But Kering is poised to roll out its ecommerce platform and operations to the entire holding company, owning the channel in the future instead of relying on third parties.
  • According to Bain, ecommerce will account for 25% of luxury sales by 2025, pushing companies like Kering to improve its performance in the channel—ecommerce is also a way for these companies to reduce dependence on their wholesale footprints, which come with lower margins. In Kering’s decision to ditch Yoox, the conglomerate risks losing online revenue in the short term, but will be in a better position in the long run, once it gains its ecomm sea legs. Kering’s new partnership with Apple is a solid start—together, they will develop apps to support Kering’s sales staff across all brands, embracing digital tools to uncover a more sustainable path forward.