The merger between Yoox and Net-a-Porter will surprise few, but the deal has massive ramifications for the luxury market.

The merger between Yoox and Net-a-Porter is a move that will surprise few, but has massive ramifications for the luxury market. After all, both companies have similar experience in multi-brand ecommerce.

However, what is interesting is that Yoox’s business model is completely different from Net-a-Porter’s. The former sells old stock from previous seasons, where the latter competes with bricks-and-mortar stores, with current fashion lines.

By coming together, both companies will strengthen their overall offering and as a result bolster a total of 24 million unique users (15 million from Yoox and 9 million from Net-a-Porter respectively).

Net-a-Porter and Yoox have already identified around 2 million high-spending customers collectively; significantly higher than their competitors. With such a wealth of rich data to hand, they are at a significant advantage, armed with an array of customer shopping habits and behavioural insights for a lucrative customer base.

Looking past the obvious result of this merger (creating one of the largest ecommerce sites in the luxury sector), it has wider ramifications on the luxury market as a whole.

Luxury brands will no longer be able to retail items in China that cost 20% more than in Paris for example.

Centralising the pricing strategies will force luxury brands into a price harmonisation that some have already started, such as Chanel.

But these luxury brands are still shy and new to this price re-alignment, hence it is still common to see many native Chinese and Asian customers shopping outside the Asian market where prices are traditionally higher. Consequently, we will see more and more luxury brands offering limited editions and capsule collections.

We know experience is key in the luxury market. Many consumers will pay more for goods if they feel the experience they have had whilst purchasing the item is worth the additional cost.

And whilst Net-a-Porter and Yoox can give their customers all the fancy boxes and ribbons they want, they cannot offer champagne or a personalised cupcake or a nanny that looks after the kids when you shop.

These above-and-beyond retail experiences sit at the heart of the luxury sector and are the reasons customers will continue to pay more.

Although Net-a-Porter and Yoox have size on their side, they could easily face competition from brands who are able to deliver a more bespoke customer shopping experience.

Some of the big brands in this space such as Lane Crawford, MyTheresa and Neiman Marcus to name a few, have been excellent at delivering a multichannel experience to customers.

Ecommerce enables luxury to be more accessible, but it can also provide danger to a brand and the sector; after all luxury should epitomise exclusivity. Net-a-Porter and Yoox may hold a lot of customer data but they have not conquered the online luxury market just yet.

  • Sam Williams-Thomas, chief executive of OgilvyOne UK