{"id":4696,"date":"2015-12-09T20:43:56","date_gmt":"2015-12-10T01:43:56","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/selling-luxury-online-ynap\/"},"modified":"2015-12-09T20:50:54","modified_gmt":"2015-12-10T01:50:54","slug":"selling-luxury-online-yoox-net-a-porter","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/selling-luxury-online-yoox-net-a-porter\/","title":{"rendered":"Selling Luxury Online \u2013 Yoox Net-A-Porter"},"content":{"rendered":"

Yoox Net-a-Porter<\/u><\/strong><\/p>\n

\"ynap3\"<\/a><\/p>\n

Yoox Net-A-Porter (\u201cYNAP<\/strong>\u201d or the \u201cCompany<\/strong>\u201d) is a leading online luxury fashion retailer. On March 31, 2015, Yoox (Italian public company) announced a merger with Net-A-Porter (\u201cNAP<\/strong>\u201d) (Richemont is majority owner).<\/p>\n

Business Model \/ Strategy<\/strong><\/p>\n

\"competition\"<\/p>\n

The business model is definitively aligned with the operating model (close relationships with suppliers, best-in-class logistics, geographic scale), creating high barriers to entry. The Company targets the luxury market \u2013 purchases with relatively high Average Order Value (\u201cAOV<\/strong>\u201d). YNAP aims to cover all major geographical luxury markets (incl. Europe, North America, Asia) and all luxury fashion customer segments (mono-brand, in-season, off-season).<\/p>\n

\"customer<\/p>\n

Mono-brand<\/u><\/p>\n

YNAP empowers brands with a turnkey solution to establish\u00a0their own online flagship store, assisted with the Company\u2019s e-tailing operations experience (customer care, shipping, invoicing, digital set-up, etc.). Post-merger, YNAP will benefit from approaching brands on NAP with their mono-brand platform.
\n<\/a><\/p>\n

Multi-brand (in-season, off-season)<\/u><\/p>\n

NAP offers content and higher-end full-price items. Yoox offers off-price items and an \u201cendless selection\u201d. The Company\u2019s goal is to be viewed as the premier online destination for all luxury shoppers, and maintaining a strong brand<\/em> presence will be important to achieve this objective.<\/p>\n

Operating Model<\/strong><\/p>\n

Relationships with Suppliers<\/u><\/p>\n

The luxury market has a relatively fixed number of items that are available for sale (which helps drive higher prices). As such, the access to this limited supply is a key competitive advantage for YNAP. This link to suppliers (geographically, # of touch points across business lines, etc.) is an integral aspect of YNAP\u2019s operating model. YNAP must retain its close relationships with luxury fashion brands\u00a0to retain access to products for its multi-brand selling platforms.<\/p>\n

Geographic Scale<\/u><\/p>\n

The Company continues to strengthen local capabilities allowing for 1) efficient management of local inventories and 2) close\u00a0proximity to \u00a0customers, thus improving overall shopping experience (same-day delivery, several customer care languages) which is key for the luxury segment. Yoox\u2019s aim is to move towards one virtual global inventory system.<\/p>\n

All local hubs are equipped with their own local sourcing, digital production, and distribution capabilities. This enables an optimized delivery cost structure, an efficient ability to handle returns, and a better quality of parcels upon delivery to final customers.<\/p>\n

Logistics<\/u><\/p>\n

YNAP has begun to automate its warehouses, segmenting inventory (folded garments vs. smaller items vs. hanging garments), and is aiming for a full deployment of RFid technology. The entire logistics process is outlined below. Although the Company has managed to reduce handling and warehouse costs, a particular focus has been having improvements also lead to improved customer service capabilities.<\/p>\n

\"process\"<\/p>\n

Are the Business Model and Operating Model Aligned?<\/strong><\/p>\n

As discussed above, the business model and operating model support each other (and are interlinked). Customer service and speed is even more essential in luxury as a differentiating factor. The relationships built with suppliers consistently increases the competitive advantage of the Company, because they are able to increase their multi-brand selection and partnerships (turnkey solution). The luxury market is supply-driven, and limited access to supply is a major barrier to entry, which benefits YNAP.<\/p>\n

\"inventory\"<\/a><\/p>\n

The increasing geographic reach enables global operations with market-specific customer service options. There are 11 languages offered, 10 currencies, dedicated couriers in selected markets, and local payment methods accepted. Notably, the Company offers an RFid authenticity seal in China, overcoming a significant problem for ecommerce in China.\u00a0The various YNAP online brands\u00a0also benefit\u00a0from enhanced\u00a0scale.<\/p>\n

\"Map\"<\/a><\/p>\n

Through leveraging an interlocked business model and operating strategy, YNAP has successfully defined the luxury ecommerce space\u00a0and is positioned as the clear\u00a0market leader in the industry.<\/p>\n

Sources<\/strong><\/span><\/p>\n

http:\/\/www.yooxgroup.com\/pages\/investor-relations\/results-centre\/<\/a><\/p>\n

http:\/\/cdn3.yoox.biz\/cloud\/yooxgroup\/uploads\/doc\/2015\/YOOXGroup_Roadshow_Presentation_September-2015_vPUBLISHED6.pdf<\/a><\/p>\n

http:\/\/www.cnbc.com\/2015\/10\/05\/yoox-net-a-porter-boss-merger-mobile-focus.html<\/a><\/p>\n

JPM Broker Report – A clicking match (2015-11-11)<\/p>\n

BAML Broker Report – The model wedding (2015-10-19)<\/p>\n

BAML Broker Report – Digital Luxury, supercharged (2015-07-28)<\/p>\n

Capital IQ<\/p>\n","protected":false},"excerpt":{"rendered":"

Through leveraging an interlocked business model and operating strategy, YNAP has successfully defined the luxury ecommerce space and is positioned as the clear market leader in the industry.<\/p>\n","protected":false},"author":466,"featured_media":6027,"comment_status":"open","ping_status":"closed","template":"","categories":[219,628,438,912,240,578],"class_list":["post-4696","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-ecommerce","category-europe","category-global-leader","category-luxury-retail","category-retailer","category-tom-winner"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"\nSelling Luxury Online \u2013 Yoox Net-A-Porter - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/selling-luxury-online-yoox-net-a-porter\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Selling Luxury Online \u2013 Yoox Net-A-Porter - 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