By KLagerfeld
Alumni
Modified Dec 9, 2015
Connecting fashion content to e-commerce, NET-A-PORTER introduced a new space of luxury fashion online.
Launched 15 years ago, NET-A-PORTER started out in a London flat with stock piled up in a bathtub. Today, the company is operating beyond what a traditional online luxury fashion retailer does, and generating operating profit of $82 million in 2015, up 43.4 percent over 2014. NET-A-PORTER has established itself as the world’s premier luxury fashion destination with unique business and operating models.
Business Model
A pioneer of innovation, NET-A-PORTER speaks to a monthly audience of over 6 million via a global multichannel ecosystem, including The EDIT digital magazine, PORTER magazine and net-a-porter.com, offering a seamless shopping experience across mobile, tablet and desktop.
Unparalleled Customer Service
Net-a-porter.com, the company’s e-commerce site, offers express worldwide shipping to more than 170 countries with the option of same-day delivery in New York City and London. Fashion merchandise typically arrives at the front door of a customer’s house with the signature black packaging – simple, chic and luxurious. From traditional luxury brands such as Gucci and Prada to contemporary designer brands such as 3.1 Phillip Lim and Proenza Schouler, NET-A-PORTER offers fashion merchandise from a wide selection of brands that meet the needs and tastes of a diverse group of customers. Net-a-porter.com adopts a hassle-free return policy with complimentary returns and exchanges. Customers from around the world are supported by a multilingual Customer Care team available 24/7. This customer centric approach addresses pain points of many luxury fashion customers, who are often hesitant to purchase designer shoes and dresses online with the fit and sizing concern.
Fashion Media & Multichannel Integration
NET-A-PORTER’s founder Natalie Massenet, a former fashion journalist, stressed content as much as commerce when she created the company. NET-A-PORTER takes pride in being an innovative media company as well as an online luxury retailer. Net-a-porter.com is operating in a magazine format for selling designer fashion. The EDIT digital magazine provides customers with the latest fashion trends and expert styling advice. Using the built-in “Shop the Magazine” function and with only one click, consumers receive immediate access to a wide range of fashion merchandise – fresh out of the runway. NET-A-PORTER also launched the new PORTER magazine in 2014 with glossy editorial content offered in both digital and print. Targeting tech-savvy luxury consumers with more sophisticated fashion needs, PORTER magazine operates across mobile, tablet and desktop.
Operating Model
Behind the virtual array of shiny products that populate websites, fashion e-commerce is an intensely physical business, depending on smooth back-end logistics as much as slick front-end customer experience. The competitive advantage of NET-A-PORTER’s business lies in its exceptional customer service and integration of multichannel experience. Operation excellence is being leveraged to support the unparalleled customer experience, which is critical to winning in the fragmented fashion e-commerce space.
For the most part, NET-A-PORTER operates a traditional wholesale model, buying and pushing out merchandise to customers. Since fashion retail is a highly seasonal business, retailers need to take on significant inventory risk and have high working capital requirements. However, it does offer NET-A-PORTER full control of stock and processes, which guarantees consistency in payment, packaging and delivery that platform websites could not provide.
Technology plays a critical role in daily operations. Inside the warehouses is a software-controlled ballet of man and machine. In giant buildings strategically placed near major fashion markets such as London and New York City, robots work alongside humans to pick, pack and ship products. Two giant flat screens track orders as they come in, a motivational tool that reminds everyone that this is all business. The top screen shows an image of the products and the price of each order as it is placed, along with a running tally of the day’s sales figures. The bottom one depicts a map of the world that rotates to show the origination point of the latest order. Air horns blast constantly to alert employees on ring-a-bell orders, which is a throwback to the days when the company was just a handful of people working out of a studio, and each sale merited a celebration.
Delivery is fulfilled by UPS for regular orders in the U.S. and DHL for the rest of the world, but rush orders in New York and London travel in black-and-white vans staffed by deliverymen who are allegedly hired for their looks and manners. In a company with no brick-and-mortar stores, the deliverymen are one of the few points of actual customer contact.
As a disruptor in the industry, NET-A-PORTER has innovation at its heart. However, as the business transitioned from an entrepreneurial startup to a sustainable growth company, employeecollaboration is key to long-term success. Ideas need to be shared so that employees and management get the best out of each other. Finding the balance between innovation and operational excellence, NET-A-PORTER focused on building systems that ensure both efficiency and flexibility. As a catalyst to this and to balance the disruptive nature of innovations, the company has implemented SCRUM and Lean processes to accelerate communication and decision-making.
Fashion Forward
Online luxury sales are projected to grow 20 to 25 percent over the next five years, compared to only 3 to 4 percent for the luxury industry as a whole, meaning a rising tide for all online fashion players. However, there will not be one winner-takes-all model for fashion. NET-A-PORTER would need to continue finding new strategic positions through expansion while refining its operational capabilities to sustain long-term growth.
Sources:
http://www.businessoffashion.com/articles/bof-500/online-sales-e-commerce-net-a-porter-yoox-farfetch
http://www.businessoffashion.com/articles/news-analysis/european-fashion-sense-dominates-online-too
https://channels.theinnovationenterprise.com/articles/59-strategy-in-fashion-at-net-a-porter
December 13, 2015AI says:
I wasn’t familiar with Net-A-Porter before, and this was a great read. I especially liked your discussion around how the company grew up from a start-up to a maturing model of “software-controlled ballet of man and machine.” Not all companies can make that transition efficiently.
December 13, 2015Marco Iansiti says:
Very cool post. The price points they work with on the ecommerce side are pretty amazing. It’s interesting how the operating model is aligned to support them. Seems like they are in a great position for growth.
December 14, 2015Garri Juanda says:
Awesome post! It is interesting to see how Net-a-Porter and Mr Porter have been the forefront of ‘high quality’ online shopping. What strike to me is despite of their online success, they are reaching out to the offline world more and more, for example by publishing Porter magazine and male-model-like rush order courier service. I understand that they do these to have more touch point with their users, but aren’t the lean operating model is the bread and butter of e-commerce? What is the true reason why they have to moves back from online only to include offline touch? Is online only model is not enough?
December 14, 2015Chipotle Lover says:
Very interesting! I did not realize that they were such an early played in the luxury e-commerce industry. I think their most interesting aspect is the fact that they have integrated a fashion magazine with purchasing. Usually people see things in a magazine and then it does not translate as often into sales because you do not know where to purchase it from and then its out of mind.
December 14, 2015Gabo says:
Thanks for sharing! I’m a big fan of Net-A-Porter and particularly Mr. Porter (I’m a frequent shopper there) and I can certainly attest to the efficiency of their operating model and have been a very satisfied customer with their service. The fashion world has been so behind in adopting technology as part of their distribution strategy, although it’s been with reason. When you look at luxury brands like Chanel, Hermes, Louis Vuitton, and the like, they want to remain as unubiquitous as possible since they’re all about exclusivity. By establishing a presence online that feeling of exclusivity goes away. However, Net-A-Porter has done a superb job at curating the assortment of its brands so that both the brands and the sophisticated luxury customer are satisfied with the presentation. With the growing traction of competition like Moda Operandi (which allows customers to preorder looks after the runway show) I wonder if Net-A-Porter would shift to or extend to that sort of model and what the implications would be for its existing structure.
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