Who's Winning the Fashion E-Commerce Race?

Fashion e-commerce is heating up. In a race between luxury incumbents, ‘pure play’ e-tailers and a slew of upstarts with new business models, who will come out ahead?

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Yoox is buying Net-a-Porter from Richemont, forming the world’s largest fashion e-tailer, with combined annual sales of €1.3 billion.

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Fashion aggregator Lyst and mobile fashion app Spring have all raised new rounds of funding to fuel growth.

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For the most part, retailers like Yoox and Net-a-Porter operate a traditional wholesale model, buying and pushing out merchandise to customers. These businesses take on significant inventory risk and have high working capital requirements. Companies like Lyst, on the other hand, are taking a new approach, providing technology platforms that allow certain users (brands and retailers) to display items for other users (shoppers) to consume, without buying and holding inventory. “We build a web platform on top of their inventory,”  

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But synchronising inventory with retailers in real-time is not without challenges. “Things go in stock, out of stock, things are returned, things go on sale. It really becomes incredibly complex. 

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Lyst is set to hit a gross merchandise volume of $150 million in 2015, up from $77 million last year. (The company takes a “low double-digit” commission on sales, implying actual revenues of much less than that.)

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According to the Boston Consulting Group, online luxury sales are projected to grow 20 to 25 percent over the next five years.

Only about 6 percent of sales are online at the moment.

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“In fashion, you’ve got huge multi-million dollar brands, but you also have thousands of smaller independent designers.

http://www.businessoffashion.com/articles/bof-500/online-sales-e-commerce-net-a-porter-yoox-farfetch