image: Matches

image: Matches

Let the e-wars begin. Fashion is in the process of building the new-age conglomerate, ones that exist (or will exist) almost entirely online. Wal-Mart, for instance, has consistently made headlines over the past year or so for acquiring a handful of e-commerce sites, including (but not limited to) Bonobos for $310 million and for $3.3 billion, in a push to accelerate its efforts to more squarely face off against e-giant Amazon.

Earlier this week, French luxury department store Galeries Lafayette confirmed that it will take a majority stake in online retailer La Redoute, and on Friday, private equity firm Apax Partners announced that it is acquiring a majority stake in luxury fashion site Matchesfashion – following a bidding war amongst the likes of Bain Capital, KKR and Permira, over the past few weeks.

The Matchesfashion deal – in which Apex put down an undisclosed sum (widely estimated to be roughly £800 million) – is just the latest in a string of big-name e-commerce deals, a particularly buzzy space as of late, as consumers continue to move online for an increasingly large portion of their purchasing needs and as brands, such as Wal-Mart, continue to build budding e-conglomerates.

Tom and Ruth Chapman, the founders of 30-year old Matchesfashion, will retain minority stakes in the company, which currently employs more than 500 people, delivers to 176 countries and offers more than 450 established and emerging-stage designer labels.

The acquisition is expected to be completed over the next three months and serves to shed light on how important a growth engine the internet has become and how heavily big-brands (both brick-and-mortar-borne ones like Wal-Mart or online-only behemoths like Amazon) and traditional luxury conglomerates (a la LVMH), alike, are investing on a large scale.

Industry analysts – who expect online transactions to represent 20 percent of all luxury sales within the next decade, up from the current 7-8 percentage point – have, for some time now, labeled e-commerce (and m-commerce, the term for mobile-based purchases) the most important growth engine for consumers goods. But it is only within the past several years that many fashion and luxury brands have decided to go all the way or almost all the way in.

One of the most groundbreaking of an array of recent deals centering on the e-commerce space came by way of the 2016 merger between the Yoox and Net-a-porter groups. When the news broke in March 2016 that the respective fashion sites were to join, the press had an absolute field day.

Speaking of all of the buzz, Federico Marchetti, the founder of Yoox, and the chief executive officer of Yoox Net-a-porter Group (its post-merger name), told WWD: “Online luxury is one of the sectors showing the highest growth rate. It’s under the spotlight, and all brands are watching. Yoox and Net-a-porter were two leaders, two number-ones in their respective areas. When two leaders are joined, they draw more attention. Also, this was an innovative merger, the first in the luxury online arena. It may not be the last, but it’s the first.”

Since the two joined forces, the group has generated €515 million in net sales in the first quarter of 2017, with about 3 million active customers. In an interview with the Financial Times, Marchetti has since ruled out any further acquisitions, for the very near future, at least. “For now, we have enough. We are fully focused on the integration and the geographic expansion of the company into the Middle East [with investor Mohamed Alabbar], where we expect that growth will be more than our usual 17-20 per cent.”

Another noteworthy player in the war for digital domination: FarFetch. The London-based e-comm site, which was founded in 2007 by the Portuguese entrepreneur José Neves, has, over the past several years, inked a number of interesting deals. In May 2015, the company acquired Browns – a renowned fashion boutique based in London – in a move that the fashion media predicted would enable FarFetch “to gain a significant advantage over multichannel and pure-play rivals.”

As noted by Retail Week at the time, “Farfetch’s aspiration to change multichannel luxury has been evident for some time. It already brings the unique experience and product range of each of its boutique partners to an international, digital audience.”

This past June, FarFetch went on to scoop up Conde Nast’s failed venture, purchasing the domain name and intellectual property of, which launched in the U.K. as an e-commerce operation in September 2016, but failed to gain traction. At the time of the announcement, the Los Angeles Times reported, “Neves, whose title is chief executive officer, said Farfetch and Condé will be cooperating fully as part of a ‘long-term partnership’ on a new commerce and content proposition. Jonathan Newhouse, chairman and CEO of Condé Nast International, will join the Farfetch board.”

And later that same month, it was announced that had bought a stake in Farfetch for $397 million, the Chinese e-commerce company’s largest overseas investment. That deal came a year after Farfetch raised $110 million specifically for the purpose of supporting expansion in Asia. “China, where Farfetch first launched in 2014, had already become its second-largest market by the time that round of funding was announced in May 2016,” per TechCrunch.

Speaking of the deal this summer, Neves said: “We are deeply honored and excited to be announcing this partnership with Richard Liu and China is the world’s second-largest luxury market, and we are delighted to have such a respected partner, known for its strict protection of IP, with whom to address Chinese luxury consumers.”

Also demanding a place in the digital conglomerate-building revolution: Luxury goods group LVMH, which launched a new digital platform to host all of its brands and those of others, a sign that the French company is stepping up efforts to capitalize on the luxury and fashion sectors’ online sales boom, despite years of lagging in light of traditional push back by luxury brands fearing a loss of control/exclusivity and a rise in counterfeiting efforts.  

Named, the conglomerate’s new site, which launched in June, is operated in connection with its Paris-based department store, Le Bon Marche, and stands to boost the visibility – and revenues – of the various LVMH brands, including Louis Vuitton, Celine, Loewe, Marc Jacobs, Givenchy, and Pucci, among others. The Paris-based group’s online sales of 2 billion euros ($2.1 billion) last year equated to 5.3 percent of group revenue, with only select companies under its umbrella offering goods online. Paris-based Celine, for instance, had shunned e-commerce entirely. 

Even Hermès has announced this summer that it will launch a new website in the U.S. Set to go live in the second half of the year, the site will be “mobile first” and will combine its two existing sites into one. As such, even those brands most staunchly opposed-to-ditigal in the past, are taking to the web in force. 

The luxury industry is “in a very delicate moment,” Federica Levato, a Bain & Co. partner in Milan, said this spring. Luxury retailers “are struggling with what the customer is looking for. Millennials are exposed to so much information. They are also influencing other generations towards how they are approaching luxury.” 

This increasing level of sophistication amongst consumers (who have come to simply expect convenience in their purchasing activities) combined with the stellar results of Yoox Net-a-porter, for instance, and the ever-increasing amount of M&A activity within the e-commerce space,  suggests – or more accurately, clearly identifies(!) – digital as being the bright spot for luxury and the future of fashion. With that in mind, let the wars for e-commcerce dominance continue!