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Yoox Net-a-Porter Says Private Label Launch Will Help Drive Sales Growth

Yoox Net-a-Porter Group (YNAP) said its sales are set to grow as much as 20 percent each year through 2020.

The luxury company on Wednesday unveiled a bold business plan to grow market share globally by focusing on three key areas: mobile; introducing fine jewelry, watches and more private labels to its offering; and honing in on the U.S., the Middle East and China.

As such it expects operating profit margin will increase by 11 to 13 percent by 2020, up from 8 percent in 2015.

“We have ambitious plans to grow faster than the online luxury market by leading through mobile. I am confident that by 2020 we will not only reflect on five years of strong growth in revenues and profitability but we will also have positioned YNAP technologically at the forefront of innovation for the following decade,” Federico Marchetti, chief executive officer, said.

According to Bain & Company research, the online personal luxury goods market is projected to grow at an annual rate of 15 percent over the next five years. YNAP, with an estimated 2.5 million “high-value” customers spending more than $10,000 each a year, is intent on outpacing that. Here’s how.

Consumer-centric approach, focused on mobile

About three-quarters of YNAP orders are currently made on mobile devices. The company said it sees strong growth potential in offering enriched personalized service on mobile and intends to use smart data to deliver style advice, one-to-one geo-localized editorial content and product recommendations. Dedicated personal shoppers will also be offered to high net worth customers of Net-a-Porter and Mr Porter.

International expansion

YNAP plans to accelerate growth in the Middle East, strengthen its position in the U.S. and Europe, and use its “localization expertise” to capture market potential in the Asia Pacific region.

Enriched product offering

YNAP will start selling fine jewelry and watches on Net-a-Porter and Mr Porter. The move is expected to add about 100 million euros ($110.6 million) in sales to its business within four years. In addition, the introduction of private labels on Yoox and a strengthened offering of Iris & Ink on The Outnet are projected to make up about 10 percent of those sites’ net revenue by 2020.

Shared global scalable platform

YNAP is working on a shared global scalable platform to power its ambitions. A “tightly planned rollout” starts in the fourth quarter of the current fiscal with a new order management system on Yoox e-stores. But the first online flagship store to launch on the company’s new core e-commerce platform won’t take place until Q3 2017. Eventually YNAP wants to set up a fully interconnected global logistics network built around its central hubs and regional distribution centers. The company called the platform “the best tool to maximize the return of inventory by exposing the global stock held to the widest possible audience, thus maximizing retail margins and sell through.”

Brexit

Despite Britain’s decision to leave the European Union, YNAP said it plans to expand its London headquarters and hire new staff. The company noted that any potential depreciation of the British pound against the euro is expected to be neutral in 2016 and onwards.

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