Two of the world’s best-known e-commerce sites for luxury clothing and accessories–London-based online fashion retailer Net-a-Porter and Italian e-commerce clothing company Yoox Group SpA–are merging to create a new monolithic e-retailer with an expected annual revenue of more than $1.4 billion.
The Yoox Group confirmed on Tuesday that it had agreed to merge with Net-a-Porter, The New York Times reports. Yoox had been in talks with Compagnie Financière Richemont, Net-a-Porter’s parent company, for 18 months. The new company will be called Yoox Net-a-Porter Group.
Net-a-Porter, launched in 2000 by Natalie Massenet, sells luxury clothing, jewelry, accessories, and other goods from top designers including Jimmy Choo, Alexander McQueen, Valentino, and Balenciaga. Its website design is modeled after that of Porter, the company’s magazine, which lets readers buy featured items. Yoox Group, also founded in 2000, by Federico Marchetti, sells off-season luxury goods from the likes of Dolce & Gabbana, Diesel, Gucci, Armani, and Roberto Cavalli.
The merger is designed to create scale in the face of growing competition in the e-retail sphere. Yoox Net-a-Porter will compete with fellow e-commerce giants like Amazon Inc., which is increasing its presence in the luxury goods market (and which was previously in talks to acquire Net-a-Porter itself). It will also compete with department stores and individual fashion brands that are upping their digital retail game. “Established business models are being increasingly disrupted by the technological giants,” Richemont Chairman Johann Rupert said in a statement. “It is with this in mind that we believe it is important to increase leadership and size to protect the uniqueness of the luxury industry.”
Yoox also hopes to benefit from Net-a-Porter’s editorial skills. “Editorial content has never been our strength or priority at Yoox,” Federico Marchetti, founder and chief executive of Yoox, told The New York Times.
“But it is very important for social media, which is driving millennial sales in the e-commerce space. Smartphones now make up 50 percent of the traffic on Yoox’s websites.” Marchetti is expected to become the combined companies’ CEO. Net-a-Porter founder Natalie Massenet is expected to be the executive chairman of what she called “the world’s biggest luxury fashion store.”