When Deborah Nicodemus took over as CEO of online luxury retailer Moda Operandi, she quickly realized that she would need to rebuild the company’s technology from the ground up. “Our mission is to elevate online shopping so that it’s a luxury experience,” she says, “but there were a lot of frailties within the site.”
Moda’s photography was top notch, but basic e-commerce features were notably absent–there wasn’t even a search bar, not to mention the back-end customer management systems that have become de rigueur. Nicodemus set out to redesign the experience and introduce better internal tools, without sacrificing the editorial flair that had set Moda apart.
“We want to share stories,” she says, but with intelligent merchandising behind them.
Now, thanks to a major redesign that launched in April, her team can do just that. Click through to a “story” from Moda’s home page–Fringe & Feathers, or Cocktail Hour perhaps–and everything is shop-able, the content and commerce one and the same.
“Good e-commerce design, particularly in the luxury space, is much more experiential,” says Keiron McCammon, chief technology officer, as he scrolls through the new pages, the blush pink on the site header matching the blush-pink hue on the walls of Moda’s headquarters. “You’ve got to romance the product.”
Moda’s revamp arrives as luxury e-commerce kicks into high gear. Worldwide, the number of individuals worth more than $50 million has more than tripled since 2000, according to a new Credit Suisse report. And those ultra-rich households, and their regular-rich friends, are increasingly shopping online: Last year, online sales represented 6% of the luxury market; by 2019, research firm Euromonitor International expects that percentage to have grown to 40%.
“Bricks and mortar is still the preferred channel for today’s luxury consumer, with just under 94% of all global luxury sales still taking place in-store,” says Fflur Roberts, head of luxury goods for Euromonitor. “That said, the Internet has been transformative not only in the way luxury consumers interact, but also in the way the industry operates. This growth will open up huge opportunities.”
The race is on to capture that shift in value. Moda raised a $60 million Series E in February, bringing its total funds raised to $138.4 million. The very next month, Farfetch raised an $86 million Series E, bringing its total funds raised to $194.5 million, and Yoox acquired Net-a-Porter for $775 million.
You can buy that must-have Prada backpack on all three sites, but behind the scenes the companies look vastly different. Farfetch’s offerings are structured around its relationships with local boutiques; the company relies on boutique owners in cities around the world to curate product and manage inventory.
“Our customers are searching for newness, for uniqueness,” says Farfetch founder and CEO José Neves. “That’s really what differentiates us. It’s more about the style and the products than the label and the brand.” He was calling from the street outside Browns, the iconic London boutique he had recently purchased with the intention of transforming it into an offline laboratory.
“It’s a great marriage,” he says, arguing that physical stores will remain a critical component of the luxury market. Online, he’s seeing customers gradually warm to the Farfetch idea of browsing by boutique. “In the first couple of visits, [visitors] tend to go by product category or brand,” he says. “And then, they discover the boutiques after they buy the first time. They tend to get much more loyal to the boutique, and searching that way.”
Moda, by contrast, is all about brand-first retail. Back in 2010, when skeptics were still questioning whether online luxury sales would ever take off, the company burst onto the scene with an innovative model that allowed shoppers to pre-order items from fashion’s top runway shows. Through editorial partnerships with publishers like Condé Nast–cofounder Lauren Santo Domingo is a Vogue contributing editor–Moda growth-hacked its way to a loyal customer base of die-hard fashion fans, eager to claim the latest Dolce & Gabbana dress in their size. No flash sales, no discounts.
“We’re not interested in the mid-market,” Nicodemus says. “We just had a client buy a $50,000 fur on our app.” While Net-a-Porter has opened the door to more accessible brands like J.Crew, Moda has been adding jewelry, fine art, and commissioned pieces, and lavishing attention on the luxury labels.
That strategy has produced stratospheric average order values. “The first year, she spends $2,300. The next year, it’s $5,000. The year after that, it’s $8,000,” Nicodemus says of her typical customer. The runway-based side of the business, which Moda calls “trunk show,” represents 60% of the company’s total volume. In that model, customers create wish lists on the company’s mobile app, as designers release new collections, and then work with stylists to pre-order their favorite items, paying half the price upfront and the remainder when the items ship.
Moda also sells women’s apparel and accessories via a more traditional retail model, in which it holds the inventory. That side of the business benefits from the pre-order data collected through trunk show, Nicodemus says.
Like Farfetch, Moda has observed that customers are interested in seeking out offline experiences. The company started renting out hotel suites in Paris during fashion week, and soon after decided to open a permanent London location. “Our plan was to do $350,000 in a three-month period, and we did $472,000 in a week,” Nicodemus says of the London showroom. Additional locations are slated for Miami, Asia, and the Middle East.
Those moves bring Moda more directly into competition with traditional department stores, who in parallel have been playing digital catch-up. As Barneys, Nieman, and Saks improve, why should a customer choose Moda?
“We give them access to something they do not have, in the form of the trunk shows,” Nicodemus says. Moda has no intermediary buyer filtering the most commercial pieces in a designer’s collection: “We empower clients to make their own decisions.”
Amid the excitement over high-end e-commerce, Sucharita Mulpuru-Kodali, a luxury expert at Forrester Research, sounds a note of caution. “These businesses are absolutely profitable,” she says of the established players. “The question is how big you want to be.”
Moda, after a slow but steady start, seems to have grown in its aspirations. Commissioning, menswear–Nicodemus, two years into her tenure, is already eyeing new growth opportunities. And on all fronts, she says, “We’re going to continue to invest in technology. It’s the lifeline to our client.” Fashion may be increasingly global, but its most valuable shoppers are just one click away.