The owner of brands such as Gucci, Kering, is set to tighten its grip on e-commerce operations to control its image and client data, which focus on their branded sites in order to sell the luxury products or ventures.
Luxury fashion has moved into online shopping much later than its accessible fashion contemporaries. They are now investing heavily in e-commerce sales while working towards the retention of control in distribution and pricing – the two elements which maintain an air of exclusivity.
Wresting back control of its web operations for brands like Balenciaga and Alexander McQueen which Yoox Net-A-Porter, an online retailer owned by its rival ‘Richemont’ developed, has been a focus for Kering. The joint venture with YNAP will terminate in the second quarter of 2020 as explained by Gregory Boutte, the digital officer of Kering, on Friday.
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The aim of the move is to increase sales and margins and the company seeks to turn its collaborations with third parties into what is being termed as online concessions, where the product assortment and presentation and other minor details are controlled by them.
Boutte said that every time a move is made to move from wholesale to a concession, the top lone increases materially. He mentioned that Kering was not against wholesale and is not likely to end relationships with third parties.
The rivals of Kering who are also investing in e-commerce include Louis Vuitton owning company LVMH etc. have not disclosed the amount of spending on such functions. The digital team at the firm has increased from 4 persons in 2017 to 80, in 2019.
Boutte says that Kering may be open to joining a blockchain technology platform which is being constructed by LVMH to help track supply chains and authentication of products which often are replicated illegally.
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Total online sales of Kering including business through third-party platforms which have been calculated at retail prices have come to 9.4% of the entirety of the 2018 revenue, as on Friday.
Web sales through Kering brand websites and online concessions are responsible for 4.7% of the revenue. According to consultancy Bain, e-commerce accounts for only 10% of the total business as of now for luxury brands and should increase to 25% of the sales by 2025.
Web sales through its own brand websites and online concessions made up 4.7 percent of revenue, it added.
Across the luxury goods industry as a whole, e-commerce accounts for around 10 percent of business today and should reach 25 percent of sales by 2025, consultancy Bain estimates.