As well as via their own websites, many luxury brands sell their products on online third-party marketplaces. Some of these marketplaces are pure online play like Amazon and Farfetch while others are the online shops of older retailers like Harrods, Breuninger and Saks Fifth Avenue.
Luxury brands in the past and still carefully consider which retailers they select as authorised stockists. Increasing availability makes commercial sense as luxury brands must be both physically and mentally “available”.
Mental availability refers to the likelihood of your brand or product appearing in a prospective customer’s mind when they’re thinking about making a purchase. Physical availability describes how hard it is for them to make a purchase. By having regional stockists, brands increase physical availability and therefore revenues. With many luxury online sales now being made online, does it make sense for brands to achieve greater physical availability by partnering up with online marketplaces and retailers?
In this article, we cover:
- The major online marketplaces in North America, Europe and Asia
- Selling direct versus selling via third-party online marketplaces
For the purposes of this article, this article does not cover peer-to-peer sites like eBay or sites like Vestiaire Collective and The RealReal, which we covered in our recent piece on the luxury resale market.
Online marketplaces internationally
First, let’s look at the major online marketplaces around the world where consumers can buy luxury goods as well as examining the potential relationships brands have with each of these marketplaces.
The major players in North America
The main online marketplaces in USA and North America are:
- Amazon Luxury Stores is an invite-only platform offering high-end consumers a curated selection of luxury fashion and beauty items. The platform’s relationship with luxury brands is evolving with some brands seeing potential while others still seem slightly wary of a danger of potential brand dilution.
- Farfetch is a global marketplace that connects consumers with over 1,400 luxury sellers encompassing 3,400 brands. It offers a wide range of luxury items from various brands. Farfetch enjoys genuinely strong partnerships with luxury brands and seem to onboard new sellers and brands on an ongoing basis. They have more than four times the number of brands of the next on our list, Net-a-Porter.
- YOOX Net-a-Porter is an online-only retailer that specialises in designer clothing, accessories and beauty products and is majority-owned by Swiss luxury goods holding company Richemont. It offers same-day delivery in certain cities and luxury brands appear positive towards the platform thanks to Richmont’s ownership and high-quality customer service.
- Moda Operandi is unique for its offering of trunk shows during and following which consumers can order direct from designers. The platform has a mix of current-season and pre-order items. In a recent article on Fashion United, the company described its relationship within the fashion industry as “deep”. It has recently launched a beauty category on its site.
- Shopbop, a subsidiary of Amazon, focuses on modern style and fast fashion which includes some high-end brands like Ulla Johnson, Anine Bing, Vince, Ganni and Zimmermann. There are some luxury brands on the site but most actually seem to be premium brands. The brands on the site consider Shopbop as a gateway to reach younger, trend-focused consumers.
- Neiman Marcus Online is the online service offered by this traditional luxury department store chain and it offers consumers a wide range of high-end brands and products. Reportedly, luxury brands seem to feel confident working with Neiman Marcus Online because of its long-established reputation for high-end, personalised shopping experiences.
- Saksfifthavenue.com is the digital version of the iconic department store and offers an extensive range of luxury goods. The platform therefore also has strong, historic relationships with luxury brands.
- Nordstrom.com offers a mix of both affordable and luxury brands, just like its real-world department store equivalents. Luxury brands work with Nordstrom.com primarily for its reputation and because it provides a level of customer service commensurate with luxury brands.
The major players in the UK & Europe
Farfetch and Net-a-Porter also operate in Europe where the other major players are:
- Matchesfashion.com is based here in Britain but trades around the world. It offers curated selections from both established and emerging designers. Brand relationships with the retailer are strong and they have featured items from luxury houses like Prada, Gucci, Saint Laurent, Valentino and Alexander McQueen as well as premium brands like Ganni and Reformation.
- LuisaViaRoma: Established in 1999, based in Italy and known for its curated selection of luxury items, the company sells brands like Balenciaga, Burberry, and Gucci. As one of the early pioneers of online luxury sales, they have built up very strong relationships with many brands.
- MyTheresa: German-based and focusing on women’s luxury fashion, MyTherea hosts over 200 brands including heavyweights like Alexander McQueen and Dior. They have a particularly strong relationship with luxury houses, signified by an agreement it has with them to hold inventory from them for quick dispatch without purchasing them in the first place.
- 24S.com: Owned by LVMH and offering a range of luxury items from established and emerging designers, 24S.com retails for many brands including Celine and Maison Margiela. Its ownership and its listing of all LVMH brands makes them an attractive destination for other luxury houses.
- Breuninger.com: This is the online site for a well-established German department store known for customer service and over 1,000 luxury brands including Acne Studios and Kenzo. They still operate in the bricks-and-mortar space, having recently opened a 12,500m2 flagship store in Munich featuring brand concessions.
- Harrods.com: The iconic London store offers a wide range of luxury goods on its website and it maintains strong relationships with heritage brands like Armani and Cartier as well as a large number of aspirational brands.
- Flannels.com: This UK-based retailer with 50 stores and a growing online presence offers a mix of contemporary and traditional luxury brands including Balmain and Off-White. The company also remains focused on growing its retail estate.
- Browns Fashion: London-based fashion boutique, established over 50 years and now owned by Farfetch, Browns copies much of the model of its parent company by maintaining strong relationships with luxury brands and features brands like Amina Muaddi and Ganni.
- Stylebop: This was Germany’s first big online retailer offering a wide range of luxury fashion but it went into receivership before being bought out by Fashion ID in 2019. It features brands like Alberta Ferretti and Jil Sander with its target suppliers being luxury designers to international premium brands.
- Selfridges: The online arm of the British department store features brands like Alexander Wang and Chanel and benefits from strong relationships with luxury houses because of its heritage and history within the UK.
The major players in Asia
Asia is even larger and more populous than North America and Europe. There are hundreds of online marketplaces in Asia selling luxury goods, some of the most famous of which are:
- JD.com: As the largest online retailer in China, JD.com offers ‘stores’ dedicated to luxury brands partnering with houses like Saint Laurent, Rimowa, and La Mer. The platform also launched Toplife, a space for high-end brands, before selling it off in 2019 to Farfetch China.
- Secoo: A leading online luxury retailer in China, Secoo offers a wide variety of luxury apparel, handbags, and watches from brands such as Tod’s and Hugo Boss. The platform is known for its authentication services and exclusive deals, primarily targeting wealthy Chinese consumers. There was a slight brand risk with Secoo as it hit the buffers in 2018 but, the year after, it established relationships with Luisa Via Roma and Prada before receiving substantial investment from a rival in 2020.
- Lane Crawford: This 170-year-old iconic high-end department store in Hong Kong has broadened its reach with a very well-executed ecommerce site. It offers a wide variety of luxury goods, including apparel, accessories and home goods, and operates regional e-commerce sites.
- Bluebell Group: This distributor and retailer offers a range of luxury, premium and lifestyle brands across Asia. Its extensive market experience makes it an important partner for many luxury brands aiming to expand in the region.
- DFS Group: DFS allows shoppers to buy the same luxury brands they carry in their duty-free stores which they can ship to over 100 countries around the world. The site features dedicated boutiques for brands like Gucci and Rimowa, offering products across categories like leather goods, watches, and beauty. LVMH now majority own the company.
- SKP-S: This is the online platform is associated with high-end SKP malls in mainland China which focuses exclusively on luxury brands like Gucci and Valentino.
- Shilla Duty Free: The platform’s online store at en.shilladfs.com focuses on Korean beauty and fashion products. It offers brands like Sulwhasoo in skincare and PLAYNOMORE in fashion. For luxury brands like Cartier and Dior, in-store pickup is available at their Korea locations and shipping is limited to selected countries.
Selling direct versus selling via third party online marketplaces
Luxury brands were initially reluctant to sell their products online. The hesitation was understandable with real concerns about brand dilution and a lack of control over customer experience. Like the internet itself, online marketing, sales and customer service has greatly improved through experience and technology meaning that, in recent years, luxury brands have invested significantly in their online presences.
Some have been faster in doing this than others. Those that were slower off the mark will not have failed to notice the rise of online luxury sales as a phenomenon that cannot be ignored, especially given its accelerated growth in all regions of the world.
While North America leads with the highest online percentage of sales (14% in 2016 expected to reach 33% in 2020), Asia is catching up fast (7% in 2016, 14% in 2020), fuelled by rapid digital adoption. Europe, although a major player in the luxury market, has been slower in embracing online sales (8% in 2016, 23% expected in 2023). Figures sourced from Statista.
The issue of control
In much the same way as luxury houses tightly control who can join their retail network, those brands that want to sell online but not exclusively from their own site have faced similar issues of quality vetting. Deciding which companies should be brand partners is more complicated, expect perhaps in cases like Saks Fifth Avenue and Neiman Marcus who have history in the luxury space.
Restricting sales to single-brand-only websites (so-called monobrand websites) comes at a cost. Figures are hard to come by but most recent reports in the luxury press suggest that monobrand sites account for only 40% of online luxury sales. Each site requires a significant upfront investment in its creation and ongoing costs in its promotions. On the flip side, third-party online marketplaces account for approximately 60% of online sales. Marketplaces like Farfetch and Net-A-Porter have established themselves as strategic avenues for luxury brands to approach omnichannel retail.
Each approach comes with its own set of advantages and challenges. Selling directly allows brands to have complete control over customer experience, product selection and brand presentation. However, the reach might be dwarfed in comparison to the vast audiences that third-party marketplaces can offer. These platforms curated selections from various luxury brands, providing exposure and potentially attracting a new customer base but, on the downside, brands have less control over customer experience and risk the image dilution they may have feared in the Internet’s infancy.
Reading the runes
Looking ahead, the online share of the luxury market is expected to grow across all regions. North America’s online penetration is forecasted to reach 35% by 2023, Europe’s is expected to hit 16%, and Asia’s could climb to 27%. Figures sourced from Statista.
As younger generations become the dominant luxury consumers, and as digital platforms become more sophisticated, the interplay between direct sales and third-party marketplaces will continue to evolve.
Luxury brands are therefore at a crossroads. The dynamic between brand-owned online stores and third-party online marketplaces is in a state of flux, influenced by technological advancements, consumer behaviour, and regional trends. When creating future revenue generation strategies, a decision not to appear on third-party platforms as well as their own could be one of the most important decisions a brand takes.
Getting traffic to your site
Rightly, it’s inconceivable that a brand would choose not to have its own online presence, instead subcontracting its online promotion and distribution to third parties. As mentioned earlier, investing in your own site comes at considerable immediate and long-term expense but this is something that, as a brand, you can control. Croud Luxe have worked with leading UK and international brands for over 10 years, driving organic and paid traffic from search results and social media platforms. To discuss the next stage in developing and marketing your own brand and digital channels, please get in touch with us. We’d love to hear from you.
