A cashmere click fight could heat up as LVMH pushes into e-commerce, where Yoox and Farfetch have more experience.

(Bloomberg Gadfly)—It’s digital handbags at dawn.

LVMH is working on an e-commerce site that would bring together all of its brands—and those of competitors—according to the Financial Times.

The French giant’s assault is a fresh worry for Yoox Net-a-Porter Group SpA,  whose upmarket online boutique, Net-a-Porter, led the way in persuading shoppers to spend thousands of pounds with the click of a mouse or touch of a smartphone. Founded in 2000, it remains the industry pioneer, and has plenty of experience that won’t be easy to replicate. It will also take LVMH, No. 46 in the Internet Retailer 2016 Europe 500, some time to get its site up and running. But even with this breathing space, the competitive landscape is heating up.

Farfetch, a rival online luxury service, is making inroads. Unlike Net-A-Porter, which holds stock itself, Farfetch is a conduit for independent, high-end, fashion boutiques. While this can make super-fast delivery more challenging, it can make it easier to offer a broader range of products, a plus for luxury shoppers, and without as much capital outlay.  The company recently appointed Natalie Massenet, the founder of Net-A-Porter, as co-chairman, indicating that it means business.

Meanwhile, digital investment is a must for all of the big brands. Just this week, Hugo Boss AG, which is in the midst of a drive to return to profit, said improving its online business was its “highest priority.” Hugo Boss is No. 308 in the Internet Retailer 2016 Top 1000.


For the luxury industry, sales made via the internet are a big deal. Online has risen nearly 20-fold since 2003, and accounted for almost 8 percent of the market in 2016, according to Bain & Co.

But LVMH’s initiative underlines a broader trend that could become a creeping threat to Yoox (No. 27 in the Europe 500), as well as eventually Farfetch. It’s got momentum at the moment, but longer term, it won’t be immune from brands taking more control over the sale of their products online.

Brands want influence over every part of their offering, from sunglasses to shops. They have already sought to control more of their physical distribution, including by limiting supply to some department stores. It’s not just so that they dictate the look and feel of their selling environments.

At a time when discounting, particularly in U.S. department stores, has become rife, it’s more crucial than ever that brands can set prices themselves.

Last year Yoox set out aggressive sales and profit targets. It is aiming for average annual net revenue growth of 17-20% over the next four years, as well as lifting the adjusted Ebitda margin from 8% to 11-13%.


While its performance last year was in line with its ambitions—sales rose 17.7% and the Ebitda margin reached 8.3%—its shares have fallen 20% since mid-January, not helped by a downgrade by analysts at Exane BNP Paribas.

To keep its first-mover advantage, Yoox needs to continue to deliver a superior online environment and top-notch delivery. It also needs to stay on top of social media trends, which are shifting rapidly. It has already introduced its own social network, the Net Set. Selling via WhatsApp, which it is exploring, would be another smart move. But it will need to use all of its fashion flair to out-style the mounting competition.

Gadfly has already argued that meeting Yoox’s targets looked as tricky as walking in ultrahigh stiletto heels. With LVMH muscling in, keeping upright just got even harder.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.