The new wave of online shoppers is led by millennials, who already buy much of their soft luxury, or fashion, online.

(Bloomberg) — Richemont’s decision to plow 2.7 billion ($3.3 billion) into e-commerce by buying out Yoox Net-a-Porter SpA is a wake-up call to skeptics who thought consumers would never buy $5,000 Cartier necklaces and $50,000 Vacheron Constantin watches online.

YNAP, which ranked No. 1 in Internet Retailer’s annual survey of the world’s leading retailers of luxury goods and No. 20 in the Internet Retailer 2017 Europe 500, had been targeted by short-sellers who thought Amazon.com Inc.’s appeal to buyers of books or appliances would be hard to replicate with high-end luxury. The Swiss company’s bid overwhelmed those bearish bets as the stock surged to a record.

“Digital is quickly becoming an important distribution channel for hard luxury,” wrote Michelle Wilson, an analyst at Berenberg, referring to watches and jewelry.

For more data and insights on where Yoox Net-A-Porter stacks up in the global luxury e-commerce market, click here (membership required).

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The new wave of online shoppers is led by millennials, who already buy much of their soft luxury, or fashion, online. Future generations of Patek Philippe owners may never set foot inside brick-and-mortar boutiques as consumers grow more comfortable waiting for delivery of higher-priced items, with the convenience of online shopping helping facilitate impulse shopping.

Luxury brands are shifting their strategies in response, with Dior Couture and Dom Perignon owner LVMH launching multibrand e-commerce ventures last year for both fashion and beverages, while brands including Kering-owned Gucci and Prada SpA rolled out their first online stores in mainland China.

Online Gains

Online luxury sales rose 24 percent last year, according to consultancy Bain & Co., even as traditional distributors of timepieces went out of business. Richemont’s acquisition follows Apax Partners’ takeover of rival Matchesfashion.com and JD.com Inc.’s purchase of a stake in Farfetch last year.

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Richemont is expanding a push into retail as it tries to sell more of its timepieces itself, rather than via outside retail partners. Gaining more contact with the customer helps the company gauge watch demand and avoid inventory gluts or shortages. While high-end fashion brands have long boosted margins and safeguarded their brand perception by limiting their exposure to wholesale, multibrand emporiums still account for a higher share of sales in watches and jewelry.

Last year Richemont built a 7.5 percent stake in Dufry AG, the world’s largest duty-free retailer, and passed on the opportunity to buy Breitling, the aviator watchmaker that CVC Capital Partners purchased. Chairman Johann Rupert has said he prefers building Richemont’s own brands rather than overpaying to acquire new ones.

YNAP’s shares surged as much as 26 percent Monday to 38 euros, touching the price that the Swiss luxury-goods maker bid for the Milan-based company, which sells $7,000 Chopard earrings and $700 Balenciaga trainers. Almost a third of YNAP’s freely available shares were shorted, according to Markit Securities — meaning investors had sold borrowed stock in the hope of profiting by buying it back later at a lower price.

“There is a possibility of a counterbid to Richemont’s offer,” wrote Sherri Malek, an analyst at RBC Europe Ltd., saying YNAP could be attractive to Amazon.com, or that YNAP could tie up with Asos Plc or Zalando SE.

2015 Merger

Richemont owns 25 percent of YNAP’s voting shares but has economic control over half of the company through non-voting stock. YNAP was created in 2015 from the merger of off-season luxury discounter Yoox with Richemont-backed Net-a-Porter, founded by the former fashion journalist Natalie Massenet. YNAP’s sales rose 17 percent organically and reached 2.1 billion euros in 2017, the company reported last week.

Goldman Sachs Group Inc. advised Richemont on financial matters and BonelliErede and Slaughter & May were legal advisers.

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