Is it difficult for luxury e-commerce platforms to escape defeat? Cartier's parent company is also unable to play, and its joint venture with Alibaba is rumored to be dissolved
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发表于 2024-6-16 20:13:41
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Another luxury e-commerce platform may lose out on the Chinese market.
According to a report by global fashion media WWD, insiders revealed that on June 13th, Wu Yating, CEO of Fengmao Trading (Shanghai) Co., Ltd. (hereinafter referred to as "Fengmao Trading"), announced to employees that the company was about to dissolve.
Fengmao Trading was jointly established by luxury jewelry brand Cartier's parent company, Lifeng Group, and Alibaba. It is an important entity for Lifeng Group's luxury e-commerce business YNAP to enter the Chinese market, and also the operator of the luxury e-commerce platform Net-A Porter in China.
According to Fashion Business News, multiple fashion brand owners have received news from Net-A Porter China that their Chinese business is expected to be liquidated, and they will no longer place orders with brands starting from the Spring/Summer 2025 series. Net-A Porter's online business in China will continue until March next year.
However, according to Time Finance, Net-A Porter's Chinese social media account continued to release content on June 13th as usual. On the morning of June 14th, Time Finance confirmed the above information with Net-A Porter China customer service as a consumer. Customer service responded that they have not received any relevant notifications yet, and all business processes, including shipping and after-sales, are operating normally.
On June 14th, Time Finance sent an email to Fengmao Trading to verify rumors of company dissolution and business planning, but as of the time of publication, no response has been received.
Tang Xiaotang, an independent analyst in the fashion industry at No Agency, told Time Finance that the rumor of the dissolution of Fengmao Trading may be related to the divestment and sale of luxury goods e-commerce business YNAP by Lifeng Group (which was formed by the merger of two major luxury goods e-commerce platforms, Net-A Porter and Yoox).
According to sources cited by the Financial Times, in April this year, Richemont Group appointed Goldman Sachs to sell its YNAP business.
Coincidentally, before Net-A Porter China was deeply embroiled in the dissolution controversy, the world's largest luxury goods e-commerce platform Farfetch sold at a low price to a Korean e-commerce giant due to financial issues; Another local luxury goods e-commerce platform in China, Siku, has also applied for bankruptcy and restructuring several times.
Why is the luxury e-commerce business, which was once sought after by many celebrity capital and also competed with Alibaba and JD.com to enter, now declining?
Once fragrant cakes, Alibaba, JD.com, and Tencent have all entered the market
The online business of luxury goods has always been a hot topic.
Net-A Porter was founded in 2000 and is the pioneer of luxury e-commerce platforms. After the great success of Net-A Porter, other platforms with similar positioning emerged one after another, sparking a wave of capital investment. In 2010, Net-A Porter was acquired by Lifeng Group; Another luxury e-commerce platform, Farfetch, has secured six rounds of financing within eight years, raising over $300 million.
In the global wave of luxury consumption, giants are eyeing the Chinese market one after another.
Since 2009, luxury brands such as Herm è s and LV have begun to expand significantly in China, and the cakes sold online for luxury goods have become increasingly attractive. Local luxury e-commerce platforms, such as Zouxiu.com and Siku, have been in high demand for a while. Foreign e-commerce platforms such as Net-A Porter and Farfetch also entered the Chinese market in 2013 and 2014.
In 2015, Lifeng Group merged Net-A Porter and Yoox, two luxury e-commerce platforms, into the YNAP business. After entering the Chinese market for three years, YNAP achieved sales of 1.87 billion euros in the 2016 fiscal year and set a goal of exceeding 4 billion euros in sales by 2020.
At this time, luxury e-commerce platforms in the Chinese market have also undergone a round of replacement, and local luxury brands such as Zouxiu have gradually faded out of people's sight due to issues such as counterfeit goods and services. Foreign platforms such as Net-A Porter and Farfetch have accelerated their expansion, and the latter has also successfully secured a $30 million investment from Seven Wolves.
In 2017, local luxury goods e-commerce platform Siku successfully went public on NASDAQ, and local e-commerce giants did not want to let go of this fat. In the same year, Alibaba launched Tmall luxury products, while JD.com was brewing a completely independent TOPLIFE operation from the main site.
After Alibaba and JD.com entered the market, the Chinese luxury e-commerce industry ushered in a new competitive landscape, and Net-A Porter and Farfetch began to reconsider their strategies in the Chinese market.
Holding onto the thighs of local capital giants may be a good choice.
In 2017, Farfetch's shareholder IDG Capital facilitated its acquisition of a $397 million investment from JD Group. In 2018, Lifeng Group completed the privatization acquisition of Net-A Porter's parent company YNAP and partnered with Alibaba to establish a joint venture in China, namely Fengmao Trading. In the same year, Siku received $175 million from consumer funds under JD.com and LVMH Group.
In China's luxury e-commerce industry, the competitive relationship between giants has lasted for many years.
In 2019, JD's TOPLIFE business was merged into Farfetch China. In 2020, Farfetch China raised another 250 million US dollars from Tencent. By the end of 2020, Farfetch had received an equal joint investment from Alibaba and Lifen Group, totaling $500 million. In addition, Alibaba and Lifeng Group have each purchased $300 million worth of private equity convertible bonds from Farfetch.
However, the luxury e-commerce market does not seem to have achieved the expected scale growth. In 2021, Farfetch closed its overseas flagship store on JD.com, and Temple Library, which had once become a benchmark for local luxury e-commerce capitalization, was delisted from NASDAQ, bringing an end to the competition among Chinese luxury e-commerce giants.
The foam burst and luxury e-commerce platforms began to sell
Even with the support of numerous celebrity capital and the strong Chinese consumer market, luxury e-commerce platforms represented by YNAP still cannot escape the fate of selling themselves.
Taking YNAP of Lifeng Group as an example. According to the financial report of Lifeng Group, from fiscal year 2020 to fiscal year 2022, YNAP's e-commerce department of Lifeng Group had revenue of 2.427 billion euros, 2.197 billion euros, and 2.788 billion euros, respectively, with operating losses of 241 million euros, 223 million euros, and 210 million euros, respectively.
This business not only failed to achieve its revenue target of 4 billion euros, but also became a drag on the performance of Lifen Group.
In 2022, Lifeng Group disclosed its plan to divest its YNAP luxury e-commerce business. 47.5% and 3.2% of YNAP's equity will be sold to Farfetch and the UAE investment fund Symphony Global by the end of 2023. The agreement also stipulates that Farfetch can increase its stake in YNAP by up to 100% through put and call options mechanisms.
Unexpectedly, YNAP's "White Knight" is also in trouble. In just one year, Farfetch was exposed to significant layoffs, making it difficult for him to survive. By the end of 2023, Farfetch will no longer be able to issue financial reports, according to J Michael Evans also resigned from the board of directors.
Under the predicament, Farfetch reluctantly embarked on the path of selling himself and was acquired by South Korean e-commerce giant Coupang for $500 million. Coupang's latest results released in May this year showed that the company was heavily affected by Farfetch's losses in the first quarter of 2024. According to the fashion media "Huali Zhi", Farfetch incurred a loss of at least $90 million during the reporting period.
Coincidentally, since 2022, Siku has applied for bankruptcy review multiple times, and news of inability to ship, cash flow disruptions, and significant layoffs has also been circulating.
In the eyes of industry insiders, the sunset of luxury e-commerce platforms such as YNAP, Farfetch, and Siku is not accidental, but is related to the business logic of the industry itself.
Tang Xiaotang bluntly stated to Time Finance, "Luxury e-commerce platforms, in principle, can make profits by reaching a certain scale, but the reality is that luxury brands such as LV and Herm è s are all DTC channels (directly facing consumers) and cannot cooperate with the platform.". If big brands are excluded, the luxury goods market size has significantly shrunk, and we still have to face many competitors, making the path of luxury goods e-commerce impossible
In addition, several industry insiders believe that the concept of multi brand luxury goods e-commerce platforms and the positioning of luxury goods themselves are contradictory. In the face of established rules in the luxury goods industry, luxury goods e-commerce is difficult to form core competitiveness in terms of service experience, product inventory, and audience operation.
The capital story of luxury e-commerce platforms is gradually shattered, and this "middleman" model seems to be difficult to gain market favor anymore. An important signal is that the direct cooperation between luxury goods groups and e-commerce platforms is becoming deeper. In late May this year, LVMH Group announced further deepening cooperation with Alibaba, extending the five-year partnership and optimizing the high-end retail experience through Alibaba Cloud and Tongyi models.
With multiple luxury e-commerce giants facing operational difficulties, the once highly sought after industry is no longer thriving, but the competition for the luxury goods market is far from over.
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声明:该文观点仅代表作者本人,本文不代表CandyLake.com立场,且不构成建议,请谨慎对待。
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