From Compagnie Financiere Richemont's multibillion-dollar point of view, the purchase of the remaining 67 percent of the e-tailer it did not already own was a small deal, but it shows digital is important in the luxury world.
In 10 years, Net-a-porter has grown into a $182 million business with about 10 percent profit each year. That's in the general ballpark of other pure play apparel retailers such as Yoox, Shopbop, Bluefly and Gilt Groupe -- although, notably, Gilt is less than three years old. The $1 billion Zappos, meanwhile, an outlier so far, shows the potential for apparel retail online.
Net-a-porter is luxury all the way. Yes, it's true the company has a significant contemporary business and runs an outlet, but so do its luxury brethren such as Saks Fifth Avenue, Neiman Marcus and Barneys New York.
Like Barneys and Colette, Net-a-porter showcases the latest and greatest with a sharp editorial eye. Its more than 100 brands are a who's who of must-have labels such as Preen, Yves Saint Laurent, Liberty, Vanessa Bruno and, soon, J. Crew. It has innovated in numerous areas, including its magazinelike content, live online runway shows with immediate deliveries, unusual partnerships and exclusives, such as with Stella McCartney, and same-day delivery in London and New York.
The acquisition, which valued the company at $532 million, confirms the growing importance of the Internet as it increasingly connects all aspects of our lives.
When Richemont launched an online store for Cartier in America last month, its president and chief executive officer, Emmanuel Perrin, commented, "The Internet has been a medium taking an increasing part in our client's lifestyle and means of interaction."
At a time when brick-and-mortar retailers shrunk, Net-a-porter benefited from a global reach at all hours of the day and night. It built a strong brand and has given its designers an online presence.
E-commerce is expected to return to double-digit growth this year, particularly in apparel and luxury.
If there's one thing recent acquisitions and the shutdown of LVMH MoÃ«t Hennessy Louis Vuitton's eLuxury show, it's the value of acquiring a business native to the digital and fashion space.
As Net-a-porter prepares to open another distribution center in Asia, a logical avenue of growth for the company would be to provide logistics and fulfillment for Richemont's global online business. Richemont, in turn, could give Net-a-porter access to some of the richest customers in the world, if it doesn't already have them.