Would you buy a $5,000 gown with a tap on your iPhone? How one fashionable entrepreneur created the world's leading luxury online retailer, which may soon prove to be too large for only the internet.
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Mon, Nov 05 2012 20:47:52
"Once upon a Net-a-Porter"
As it seems is the case with so many other successful companies, Net-a-Porter climbed its way to the top despite numerous factors that made failure seem inevitable. The company’s founder, Natalie Massenet, launched Net-a-Porter.com in the year 2000, shortly after the dotcom bubble burst and the future of e-commerce was unclear. However, Massenet saw a gap in the market for buying high-end clothing online and that is where the idea for Net-a-Porter was born. With initial investments from friends including Jimmy Choo founder Tamara Mellon and handbag designer Anya Hindmarch, the
site went live.
Massenet and her team worked out of a small flat in Chelsea that was stacked high with inventory. Not only was it a challenge to convince consumers (who at the time had never looked to the internet for retail purchases) to buy designer clothing online, but it was also difficult to convince designers to use the internet as a channel of distribution. Massenet describes that the early years consisted of a great deal of tears and pleading with designers. She would show them all of the site’s wonderful features and they would respond saying, “Just tell me one more thing: where is your store?” Despite all of the threats, Net-a-Porter continued to grow and the company became profitable in the fourth year of operation. Massenet was not only good at predicting fashion trends, but apparently consumer behavior trends as well. According to Passport GMID, the internet retailing industry grew from $21,340 million in the year 2000, to $129,686 in the year 2011 in the United States alone. Natalie was able to see a consumer unmet need of online shopping before consumers were even aware it was something they wanted. In 2010, Massenet sold Net-a-Porter for an estimated $533 million to the luxury conglomerate Richemont. However, the site will not be lacking any of Massenet's refined style as she stayed on to act as the company's executive chairman.
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Net-a-Porter’s core competencies consist of its large variety and assortment of the latest runway designs and labels, ease of use, superior customer service, customer loyalty, and strong brand equity with both consumers and designers. The site's most unique competitive advantage is that it is both an online fashion magazine and luxury boutique. Women can browse through the shiny images to see the latest trends and buy them in the same place. Long gone are the days of looking at a dress in Vogue and desperately searching for it down Fifth Avenue. Net-a-Porter shoppers can simply click on the item the model is wearing and purchase it on the site. Fashion obsessed women across the globe share the excitement they experience when the sturdy black Net-a-Porter box wrapped in a grosgrain ribbon arrives at their door. Harper's Bazaar UK described it best as, "packaging so beautiful, it will make you want to weep."
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The Net-a-Porter Group now consists of three websites: Net-a-Porter, The Outnet, and Mr. Porter. All three websites share the common mission to deliver the best brands and fashion with extreme ease. However, each website is targeted to a different market. Net-a-Porter targets fashionable high net worth women with not enough time or patience to shop in stores. The Outnet sells items from previous collections at a discount and targets the fashion obsessed women under 30 that do not have a large enough disposable income to shop full price high-end brands. It is the perfect place for the 20 something year old to snag a pair of marked down Christian Louboutin pumps they would have otherwise never been able to afford. The company's fashion forward brother, Mr. Porter, was launched in 2011 and sells the latest men's fashions to high net worth males across the globe. In creating three different brands within the Net-a-Porter group, the company was able to reach more costumer segments without over-saturating Net-a-Porter's product assortment.
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While Net-a-Porter’s main channel of distribution is through its E-commerce website, it has evolved into much more than just an internet retailer. The Net-a-Porter brand image has expanded to the online magazine, designer and celebrity collaborations, and even a Net-a-Porter TV on Google television! The future looks bright for Net-a-Porter and we can only imagine what they will come up with next.
The Net-a-Porter Shopper
The only thing that may be more glamorous than Net-a-Porter itself, are its customers. Massenet cleverly describes Net-a-Porter shoppers as women who are, “cash rich and time poor.” They are high net worth individuals (HWNIs), ages 34-54, who live in countries all around the world. HWNIs are defined as those who possess at least US $1 million in financial assets. The age range includes those who are at a place in their life where they are making the most money while still being internet and tech savvy. In a 2012 Mintel Report on Online and Mobile Shopping, it was not surprising to see that women with higher household incomes were more likely to shop online than men and those with lower household incomes. In the US, 77% of those making $150K+ shopped online in 2011. Seeing as Net-a-Porter customers make well over $150K, they have an even higher likelihood to shop online. Net-a-Porter has targeted a very strong niche market.
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Like Massenet, 19% of Net-a-Porter’s top customers are women running their own businesses. The site was designed by a busy woman for other busy women. Their lifestyle is best described by Massenet herself: “Choose the right husband and nanny, and then don’t worry about a social life. Everything but family and work must go.” This includes shopping. Net-a-Porter allows these busy working women to order a pair of Alaïa heels on their lunch break and a new Yves Saint Laurent bag on the way to a meeting across town. The site offers free shipping, hassle free returns, and even same day delivery by a fleet of Net-a-Porter vans driven by well-mannered men in Manhattan and London. For Net-a-Porter shoppers, time is truly something they value. Where can Net-a-Porter find these wealthy, working women? The site’s primary trade area consists of large cities across the globe. The secondary trade area is made up of smaller cities and suburbs with large concentrations of very high household incomes. The image below from SimplyMap shows the distribution of the “Very Rich Households Market Segment” across the United States in 2011.
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Although many of Net-a-Porter’s top spending customers are from the primary cash rich and time poor target market, an emerging group of cash rich and anti-shopping women should not be ignored. These women are from the same demographics of high net worth and ages 34-54; however, they form a new psychographic. They may be time rich, but they prefer to shop online because they want to avoid dealing with sales associates in stores trying to sell them pieces they do not want or being judged for wearing work-out apparel to shop. These women value being able to relax at home and browse Net-a-Porter’s editorial content to research the latest trends and, of course, shop for them at the same time with the “Shop this trend" or "Get the Look" links that appear when you scroll over an item.
Merchandise Assortment
Net-a-Porter carries over 300 popular designers from around the world. The designers vary in price, style, and popularity, all of which helps capture a larger customer base. Massenet created Net-a-Porter as a site with a limited assortment of women's apparel and accessories with a large variety of labels and pieces. This keeps the site from becoming too cluttered or losing the original vision. The site carries most major high-end designers from Alexander McQueen to Zac Posen. It also features a few lower-end designers like J. Crew and Alice + Olivia. Although Net-a-Porter does not have its own private label, the company is constantly working with designers to offer them an exclusive distribution channel for limited edition collections. For Earth Day in 2011, Net-a-Porter teamed up with Runway for Green and sold eco-friendly looks from top designers including Burberry, Marc Jacobs, and Yves Saint Laurent on their site. In 2008, the label Halston relaunched at New York Fashion and Net-a-Porter sold two pieces from the collection on their site less than 24 hours after the runway show. Fashion does not get much faster than that! Just this past spring, Karl Lagerfeld launched his second collection, Karl, which was sold exclusively on Net-a-Porter.
![Runway to Green Fashion Show: Front Row]()
Runway to Green Fashion Show: Front Row"I AM feeling more in the mood for green lately," said the designer Rebecca Moses, who was wearing a long silk jacket about the color of a fairway. Then she smiled wryly and added, "especially emeralds."
