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The Luxury E-Commerce Wars Heat Up

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The Luxury E-Commerce Wars Heat Up

On one side: Amazon. On the other: a new alliance of brands and platforms. Who will win?

The New York Times,

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Luxury goods firms join Alibaba to access the lucrative Chinese market and maintain their exclusivity.

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8

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Recommendation

Amazon might be the “everything store,” but if you sell high-end luxury goods, Amazon may not offer the branding you want. After trying to develop a myriad of unsuccessful individual platforms, a group of luxury goods companies are partnering with Alibaba by investing in Farfetch, a leader in online sales of luxury goods. They hope their investment will further support a viable competitor to Amazon, which is creating its own “luxury stores” app. The venture partners hope to capture part of the lucrative Chinese luxury market, which will be worth $178 billion by 2025.

Summary

Instead of banding together online, luxury goods companies tried to create individual platforms.

Five years ago, Johann Rupert tried to convince his peers at a luxury goods industry meeting to create one “dominant neutral” site for the industry. Rupert, who is the chairman of Richemont, which owns Cartier and Van Cleef & Arpels, failed to unite his peers. The leaders of LVMH, Kering – which owns Gucci, St. Laurent and Alexander McQueen – and the other high-end brand executives present, preferred to go it alone. In retrospect, that decision cost luxury goods companies dearly.

To capitalize on the fragmentation in the luxury market, Amazon launched “special storefronts” from May to October 2020 in the United States and Europe. Working with Vogue and “local fashion councils,” these sites promoted designers whose business suffered when department stores closed due to the COVID-19 pandemic. Amazon also created a “Luxury Stores” app targeted to its 150 million...

About the Authors

Elizabeth Paton covers European fashion and the luxury market for The New York Times, where Vanessa Friedman is fashion director and chief fashion critic.

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