Yoox Net-a-Porter will lose a sizeable chunk of the 33 luxury brands in its online flagship business by 2020, thanks to Kering’s recent decision to take e-commerce in-house. While possible reasons for the change include Richemont’s new ownership of YNAP and the growing importance of e-commerce for luxury brands’ overall sales, another factor that might have played a role is China.
Brands including Armani, Valentino, Isabel Marant, Moncler, and Missoni rely on YNAP for their site e-commerce operations, but Kering’s decision will remove major names like Saint Laurent, Bottega Veneta, and Balenciaga from its roster. In an official statement, YNAP called Kering’s decision not to renew its contract in 2020 a “natural evolution” for a group of Kering’s scale.
As China remains a crucial part of luxury brands’ global sales and e-commerce becomes more important to brands’ China sales, YNAP-managed China e-commerce comes with some downsides. One of the biggest challenges is the fact that WeChat Pay isn’t supported on YNAP sites, despite the fact that the payment method takes up about 38% of China’s mobile payment market share.
WeChat Pay is becoming an increasingly important priority for luxury brands. The percentage of luxury brands with WeChat Pay as a payment option on their sites has increased from just 5% last year to 23% this year, according to Gartner L2’s Digital IQ Index: Luxury China. The adoption rate is higher for Alipay, however, due not only to its higher market share, but also to the fact that it is available on YNAP-supported shops.
Kering-owned Gucci, which has kept its e-commerce in-house, is able to offer both WeChat Pay and Alipay on its China site, while the luxury house’s other brands stick to Alipay.
Store locators are another aspect of the brands’ sites managed by YNAP, but Gartner L2 found issues with the way they worked in China on YNAP-managed sites. Moncler’s China store locator is displayed on Google Maps, which can’t be accessed in China, while Valentino has inaccurate location pins and features a difficult-to-navigate map spanning the entire page.
Brands also must rely on an outside company to make changes to the front or back ends of their sites, putting them at a a disadvantage in a market that changes very rapidly where decision-making and execution are important.
China isn’t necessarily a low priority for Yoox Net-a-Porter’s main multi-brand e-commerce business, however. In October this year, Net-a-Porter and Alibaba announced a joint venture that will create an official Net-a-Porter Tmall store. The group faces tough competition in China from Farfetch, which has teamed up with Alibaba’s rival JD.com. It also may have to face off against a growing number of competitors in the future after LVMH launched its own multi-brand e-commerce platform, a move that may be in Kering’s future as well.