High fashion learns to love selling online
- 31 October 2010
- From the section Business
At either end of Milan's expensive Via Montenapoleone sit two quite different temples to fashion.
The Galleria Vittorio Emanuele II, built in 1877, sits near the Duomo, and hosts Louis Vuitton and the first Prada store set up in 1913. At the other end is the thoroughly modern megastore of Giorgio Armani.
In addition to Armani's expensive catwalk collections, the store showcases his children's wear, a bookshop, flower shop and a branch of every celebrity's favourite restaurant, Nobu. Soon, it will also have an Armani Hotel - to go with the one already opened in Dubai.
Not long ago, it was only in stores like these that shoppers could buy designer products.
Yes, there were luxury fashion websites, but they used to be a mess of slow-loading Flash movies and "look books" of high fashion ad campaigns. Direct shopping was the least these websites were about.
'Quality of Internet'
Much of what is available in Mr Armani's store can be found online, at armani.com.
"Mr Armani was among the very, very first," Federico Marchetti says. "He was among a group of innovators."
Mr Marchetti's company, Yoox, is one of a new breed of hi-tech firms that are powering the online strategies of some of the world's biggest luxury retailers.
Yoox manages the websites for 23 brands - including Armani, Ermenegildo Zegna and Marni - and has a waiting list of 33 more.
After years of shunning the internet because it was too slow and broadband connections were few and far between, fashion designers are finally embracing it.
"The big fear was the quality of the internet, and I have to say that they were quite right to wait," Mr Marchetti says.
Yoox.com is an online seller of discounted high-end goods. Mr Marchetti launched the company as a tiny start-up in 2000.
"The idea was to be the link between the internet world and the fashion world because these two were, and are, very far apart," he says.
The company went public last year, the only share sale in Italy in 2009. Yoox is now worth 400m euros ($555m, £347m).
Burberry has been on the cutting-edge of innovation in the luxury fashion world.
The British firm has been providing live streams for its key Fashion Week shows to customers around the world.
Anyone could click on the dresses - and order them before the show had even finished. Burberry's collections will be delivered to your house within seven weeks - a far cry from the usual six-month turnaround for the bi-annual spring and autumn collections.
That "shop the runway" technology is powered by Createthe Group, founded by James Gardner, who helped pioneer algorithmic trading when he worked on Wall Street.
"It's a very powerful way to acquire long-term relationships with their customers," Mr Gardner says. "They're seeing new clothes at the same time as the buyers."
It allows fashion companies to bypass department stores and connect directly with customers.
Burberry has its own mini-social networking series, called the Art of the Trench, which draws attention to different ways to wear its signature trenchcoat.
The firm now receives 30% of its website traffic from social media like Twitter, according to web analytics firm Experian Hitwise.
Artisans benefit too
Innovations in technology have also allowed small players to compete.
Boticca.com came about after co-founder Kiyan Foroughi visited a souk in Morocco and spotted some high-quality jewellery amidst a lot of cheap tat.
Mr Foroughi and his partner, Avid Larizadeh, launched the website to link sellers from Estonia, Dubai, Colombia and beyond with customers around the world.
"It's difficult for them to have mass distribution because every piece is bespoke," Ms Larizadeh says. "With us, they are able to have a marketplace where they will distribute globally."
Because they don't have the overheads of traditional and expensive bricks-and-mortar shops, tiny start-ups like Boticca can compete with the likes of Cartier and Tiffany.
Before fashion giants like Gucci and LVMH decided to go large on the internet, they had to be sure that they would be able to maintain the exclusivity of their brands.
But how does one square being reachable by everybody with only reaching those customers you want to reach?
"The biggest store they have in the world is online, and the most beautiful," Mr Marchetti says. "And they give it us to manage, which is a question of trust."
The brands maintain their exclusivity by restricting access to some of their products, giving valued customers a sense of being VIPs.
For example, a select audience of 1,500 people was invited to watch the live stream of the Burberry show during London Fashion Week in its stores.
Many firms have also embraced social media.
Louis Vuitton is using the location-based service FourSquare - which lets your friends know exactly where you are - to make people who visit its stores show up as "Vuitton insiders".
Shoemaker Jimmy Choo used it for its Catch-a-Choo campaign, which required customers to check in at locations around London to get the chance to buy some exclusive trainers.
Ralph Lauren has iPhone apps for its preppy Rugby brand - where users can design their own styles and then share them through sites such as Facebook.
Createthe Group has set up a more elaborate version as a social network for Juicy Couture.
Of course, the glamour of the front row of the catwalk in Paris or Milan remains. Indeed, one of the most talked-about shows in New York's most recent fashion week was Tom Ford's, who held it in his Madison Avenue store, only invited 100 people and had Beyonce and Lauren Hutton as models.
The photos of the show are supposed to be secret until the clothes are launched, which will not be until next year.
Still, a few pictures of the show leaked - online.
End of real stores?
The low cost of selling online means that small high-end fashion brands can go online - and emphasise their quality.
"We don't want to facilitate mass production," says Ms Larizadeh. "It's actually the uniqueness of each piece that is most appealing."
Mr Marchetti points to another very simple advantage of the online stores - timing. "These stores are open 24-7," he says.
One-third of Yoox's customers buy after 7pm, especially in the Japanese market.
Next year, Mr Marchetti will launch Yoox in China, becoming one of the first to bring fashion e-commerce to an economy that overtook Japan's in size this year.
But he says he cannot see a world where Prada and Gucci do not have any more shops on Bond Street or Fifth Avenue.
At least not yet.