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Yoox Net-a-Porter will sell $121,000 Swiss watches online

November 10, 2016 12:14 PM
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(Bloomberg)—IWC Schaffhausen timepieces costing as much as $121,000 will go on sale on Yoox Net-a-Porter Group SpA’s websites next week, as the Swiss watchmaker tests whether online shoppers might help pull it out of an industry slump.

The Net-a-Porter and Mr. Porter fashion sites will offer models including the Portofino and Portugieser in YNAP’s most expensive watch collection yet, according to Federico Marchetti, CEO of the online luxury retailer. Switzerland’s Richemont owns IWC as well as a minority stake in YNAP, which is No. 78 in the Internet Retailer 2016 Top 500 Guide.

After an initial reluctance due to the high price tags, Swiss watchmakers are increasingly dipping into the $34 billion luxury e-commerce market as exports have declined for 15 straight months. This is IWC’s first online foray, catching up with companies such as Hermes, which sells $25,000 timepieces on its website, and LVMH, which hired an executive from Apple Inc. (No. 2 in the Top 500) to lead its digital push. YNAP expects the alliance may help attract more watch brands to join its sites.

“IWC is the first watch brand that is going to bring the hard luxury category to the next level,” Marchetti said in a phone interview. The company’s success in selling $25,000 Valentino handbags and Pomellato jewelry has shown there’s demand for such products, he said. “There’s no resistance on price.”

YNAP’s watch and jewelry sales are expected to reach 100 million euros ($110 million) by 2020, Marchetti said. The highest priced watches on Mr. Porter’s site so far are brands such as Zenith and Bremont that sell for more than $20,000.

Reluctant industry

Another reason why Swiss watch brands have been slow to embrace e-commerce is that typically clients want to try on the products. The industry gets less than 2% of sales through direct e-commerce sites, estimates Rene Weber, an analyst at Bank Vontobel.

Richemont helped form the Milan-based online retailer by merging its Net-a-Porter unit with Yoox last year. Sales of luxury goods online have increased 77% from 2011, according to researcher Euromonitor.

A Deloitte survey in September showed that, for the first time, Swiss watch executives plan to expand more in e-commerce than in other channels such as their own stores. Richemont chairman Johann Rupert last week said all its brands need to boost online marketing as he overhauled management amid a 43% profit decline.

“Watchmakers are becoming more open to the idea of e-commerce,” YNAP’s Marchetti said.

Yoox Net-a-Porter Group also reported its third quarter earnings for the period ended Sept. 30:

  • Revenue grew 11.7% for the third quarter, with revenue of 435.4 million euros ($474.0 million) compared with 389.9 million euros in Q3 2015. Taking into account currency fluctuations, YNAP says sales increased 16.8% year over year.

For the first nine months ended Sept. 30, YNAP reported:

  • Revenue increased 12.7% to 1.33 billion euros ($1.45 billion) from 1.18 billion euros in the year-ago period. On a constant currency basis, revenue increased 16.1% in the period, the retailer said.
  • 27.5 million average monthly unique visitors, up 6.1% from 25.93 million in the first nine months of 2015. YNAP says 2015 monthly unique visitors have been restated to include those from native apps, previously not tracked, for Net-a-Porter, Mr. Porter and The Outnet, as well as to account for the change in data source used for Yoox. Yoox monthly unique visitors for the nine months of 2016 and 2015 are now sourced from Google Analytics, instead of Google Analytics for the website and SiteCatalyst for the mobile site as previously used, the retailer says.
  • 5.9 million orders, up 18% from 5.0 million.
  • 2.8 million active customers, up 21.7% from 2.3 million. Active customers are those who have made at least one purchase in the past 12 months.
 

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