Online Luxury Marketplace Growth Continues in 2021
|Here is the marketplace news that captured our attention this week.|
Online Luxury Marketplace Growth Continues in 2021
With in-person shopping off the table for much of 2020, digital marketplaces have proved to be valuable platforms for customers looking for new means of product discovery and delivery. As a result, brands in the luxury space are leaning into the online marketplace movement to cash-in on the pent up demand. In fact, Bain & Company projects that as much as one-third of all personal luxury purchases will take place digitally by 2025, with those revenues reaching an estimated $136 billion.
Luxury online marketplaces like italist, for example, are capitalising on this shifting consumer behaviour. By aggregating the inventory of over 250 independent boutiques, italist allows online shoppers to purchase luxury items sold by boutiques in Milan, Florence, and Rome—at Italian retail pricing, which can be 40% lower than global averages—without having to travel.
Other luxury marketplaces like Farfetch are also seeing an uptick in growth. Serving more than 190 countries and territories, the average Farfetch order in the first quarter of 2021 totalled a remarkable $618, with digital platform GMV growth up 60% year-over-year.
Net-A-Porter and Matches Fashion, two other luxury clothing marketplaces, are proving themselves as strategic (and profitable) ways for luxury brands to approach omni-channel retail as well.
COVID-19 has deeply impacted the luxury sector, especially in-person shopping and travel to luxury shopping destinations like London, Paris and Milan. Many luxury brands had already begun translating that experience online so the pandemic only accelerated this move. Increasingly, the luxury shopping journey will begin and run through digital channels, so luxury brands and retailers should prepare to interact with customers digitally to augment their relationships and grow lifetime customer value long-term. Because of this move online, luxury retailers must consider that third-party, online marketplaces mean having a less direct relationship with consumers. What's more, luxury retailers need a strong grasp on marketplace strategies to compete in today’s digital-first economy.
Urban Outfitters Launching Resale Marketplace in U.S.
Popular clothing retailer Urban Outfitters is launching Nuuly Thrift, A resale marketplace to buy and sell women’s, men’s and kids’ apparel and accessories.
Nuuly Thrift which is likely launching in autumn this year will be a sister platform to Nuuly Rent, the subscription rental service for women’s apparel. Both platforms will support the Nuuly brand’s mission to be a curated destination for anyone who loves fashion and is exploring how to wear, buy and sell it in ways that are gentler on the planet – and on their wallets.
Nuuly Rent was growing until Covid as 2020 hit rental businesses hard. The need for rented apparel wasn’t very high with people staying at home and locked down without social events. This past spring, Nuuly Rent rebounded to pre-pandemic subscription levels, and now has 30,000+ subs. URBN is hoping Nuuly Thrift will help continue to revive Nuuly Rent, and vice versa; Nuuly Rent will use Nuuly Thrift to sell some of its no longer rentable products, whether they’ve gotten too much wear or slight damage. Next year, customers will be able to pay for their Nuuly Rent subscriptions with Nuuly Cash earned via the Thrift marketplace.
What's more, customers will have the opportunity to resell products from any brand, and these products will be merchandised on the platform using the best-in-class creative edit that sets URBN apart. When customers sell an item on Nuuly Thrift, they will have two options: transfer their earnings directly into their bank account, or redeem them for Nuuly Cash, which is worth 10% more at Nuuly Thrift and the URBN family of brands.
For example, if a customer is paid $100 for a dress on Nuuly Thrift, that customer will have the option to convert it to $110 in Nuuly Cash, which can be spent back on Nuuly Thrift, or at Anthropologie, Free People, Urban Outfitters, BHLDN or Terrain, online and in stores.
According to a recent ThredUp report, the secondhand market is expected to double to $77 billion by 2025. That big number, plus the low overhead of a peer-to-peer platform, is attractive.
Urban Outfitters has learned that more and more of their customers are participating in secondhand marketplaces. In this, they saw an opportunity to redirect the attention (and cashflow) back to their own house of brands therefore capitalising on a very large resale market opportunity. For resale to succeed as a growth channel, it’s crucial to make the operation simple for both retailers and consumers.
WorldFirst and Alibaba enter UK Partnership
WorldFirst and Alibaba’s B2B marketplace, have entered a partnership to help UK-based small and medium-sized businesses bolster their digital presence and expand their sales internationally, overcoming the constraints brought by the Covid-19 pandemic. WorldFirst will become Alibaba’s official channel partner in the UK, helping British sellers gain access to the 15 million buyers from over 200 countries and regions on the platform.
As Alibaba’s official channel partner, London-based WorldFirst will help these SMEs assess how Alibaba can benefit them and assist them in navigating the platform’s variety of services, including everything from registration, setting up and running their online stores, to conducting online marketing campaigns together with certified Alibaba partners. Through WorldFirst, sellers will be able to conduct fast, convenient, and cost-effective cross-border payments.
The outbreak of Covid-19 has had a severe impact on businesses in the export sector, especially SMEs, many of which lack an online presence and are still largely reliant on physically attending trade shows to showcase their products. With the ongoing pandemic causing many events to be scaled down, rescheduled, or even cancelled, the WorldFirst and Alibaba partnership aims to help British small and medium-sized enterprises reach customers and business partners around the world in an efficient and cost-effective way.
Founded in 2004, WorldFirst is an international payments business helping small businesses move money around the world. Since 2019 it has been part of Ant Group, an affiliate of Alibaba.
Alibaba is well aware of the value and potential of British businesses, and has been at the forefront in supporting EU brands and SMEs in their digitalisation and internationalisation paths globally. By joining forces with Alibaba, WorldFirst will benefit from the huge opportunities that exist in the international market and the business opportunities offered by B2B e-commerce. This partnership is just another indication of the recent boom in e-commerce and the opportunities that lie within this space.