Yoox Net-a-Porter (YNAP) wants to be as synonymous with luxury fashion as Amazon is with online retail. And it has big plans for how it’s going to do it.
Formed in October 2015 from the merger of Italian e-commerce site Yoox and its high-end British rival Net-a-Porter – both founded in 2000 – YNAP is of the belief that fashion should be sold differently, with technology at its core.
The company has been aggressively growing its technology team this year from 500 to 700, split between its Bologna and London offices.
Integrating these two teams was the initial focus for YNAP’s CIO, Alex Alexander – who spends three days a week in Bologna and two in London – making sure that everyone is using the same terminologies while ensuring that work on its current tech platform continues.
The technology teams have been balancing the current platforms work versus the work needed to bring the two platforms together in a way that causes minimum disruption to the business. Meanwhile, YNAP is focusing on increasingly moving applications and assets to the cloud.
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Currently using AWS in a hybrid approach – with mostly front-end aspects sitting in the cloud – its goal once it has scaled is to build a private cloud. ‘We want to move gradually, not suddenly – move everything to cloud,’ Alexander tells Information Age.
In April, YNAP announced it will leverage IBM products in a long-term partnership that will allow it to explore new innovation in omnichannel retail, particularly in the areas of personalisation, mobile app development, data analytics and cognitive capabilities.
IBM is also helping YNAP develop one shared technology platform across all of its brands and websites. As a result, YNAP and IBM will develop and deploy a proprietary technology architecture that will combine IBM’s commerce products with YNAP’s in-house developed solutions.
‘We want to keep the skills inside the teams and make sure that we learn,’ says Alexander. ‘Knowledge transfer and enablement is a key part of our strategy – it has to stay in the company.’
Alexander is keen to tap into IBM’s machine learning capabilities, and revealed that YNAP will use some of the technologies the company has developed through its artificially intelligent computer Watson.
‘[Machine learning] is embedded into our platform,’ Alexander says, ‘from the Watson APIs to the commerce engine in terms of analytics – predicting what the customer would want to buy and what the weather is going to be like, and personalising messages for the customers.
‘So some of those aspects are very exciting in terms of the innovation that we want to use to take advantage of the huge investment that IBM is making in the area of artificial intelligence and analytics.’
The technological integration of Yoox and Net-a-Porter has been aided by the fact that both companies had started a journey on agile and built expertise and platforms in-house.
However, the result is that YNAP effectively now has two of everything – and while that means there are impressive capabilities in both platforms, some will have to be discontinued because of a lack of return on investment.
Those capabilities that have been best in class will be retained and made group level, but other areas will see YNAP buy the core and then innovate on top.
‘That way, we can get the speed to market,’ says Alexander. ‘What we are moving to is a hybrid target where we integrate the best of what we’ve developed with the best in class that we’ve bought, and we are creating an ecosystem that is unique to us because it is how we implement those systems that creates the differentiation.
‘But we are retaining our agile approach – that’s a key part of our principles. In fact, we are pushing agile to the next level; we want to make sure that we innovate.’
In May, for example, YNAP ran its first global hackathon. Net-a-Porter ran hackathons for several years, and Alexander is keen to continue the tradition.
YNAP has also made its R&D department global to give it the greatest potential for exploring new innovative ideas and how they can be taken to market. These include image-based search and omnichannel personalisation. ‘We’re creating an engine for innovation,’ says Alexander.
Alexander was headhunted to join YNAP in June 2015, several months before the merger was finalised.
In a unique career, he learned his trade in a couple of start-ups before taking on posts running omnichannel technology strategy at Sainsbury’s, based in London, then Walmart in Silicon Valley.
He cites his learnings in UK start-ups as the major influencer on the rest of his career. As a co-founder of ENTIER, an innovation consultancy specialising in e-commerce, Alexander occupied interim roles as CTO for BT Global Services and CIO for HMRC and the Ministry of Justice.
‘One of the first lessons I learned was the first-mover advantage,’ he says, ‘You hear about it in most of the MBAs, but the difference in launching a project one day and not the next day is the difference between whether your company survives or not.
‘Having that start-up background has driven me throughout my career. If you come second, you fail. If you’re slow, you fail. So I learned you’ve really got to be a fast decision-maker, bringing products to the market very quickly and also being close to the customer.’
At Walmart, Alexander looked after the UK market but was based in the San Francisco office, where the retail giant employed 3,000 engineers.
Part of his role was to help Walmart beat Amazon at e-commerce by incorporating online grocery ideas from the UK, which was perceived to be more mature, to help create innovation in the US.
But even though YNAP can’t match that scale, it has high ambitions – and while fashion is a brand new market to Alexander, he believes that a lot of the technology aspects are the same.
‘In some ways, there are commonalities because it’s about innovation, first to the market and fast pace,’ he says. ‘I can see a lot of start-up mindset both in the Yoox part and also in the Net-A-Porter part in London.
‘Preserving that start-up culture has been one of my priorities as we’ve combined these companies because neither side is a small company any more – there are 3,500 people around the world with ambitious growth plans set for 2020.
‘One of the things I’ve pushed is pace – to make sure that we make decisions fast – and ensuring that we do innovation at scale and don’t have it fragmented in London or Bologna. Merging the two teams has really been my key focus. Having come from a background where my teams were very scattered across the globe, this comes naturally – but here it’s part of the learning.’
A perfect marriage
While Yoox and Net-a-Porter had seemingly different target markets and approaches to selling clothes, Alexander claims that the merger formed a ‘perfect marriage’.
Net-a-Porter had gained popularity by selling luxury designer collections via an online store presented as a fashion magazine. It cleverly utilised content and design to generate inspiration among women, then launched new brands for men (Mr Porter) and out-of-season stock (The Outnet).
Yoox, meanwhile, was all about out-of-season stock from the start, offering discounted designer clothing to those who don’t want to fork out on the ticket price. It perfected this model by nailing logistics and operational efficiency, before striking up partnerships with luxury brands such as Armani and Valentino to operate their mono-brand online stores.
‘The journeys of the two companies were almost converging,’ says Alexander. ‘The coming together of the content excellence and the operational excellence is a perfect marriage in terms of luxury.
‘It becomes a cycle where the products become available to Net-a-Porter and Mr Porter when they are in-season, and when they’re end-of-season they get sold to Yoox.com. This is not an ordinary business model – just being mono-brand or just being multi-brand – and I think that’s really what the powerful part is.’
YNAP’s ultimate aspiration is to be the destination for high-net-worth customers. Doing this involves mastering globalisation, multivisibility and the next wave of omnichannel innovation.
The company already sells to 180 countries, and effectively has outlets for pickup and delivery through the thousands of stores owned by the mono-brands it partners with.
Its vision is for a customer in London to be able to order something on Net-a-Porter and then pick it up from a Dolce & Gabbana store when on holiday in New York because the product is available in both locations.
‘What is key is differentiation and maintaining each brand’s DNA,’ says Alexander. ‘Although the backbone of a feature can be built and exist once, the way that it is available to different brands will be different in terms of how it appears because the customers are different.’
The timing of the merger is a unique moment in the history of fashion, according to Alexander. Indeed, retail is an industry ripe for innovation like few others, and e-commerce will continue to grow at a rapid rate in the coming years.
The new wave of innovation, Alexander believes, will be driven by mobile, social, content, data and omnichannel, and the industry is at a ‘pinnacle point’ where all of these things are coming together.
YNAP sees mobile as the ‘concierge in the pocket’ of its high-net-worth customers, not only helping them browse but also make decisions. And at the heart of that experience is personalisation and content inspiration.
Meanwhile, YNAP believes that omnichannel opens up frontiers that some of its competitors cannot reach through its ability to tap into the ecosystems of the mono-brands it partners with.
‘They’re not our stores – they’re stores we have access to,’ says Alexander. ‘If you look at that ecosystem of products and locations, customers want the best products, and the moment they see them on a catwalk they want to be the first to buy them. They’ll make a decision on their mobile to buy it and they’ll want to have it immediately.’
That, ultimately, is what YNAP has identified as the future of fashion retail: instant-decision omnichannel powered by instant transactions.
At the touch of a button
The end goal is a business model where sales are driven by mobile, data personalisation and content inspiration, and then product is delivered instantly in an omnichannel way, wherever the customer wants to pick it up from.
‘We are not just about transactions – our focus is inspiration,’ says Alexander. ‘When you are inspired then you really want it, so we want to be able to provide it instantly.
‘We are building omnichannel capabilities to provide that instant visibility and fulfilment of the stock, but it starts with inspiration, and that comes through a focus on content and personalisation from the data we have on the customer.’
A key part of YNAP’s innovation is predicting what the customer will want to buy and making sure the product is in a distribution centre that allows them to buy it.
The company is working on algorithms to predict where and when it’s going to run out of stock, and other trends regarding its customers, making sure it moves its products overnight to the most likely locations where the customer will want to collect.
Amazon has had this innovation for a number of years but it has never been done for fashion – planning the demand and the expectation of the customer, and matching them together.
If YNAP gets it right, it will have many more years of growth to come.