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Yoox Net-a-Porter CEO Federico Marchetti, E-Commerce Pioneer, on the State of Shopping

Marchetti tells us how AI is enhancing luxury and why he thinks the internet age has just begun.

Federico Marchetti YNAP

One business’s loss is another’s gain. When Covid-19 forced brick-and-mortar shops to close their doors this spring, a boom in online sales ensued. As a pioneer of online shopping, Federico Marchetti, CEO and chairman of Yoox Net-a-Porter Group, was well-equipped to navigate the sea change. In 2000, Marchetti founded Yoox, one of the first online-only shopping destinations, and in 2015, he drove a merger with Net-a-Porter to create the e-commerce titan that he leads today.

Marchetti is credited with introducing a number of e-tail practices that are now industry standards—from creating digital flagships for marquee brands to selling high jewelry and watches online. YNAP group—which comprises Yoox, Net-a-Porter, Mr Porter and The Outnet and was acquired by Richemont in 2018—is the e-commerce market leader, with more than 4.3 million customers in 180 countries and one billion visits to its websites annually.

Even before the pandemic, it is estimated that over one billion euros of luxury goods are sold through mobile phones each year. Now it looks as if e-comm may become the new normal. We caught up with Marchetti to chat about how the industry has had to adapt and what the crisis means for fashion retail’s future.

How has the current climate affected e-commerce? 

FM: The pandemic forced the world to embrace e-commerce more than ever before. As a global business, we saw how the virus was impacting each country. We learned from our brands and operating teams in different locations­—it was as if we had our own mini United Nations to guide us through. This meant we could stay one step ahead, whilst accounting for particular local differences or demands. What makes this era defining is that everyone is now embracing technology in a way they never did before—they are joining our world. People thought we were already in the internet age, but I think it really has only just begun.

You shut down your operation at the start when most other companies were desperate for an online presence. Why was this?

FM: We voluntarily and temporarily closed some of our global distribution centers during the peak of the crisis to protect our colleagues and wider community. I believe this was the right thing to do. It was a key factor in very low incidents of coronavirus amongst our employees, only 0.1%. Our customers supported us. I have never received more letters of support from them than during this crisis.

All our global distribution centers have now reopened with enhanced health and safety measures in place for our teams. UK unions, in fact, told us we are a benchmark. Also, we have been looking at new innovations to protect our people. One of these is ‘StaySafe’, a proprietary app that provides our colleagues with health and safety information, security updates, wellbeing surveys and a booking function allowing them to reserve their place at the office if they would like to come in—allowing us to ensure enhanced social distancing.

What has been the most surprising shift in the consumer habits since March?

FM: We have seen customers being considerate about their choices, looking for designs that stand the test of time. And we saw some trends emerging that I think captured our collective journeys through quarantine. In the initial weeks people shopped beauty, self-care and sportswear. Later, as people upped their game on Zoom calls, we saw interest focused on “neck-up” dressing. Sometimes our data creates an insightful picture of how people are feeling.

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E-commerce is a crowded market. How are you staying ahead of the game?

FM: There is an Italian motto that I live by: non dormire sugli allori, to rest is to rust. To me, this means innovate—it is something that has guided me for 20 years. In 2006, we launched our first online flagship store with Marni, and from there we continued to bring our technical expertise to the most prestigious luxury fashion brands around the world. Our Next Era model is now creating a blueprint for the future of luxury retail, using YNAP technology to build a seamless integration of online and offline, revolutionizing the shopping experience.

[Ed. Note: Next Era allows a customer visiting a brand’s website to access inventory at brick-and-mortar boutiques around the world as well as YNAP’s distribution centers, essentially allowing one to shop online and offline products simultaneously and choose between having something shipped or trying it on in-person at a store. It is currently employed on Valentino.com]

How do you see AI and robotics influencing your business in the near and distant future? What exactly will they be replacing?

FM: Artificial intelligence and big data analysis are helping us build more personalized services for customers and improve the shopping experience. Our Yoox Mirror feature uses AI and augmented reality to allow our customers to create an avatar with their own face and features and try on curated clothing within the Yoox app.

Images are effectively the new data. Our researchers are exploring the power of artificial intelligence to process our huge archive of images. How do we balance those disruptions with luxury’s traditional defining factors? By making deliberate choices to continue doing human things that technology is not capable of doing for us. At times this will mean we knowingly reject some of the gains in efficiency made possible by technology. In other moments, emerging technologies can enhance luxury.

I believe that one day, the human aspect of design will be a choice. I made a prediction last year: we use labels like Made in Italy, British Made, Designed in California, German automobiles, Swiss watches that convey a sense of quality to the customers. One day ‘Made by Humans’ labels will adorn our most special products.

How do you think the pandemic will make lasting changes to consumer habits?

FM: I see two driving forces: technology and sustainability. I see a future with fewer collections, less production, less waste, more creativity and more sensitivity. There has, of course, been demand for this already, but I hope we will see an acceleration of this. More mindful purchasing: buying quality products that last, pieces that can be cherished for a lifetime and beyond. To me, that is true luxury.

Has the crisis sounded the death knell for the physical store?

FM: Some were sounding the death knell for physical stores back when I started Yoox in 2000. I didn’t believe they would disappear then and I stand by this today. I believe that a union can be created between the two universes—online and offline—an invisible, borderless integration with technology enhancing the experience. I also believe that we have a profound responsibility to enable and support the next generation of entrepreneurial talent for our industry, be that in technology, design, craftsmanship, sustainability.

This interview has been edited and condensed.

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