Federico Marchetti

OUR CUSTOMERS BUY BEAUTIFUL FASHION FROM MOBILES. Federico Marchetti is a visionary who started the e-commerce fashion company Yoox very early in the emergence of the web. Now he is the Chairman and CEO of the combined Yoox Net-a-Porter Group, following the merger with online design fashion retailer Net-a-Porter in 2015.

Federico Marchetti, can you please give me a general overview of what you did?

What I continue to do. I was among the very first to bring fashion and the web together with the launch of Yoox in 2000. Next year in June both Net-a-Porter and Yoox are going to celebrate their 20th anniversaries.

What does Yoox Net-a-Porter do?

We sell luxury fashion online to customers around the world, leveraging our unique blend of curation, content, technology and service. The Yoox Net-a-Porter Group is made up of four very different brands, each serving different customer segments. One is Net-a-Porter, another is Mr. Porter, the third is Yoox, and the fourth is The Outnet. They are all part of the Yoox Net-a-Porter Group that in turn belongs to the Richemont Group, a Switzerland-based luxury goods holding company founded in 1988 by the South African businessman Johann Rupert.

How do the four Yoox Net-a-Porter brands differ?

In the merger we put together companies that had a lot of synergies between themselves because they were very different, and they remain very distinct because we kept the differences. Net-a-Porter is luxury, fashion and fine jewellery and watches, only for women. Mr. Porter is only for men, and it’s a destination that is more about style, although it too is luxury, fashion and watches.

And Yoox?

Yoox is for a younger clientele. It is about accessible fashion, ranging from discounted products and end-of-season, to vintage, to young designers, to sustainable collections. It’s a very contemporary curation of products that you cannot find anywhere else.

And The Outnet?

The Outnet is more a fashionable outlet; only for women, with a lot of content and curation.

Which is bigger? 

At the time of the merger Yoox and Net-A-Porter were more or less the same size.

HRH The Prince of Wales and Federico Marchetti during a visit to the Yoox Net-a-Porter Group London Tech Hub in White City.

Federico Marchetti, if a customer wants to buy, for example, vintage Armani, where is it stored?

We store our products for our customers in our warehouses, our logistics centres. We currently have a logistics centre in Bologna, and our logistics centre in Milan will be fully operational next year. We also have logistics centres in London, New York, Dubai, Hong Kong, Tokyo, and Shanghai.

Are you very active in both the Western world and the Eastern world? 

Yes, we are active in 180 countries, and through these logistics centre we serve our customers with the products that they want in the shortest time possible. We have same day delivery in London, New York, and Hong Kong. You order in the morning and you get it by courier in the afternoon. Next year there will also be same day delivery in Milan, and soon in Dubai.

How many people work in the group?                                

Five thousand four hundred, all over the world. It’s an Anglo-Italian group, meaning that we have two headquarters, Milan and London, and I split my time between them.

As an Anglo-Italian company are you worried about Brexit?

We don’t know exactly what’s going to happen about Brexit, so I cannot answer this question yet, but we have solutions in place in case it happens.

Why do people buy from you, rather than going to the label’s own store?

Our four shops are all destinations that provide a multi-brand experience. If you want to buy a sweater, you can choose from different designers, from Brunello Cucinelli to Tom Ford, and select the one that you like. It’s different from having a head to toe experience in a flagship store, but almost 14 years ago in 2006, for those kinds of customers we launched the Online Flagship Stores division which is a part of Yoox Net-a-Porter Group. Basically this invisibly powers Online Flagship Stores for luxury brands – the ones that are in Bond Street. This is mono-brand, for people who only want to shop for let us say Armani, which is a different experience from mixing and matching different brands. We are the invisible partner for many brands. For example, Armani.com is powered by Yoox Net-a-Porter Group, meaning the logistics, technology and so on.

If you buy Valentino on Net-a-Porter is it the same price as what you would pay in the shop?

Yes, but curation is what customers want from Net-a-Porter. Customers go to Net-a-Porter because they see the curated content and get inspiration.

Is Federico Marchetti a man of technology and systems or a man of fashion?

I am 50/50, technology on one side and luxury and fashion on the other side. The key competency of this group is an ecosystem made of technology, logistics, algorithms, data and so on, but there is another key component which is taste, style and fashion. It is a balance of human and machine.

How many people work with you in the technological part?

The biggest component of our people is technology, and technology means innovation. For example, recently we launched an app called YooxMirror, for the customer to try on clothes on your mobile phone. In 1999 when I started, everybody went to boutiques to try on clothes. Then with Yoox Net-a-Porter everybody started to try clothes on at home, with the ability to return. Now our YooxMirror technology combines artificial intelligence and augmented reality. People can try on clothes in the YooxMirror app in front of a virtual mirror, so they can see themselves with a selfie wearing the clothes that they want, mixing and matching different brands.

Federico Marchetti, now the customer can do almost everything using technology. Is this why many shops are closing?  

No. We’re working on a very close relationship between the physical shops and the online shops. We call it Next Era, where we don’t consider the online customer different from the customer that shops in a boutique. We succeed in seamlessly integrating the experience of the customer between going to Via Montenapoleone or Valentino.com. The same customer can go to Valentino.com and get the product in via Montenapoleone. Or, if you go to Via Montenapoleone and don’t find what you want, the sales people can say: ‘It’s online and it can be delivered to you at home.’ This is just an example, but it means that for the customer the offline experience and the online experience work together to deliver the best experience. The most annoying thing is when you go into a shop and you want something but they don’t have it. With Next Era ‘sold out’ doesn’t exist anymore.

How do you decide which items to stock? Let’s say for example blue blazers from Valentino. How do you decide how many to have in storage?

It’s complicated and we have a very talented team of buyers. That’s why I said 50/50, because technology is important, but so is taste. What the buyers decide to buy is super important, because that’s our content. We are a retailer. We buy. We stock. We store.

If you show a new collection of Prada for example on Net-a-Porter or Mr. Porter and there are remainders that you didn’t sell, will these automatically go onto Yoox?

In most cases yes, but it depends on the agreements and the logistics with the different brands.

You started Yoox from scratch 20 years ago with a very small investment. Is turnover still growing?

The last public numbers that we gave, before the acquisition by Richemont, were over two billion dollars. We are a growing business with double digit growth (10 percent and above is double digit) with around three point five million active customers. It’s becoming a very large business.

More and more people are buying this way. Do Asians, Europeans and Americans all use online in the same way?

There are differences, for example, in terms of mobile. Of the two billion dollars that I just told you about, over one billion is bought by our customers on their mobile telephones. There are many differences between the different markets. In terms, for example, of mobile penetration, the Middle East and China are at the top, probably because the population is the youngest. America is similar to Europe in terms of mobile penetration. 

How many brands do you carry?

Over a thousand.

Then you also have your own brands for Yoox and Mr. Porter. Why?

Our own labels are focused on essentials, because there was a need for them from our customers. Both brands are generated by the data coming from customers, not from a creative director coming up with a fashion collection. We would never compete with the fashion designers.

Do you use artificial intelligence in your organization?

We use it in many environments. The philosophy of the group has always been to find a combination and a balance between human and machine. For the past 20 years, everything that has inspired my work has been to find this balance. In fact, the name YOOX came from the chromosomes Y and X, and XX, representing men and women again. The human DNA is embracing the Os or the zeros, which is the DNA of the internet because it’s the zeros of binary code. So in the Yoox name you have the human DNA and the DNA of the machine together. Even if we’re a technological company we are also in luxury, and we know that we’re selling emotions. Therefore we want the human touch to be always present in everything that we do.

This is your strategy?

For the past 20 years we decided strategically that we always want a combination of human and machine, and it is the same story with artificial intelligence. For example, we have many talented stylists around the world putting together beautiful outfits for our customers, because what we do differently, probably from everybody else, is to inspire our customers with content; editorial content, beautiful pictures and so on. All these stylists around the world, in Tokyo, in New York, at the offices in London, Milan and so on, have taste – because that’s their job. We believe that we can teach taste to a machine by a sort of neural network, a machine learning from the taste of all the outfits that have been put together by all the stylists in the last 20 years. We are teaching the taste coming from the work of the stylist to a machine.

As a result one day you will not need stylists anymore?

No, that’s not true. And that’s the point. We believe in this combination of human and machine. We don’t do this in order to replace human stylists. We do it in order to give our newly doubled to 100 team of personal shoppers a powerful tool to use when they speak with customers, to provide them with different alternative outfits. It is not a threat.

How does the integration between stylist and artificial intelligence work?

The machine learns the taste from the individual stylist. Let’s say a stylist in New York is putting together this outfit with Brunello Cucinelli, Tom Ford, learning, learning, learning, learning…. The machine then takes the tastes from all the stylists and translates them into a tool for another team, the personal shoppers who are the ones that speak with the customers they know and say: “This Cartier watch has just arrived, would you like to buy one?”

Do the personal shoppers phone the customers?

Yes, and more than phone. They use WhatsApp, and they also meet in person. Everything is around the personalized approach. “I know you very well and I know that there’s this fantastic new dress from Valentino that is perfect for you.” They have the machine as a tool to also suggest an outfit coming out from it.

It is the machine that suggests?

To the personal shopper, but not to the customer. The personal shopper makes their own decision, according to their knowledge of the customer’s taste. It’s a combination between human and machine.

Nowadays the word sustainability is very fashionable?

Now, yes. When I started, no.

Your customers give a lot of importance to sustainability, but haven’t you always held that as a personal philosophy?

In 2009 I decided to launch a special area in Yoox as a destination for customers who only want to buy sustainable, but I was thinking about sustainability 10 years before when I started Yoox. If you put together end of season products and vintage it means that good fashion never dies, which means a circular economy, which means you don’t waste the products. This was exactly the concept of Yoox from the very beginning.

Does sustainability also have to do with not using furs, leather shoes etc.?

Fur is about ethics not about sustainability, because fur can be sustainable. We stopped selling fur at Yoox Net-a-Porter Group two years ago because we did a survey with over 5,000 customers and the vast majority of them told us that they would prefer that we were not selling fur.

Is sustainability about the quality of the product?

Yes, the big picture is that Yoox Net-a-Porter is selling high quality goods that last for a long time so it doesn’t generate waste. Yooxygen is the sustainable subsection of Yoox, and we recently did the same also with Net-a-Porter, called Net Sustain. I’m happy that sustainability is now a trendy word because it means that people care more.

Do you see less people buying leather?

Leather is not necessarily something bad. Sometimes artificial leather can be even worse in terms of sustainability. The last big discussion that I had with Prince Charles was about leather, when he came to visit us at our London Tech Hub. He is the most authentic champion of sustainability. He started 40 years ago, so there’s no one better than Prince Charles to talk to about this very complex subject.

Jimmy Choo exclusive capsule collection for Net-a-Porter

Gucci capsule collection exclusively for Mr. Porter

YooxMirror on the Yoox app is the first AI-powered virtual styling suite

Federico Marchetti, how do you balance gender in your workforce?

We are one of the most sought after companies for women to work in, because more than 50 percent of the employees are women. Women also sit 50/50 in the executive committee to decide the next strategy. They are obviously treated equally as the men, with the same salary and so on.

Where is this company going?

With the merger of Yoox and Net-a-Porter we put together two leaders in order to create the undisputed global leader, and I think it will continue to be the leader because we have the great advantage of being part of Richemont, the leading group in hard luxury, jewellery and watches. For us it is a great benefit to be growing this fast growing category together with them.

Is Amazon a competitor of yours?

No, because Amazon is not in luxury. It is a generalist and it is difficult to do luxury with everything else. That’s why there is via Montenapoleone and that’s why there is Bond Street. Luxury brands want to be together and don’t want to be mixed in with a mattress or a Black and Decker tool.

Have you changed the fashion business?

In ’99 this project was a dream I had coming back to Italy from Columbia University where I studied for my M.B.A. It’s an American story made in Italy. Starting from zero I thought that fashion and the Internet could go together, but in ’99 there was the planet Fashion and the planet Internet and they didn’t communicate and they didn’t understand each other. Fashion CEOs were not aware of what was happening on the Internet. I thought that I could be the trait d’union, the link, between the two. I don’t know if I’ve changed the business, but I definitely have been a trait d’union, and 20 years later there’s no CEO of any fashion brand that doesn’t have digital among the top five priorities on their agenda. Things have changed dramatically in 20 years. Now our customers buy beautiful fashion from mobiles.

Are you pleased with your achievement?

50 percent, because there is always something better you can do. I don’t consider myself to have arrived. I think there’s a long way still to go. Every month many more changes are coming.

Milan, November 2019

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