Within the luxury industry, conventional wholesale practices have always, by definition, involved selling goods and services through a retailer who purchases the pieces and resells them to the general public. Recently however, the Prada Group and Richemont owned Net-a-Porter have closed an unprecedented deal which may signal a transformation in the future of multi-brand retailer operations.
Net-a-porter is part of the YNAP group, a unique ecosystem of 4 multi-brand online stores which resell the ultimate curation of fashion, an exceptional assortment of jewelry and watches and products from over two hundred beauty brands. Prada, on the other hand, is an Italian luxury fashion house which has retained its independence in an industry which has seen a spiking increase in luxury conglomerates in the past decade. In recent years, Prada has been committed to driving sales through D2C channels in order to achieve control and higher margins compared to those offered by traditional wholesale. Although 90% of its sales today are direct, this hasn’t stopped the group from venturing into an unconventional drop-ship model deal with the luxury e-commerce site.
When implementing a drop shipping method, stores don’t keep the products they sell in stock, they purchase the item from a third party and ship it directly to the consumer. Typically, Net-a-Porter purchases pieces which are then held in their own inventory and then resold online with a markup. With this new deal however, Prada will own and control the inventory whereas Net-a-porter will earn commission on Prada and Miu Miu items sold through its website.
Although the wholesale model won’t cease to exist, it is undeniably evolving and decreasing in usage. “The benefits of these new types of arrangements are clear. Not only does the flexibility make luxury brands happy, but there is far less financial risk for the retailer. No longer do they have to invest upfront in inventory that they are not sure they will be able to sell at full price — if at all (BoF 2021).”
By Cosima Rattazzi