LVMH to launch its eCommerce site

Luxury goods group LVMH will reportedly launch its own multi-brand e-commerce site in March and offer all 70 of its brands on one site, according to the Financial Times. The site will be part of Le Bon Marché, the Parisian department store acquired by LVMH in 1984, and also sell other brands from outside the conglomerate.

This is not LVMH’s first foray into multi-brand fashion online retail. In 2000, the company — which counts Louis Vuitton, Fendi, Céline and other brands in its portfolio — launched eLuxury as a platform for luxury designer apparel, accessories, beauty and children’s collections. However, in 2009, LVMH announced that it would shutter the retailer as its brands began to launch standalone e-commerce operations. (eLuxury was, in turn, relaunched as editorial platform Nowness).

The new e-commerce site will mark LVMH’s most significant digital investment since hiring Ian Rogers as chief digital officer in 2015, which signaled to many in the industry that the conglomerate was finally ready to integrate digital into its business. “The luxury business is in a great position relative to where the world is going,” said Rogers, describing the luxury business as a “mass [market] of niches.”

LVMH’s re-entry into the online market now is very late to the game. However, it is indicative of a higher priority afforded to digital operations and e-commerce channels since Rogers joined the company.

It is unclear if the new online iteration of Le Bon Marché will operate on a wholesale or marketplace model, although wholesale is the likely avenue. The wholesale model requires inventory risk and having high working capital, but the company will still capture the full retail margins. The drop-ship marketplace model, in which the platform usually takes a commission on sales in order to generate revenue, makes ensuring a consistent shipping experience difficult. Working predominately with its own brands would ease some of those challenges, however.

In fiscal 2016, LVMH saw revenue increase 5 percent to €37.6 billion ($40.2 billion) and profits increase 6 percent to €7 billion ($7.1 billion). Its selective retailing category, which includes Sephora, duty free retailer DFS and Le Bon Marche — all multi-brand retailers — saw the highest growth at 7 percent.

While e-commerce still only makes up a small percentage of overall luxury goods sales, online sales grew four times faster than offline sales between 2009 and 2014. However, McKinsey & Company predicts it will triple to €70 billion by 2025 — representing 18 percent of total luxury sales — and then plateau. Overall, growth in luxury goods has slowed down since 2015 as Chinese demand lessened. The market is expected to grow only 0.5 to 1 percent in 2017, versus the 8 percent compound annual growth rate between 2010 and 2015.

But a slowdown in overall growth hasn’t stopped several major industry players from getting into the multi-brand e-commerce game over the past two years, including Galeries Lafayette and Condé Nast (with its relaunch of Style.com). As competition heats up, established players have turned to consolidation — see Yoox’s merger with Net-a-Porter and Neiman Marcus Group’s acquisition of MyTheresa.com — in order to scale further.

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