Luxury online shopping platform Yoox Net-A-Porter (YNAP) under the Richemont group is set to exit the Chinese market due to sluggish consumer spending putting increasing pressure on the operation of high-end brands in China.
According to a report by Bloomberg on June 14th, a spokesperson for Richemont stated in an email declaration that YNAP, the online retail platform under Richemont, plans to concentrate investments and resources on its core and more profitable regions.
An anonymous source revealed that Fengmao Trading Company, a joint venture of YNAP and Alibaba Group Holding Ltd., is currently in liquidation.
As YNAP is pulling out of China, the Chinese middle class has become more cautious in terms of consumption. The economic downturn in China has led to dim prospects, reduced household wealth, and an increase in youth unemployment. Some high-end brands on online shopping platforms are facing a surge in returns and order cancellations, while others are offering significant discounts to boost sales.
The Swiss luxury group Richemont mentioned in its May earnings statement that following the failed attempt to reach an agreement with Farfetch Ltd., the group is seeking to sell the majority stake of YNAP’s online platform. Negotiations are underway with potential buyers, and more updates are expected to be disclosed by the end of the year.
Net-A-Porter entered mainland China in 2013 but has been struggling to gain market share in the competitive online shopping industry since then. Its sister platform, Outnet, exited the Chinese market in 2015.
With mainland consumers no longer splurging on high-priced items and seeking bargains instead, YNAP’s online shopping suppliers have been severely impacted by the post-pandemic economic slowdown in China. High-end consumption during major holidays and shopping festivals this year continues to remain subdued.
In October 2018, Alibaba Group announced the establishment of a joint venture company with Richemont’s global luxury e-commerce giant Yoox Net-a-Porter, but specific details regarding the joint investment ratio and amount were not disclosed.
Yoox Net-a-Porter consists mainly of platforms like Net-A-Porter, Yoox, The Outnet, and Mr. Porter, with Net-A-Porter being the flagship platform. It was founded in 2000 by British fashion editor Natalie Massenet, drawing inspiration from her work experience in fashion magazine editing.