Cyber Week 2020 brought the newcomer fashionette record results. The Düsseldorf-based e-commerce company for premium and luxury fashion accessories recorded an increase in new customers of +93 percent. The editorial team of Personal-Financial.com talks to CEO Daniel Raab, among other things, about the data-driven business model, the above-average profitability, the international expansion and a possible IPO of the competitor Mytheresa.
Personal-Financial.com: fashionette describes itself as a “data-driven online platform for premium and luxury fashion accessories”. Is that just a PR-wise description for an online store for handbags or what exactly is behind it?
Raab: Fashionette’s data-driven business model is based on intelligent algorithms, among others for efficient inventory management and a personalized shopping experience through tailor-made marketing campaigns and a curated product selection. The best possible shopping experience for our customers specifically leads to increasing order volumes. Ultimately, the trust of customers in fashionette is reflected over time in the growth in average sales per year. Another important aspect: our customer acquisition costs pay off with the first order.
Personal-Financial.com: In another interview you mentioned technology “as the heart of our company”. How do you differentiate yourself from the competition?
Raab: The market segment for fashion accessories is traditionally based on emotional decisions, especially in the premium and luxury segment. At fashionette, the many years of fashion and luxury expertise of our employees meet data-driven decision-making processes. This resulted in our proprietary technology, which not only enables us to control all of our digital business processes and at the same time increase operational efficiency and effectiveness, but also to react flexibly and quickly to market changes and opportunities. In addition, this basis enables a personalized approach based on customer data in order to offer the best possible shopping experience. Buying a particular pair of sunglasses does not mean that the customer only wants to receive offers for the same brand or product category the next time they visit. The technology makes it possible, by analyzing the general usage data of our shop, to offer customers personalized and highly individual consulting services, which, for example, correspond to their diverse interests by displaying relevant products.
Personal-Financial.com: How long has fashionette been around and how is your profitability?
Raab: Fashionette AG’s roots go back to 2008. The website was officially launched under the fashionette.de brand in 2009, with a clear focus on premium and luxury accessories right from the start. We reached break even in 2013 with sales revenues of 13 million euros and ran our first TV spot in 2014. With a new logistics concept and an updated, contemporary appearance of the website, fashionette generated sales of more than 50 million euros in 2017. As mentioned, our data-driven approach contributes to fashionette’s profitability. In 2019 as a whole, we achieved an operating profit margin of over 9 percent on an EBITDA basis. The bottom line is that we are also profitable in terms of net income. This sets us apart in a peer group comparison.
Personal-Financial.com: Last week you reported on new record results in Cyber Week and throughout November 2020. Are your capacities designed for growth rates beyond 40 percent?
Raab: It is our clear goal to become Europe’s leading online platform for high-quality fashion accessories in the premium and luxury segment and to grow faster than the market. We are prepared to drive our geographic expansion and the expansion of our product range through organic growth as well as selective acquisitions. At the same time, we are increasing the efficiency of our processes while consistently pushing ahead with the expansion of our platform. It is consistently designed for scaling. This is shown by the fact that we have almost doubled our product range in the past twelve months. We not only have to buy, store and ship every single product, but also create the content for our webshop. Our scalability includes the required quality, for example in the creation of product photos and descriptions.
Personal-Financial.com: To what extent has the IPO in October already had a positive effect on the awareness of the fashionette brand and customer demand?
Raab: The IPO has, of course, contributed to employer branding and the perception of potential partners, suppliers and service providers. The main success drivers for our customer demand are the shopping experiences of our customers. It is our greatest aim to offer you an individual and inspiring shopping experience; We have managed to do this very well so far. We were able to increase our new customer growth by 93 percent in November.
Personal-Financial.com: Your focus so far has been on the DACH region of Germany, Austria and Switzerland. Most recently, however, you reported an increase in new customers of 184 percent in non-German-speaking countries. How are you currently positioned internationally and what are your further expansion goals?
Raab: We are currently active with online shops under the fashionette brand in eight countries and still generate around 90 percent of our sales in Germany, Austria and Switzerland (DACH). The aforementioned growth in new customers in our non-German-speaking countries, France, Great Britain and Italy as well as the Netherlands and Sweden, shows the great international expansion potential of fashionette. With the expansion of our market position in these countries and the penetration into other European markets, we want to become the leading online platform for premium and luxury fashion accessories in Europe with fashionette. We have many years of experience in both organic and inorganic growth and pursue a goal-oriented process with a view to promising European acquisition targets.
Personal-Financial.com: In addition to consistently expanding your platform, you also want to further increase your efficiency. Which levers are available to you to further increase your profitability?
Raab: Since its foundation, fashionette has had a successful track record in the combination of dynamic but profitable growth, on which we will continue to orient our actions in the future. The scalability of our business processes and our proprietary technology also contribute to this. This also shows the effectiveness of our investments in the early use of suitable cloud services. We also know our customers very well and are convinced that we can inspire them with many other products. We want to further develop and monetize the resulting cross-selling potential for the benefit of both sides.
Personal-Financial.com: With Mytheresa, one of your direct competitors is aiming for an IPO on Wall Street – supposedly with a valuation of billions. Do you see a danger in this with regard to the competition for investors?
Raab: We are of course pleased that another German company with a clear focus on fashion is going public, because it emphasizes the great potential and vitality of our specialization in fashion accessories in the premium and luxury segment. We consider our positioning in a sweet spot to be complementary because we represent both an entry point into premium fashion accessories and an addition to the world of luxury. We are excellently positioned to focus on realizing our own goals and convince investors to participate in the dynamic development of a very attractive niche market with our shares.
Personal-Financial.com: Where should fashionette’s journey take us over the next few years?
Raab: Customers are increasingly discovering the advantage of buying premium and luxury items online. Generations Y and Z in particular, i.e. customers between the ages of around 20 and 40, will grow in online retail with personal premium thanks to a more conscious attitude towards luxury and in view of their high affinity for the internet in general and e-commerce in particular – and continue to contribute luxury items. From a demographic point of view, Europe is still an extremely attractive region for the range of premium and luxury fashion accessories from fashionette. Orders via mobile devices make up a considerable part of the total volume. We can score especially in this area. More and more customers are ordering from us using their smartphone or tablet. According to market researchers, the segments handbags, luxury leather goods, luxury shoes and luxury glasses, which are important to us, should show annual growth of 11 percent to 18 percent in Europe between 2020 and 2023. The premium and luxury segment is still clearly underrepresented in online trading and thus offers strong growth potential in the short and medium term. We expect that fashionette will continue to benefit from the accelerated shift from stationary retail to e-commerce in the European market segment for premium and luxury fashion accessories.
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