What: The luxury e-commerce sector, including prominent players like Farfetch, Matches, and Net-a-Porter, experienced significant declines in US consumer spending throughout 2023, raising concerns about the sustainability of the multi-brand luxury retail model.

Why it is important: This downturn comes at a time when luxury brands, which initially hesitated to embrace online sales, have now fully adopted e-commerce, becoming direct competitors to these platforms. The shift in consumer spending towards brand-owned channels questions the viability of the luxury e-commerce model and whether the current challenges are temporary or indicative of a deeper issue within the industry.

Luxury e-commerce has faced a challenging year, with notable platforms like Farfetch and Matches struggling amidst declining sales and operational challenges. Despite the overall growth in luxury e-commerce, consumer preference has shifted towards purchasing directly from brand websites, leaving multi-brand retailers to grapple with issues like limited product assortments and competition on price. Successful platforms like Mytheresa have managed to grow by offering exclusive products and experiences, highlighting the need for differentiation in the market. However, the high costs of logistics, technology, and customer acquisition pose significant challenges to profitability and growth. As luxury brands continue to expand their direct-to-consumer sales, the future of multi-brand luxury e-commerce remains uncertain, with potential implications for the broader luxury retail landscape.

The uncertain future of luxury e-commerce