MyTheresa, the Munich based online luxury fashion retailer, launched their IPO in January 2021. Their share price jumped more than 37% on the first day of trading – to $35.85, and with a vaulation of $3.08 bil. One month later, it is sitting at $32.81 – still pretty decent.

 

What makes Mytheresa stand out? In their prospectus, their value proposition to their customers are (i) trusted discovery platform, (ii) exclusivity (iii) superior services for a differentiated shopping experience and (iv) special brand experience for their top customers. 

And for their merchants (which they call Brand Partners) – (i) online visibility, (ii) innovative and engaging content, (iii) be the brand stewards and helping brands upkeep their integrity , (iv) data driven and customers insights. 

 

These are the real problems that luxury brand and their custormers face- i.e the lack of trust, care, and cultivation of the relationship. Luxury brands want exclusitivity – and many ecommerce platforms do not have this seperation – mixing luxury brands with more common brands. On the customer’s side, most e-commerce platforms sell speed and efficiency, and hard to show a luxury brands’ care for their customers. Customers on the other hand do not trust platforms to give authenticity. “How can I know that this bag is real, when I can’t see it?”  Especially in a place like China, the proliferation of fake goods bothers the entire e-commerce industry. In 2013, Shangpin, a well-known E-commerce platform, was found selling counterfeit Burberry goods and later sued by the brand. In 2019, Shangpin announced their bankruptcy as they lost trust from both consumers and brands.

 

The concerns of brands and consumers provide an opportunity for MyTheresa. They have neen using a number of strategies to promote MyTheresa as a trustworthy high-end luxury e-commerce platform –I spoke with a Momentum Works commuity member who is close to this market. She told me that MyTheresa focuses on a very specific customer group – i.e. . customers who are/  will  purchase luxury products regularly.  Mytheresa uses past data including payment method, location, categories they usually visit, etc to analyze customers and predict their future behavior. In particular, in the trend-driven industry, the company has to constantly update their model in order to catch their key audiences. 

Mytheresa target customers are provided tailored services so to make them long-term loyal customers. For example, they will provide those customers with exclusive offers and give them the privilege to shop pre-sale items before other customers. Their approach creates a cycle as the brands are attracted to these wealthy customers and therefore these luxury brands will give MyTheresa special offers. In this way, MyTheresa can secure the top-seller items from these top brands for their target customers. For top elite customers, they go one step further to personalise their experience through “ money-can’t-buy-experiences” – , personal shoppers and in-person styling suites across the globe.

Our MW community member pointed out that there are quite a number of good stories and numbers in their IPO prospectus.  A few extracts on 2020 numbers (year ending June 2020) : 

  • A key component of our customer experience is a mobile and app-first approach – 78% of page views and 53% of orders came from a mobile app;
  • Delivered 47,000 SKUs and generated a €600 average order value.
  • The average customer shopped approximately twice per year and spent approximately €900 
  • 65.6% of net sales in 2020 came from existing customers.
  • 92% response rate by their customer service team within 20 seconds and are expertly equipped to assist our sophisticated luxury customers. 
  • CAC accounted for approximately 85% of our total marketing expense

More juicy intel in their IPO prospectus here. 

It contracts what is happening with Secoo, one of China’s largest luxury ecommerce platform. Their CGO,  Ren Guanjun, said last year that indicated that “pure luxury e-commerce has no future as platforms are not manufacturers of luxury goods. Once brands stop supplying goods, platforms come to an end.” Their stock price has been going down for the past few years, and in Jan 2021, they are now considering going private. 

MyTheresa is the tech darling of the quarter (not sure what will happen next quarter), but there are many interesting innovative lessons in providing “differentiated customer experience” – regardless of the industry. At the end of the day, balancing your customers base (upcoming and affluent), maintaining brand affinity and being profitable – are all the pieces any businesses that want to stand out from the mass market experience.   

Insight about Mytheresa article from Julia Samodurova, a MW community member, founder of Unmarketd

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.