Mytheresa is introducing a new inventory model. Getty Images.
Mytheresa built its fast-growing business with a traditional retail model. It would buy wholesale from brands and then sell to shoppers.
But today the German online luxury retailer announced it will introduce a new way of working with brands. Instead of buying from them wholesale, it will start holding inventory from select vendors in its warehouses and ship directly to customers who make a purchase. The inventory, however, will still belong to the brand. Mytheresa, meanwhile, will book a fee on the sales. What makes the arrangement novel is Mytheresa will still be curating its selection of items as it normally would. It calls it a curated platform model.
“It’s clunky,” chief executive Michael Kliger says of the name, “but we just wanted to really say it’s not a marketplace, it’s not e-concession, it’s another version.”
A key element in the company’s success has been its careful choice in what it sells. While Farfetch boasts a library of more than 3,500 labels, Mytheresa carries a bit more than 200 brands. The company has emphasised close relationships with those partners, which have been key to it building the loyal clientele of valuable shoppers who make up the core of its business. In fiscal 2020, the top 2.6 percent of its customers made up about 30 percent of its total sales, it said in a regulatory filing. They tend to be occasion-based buyers, turning to the company for items such as a new dress for a trip to Capri.
So far, Mytheresa isn’t saying which brands it will work with on these terms, but it will begin rolling the programme out shortly. It expects less than 20 percent of its total merchandise sales will come from the new model to start. Gradually, that level will rise, but the company doesn’t expect it to surpass 35 percent in the long term. Customers will see no changes on their end, according to Kliger.
As Mytheresa sees it, the arrangement will give it access to more inventory and allow for in-season replenishment of items that are selling well, helping to fuel its growth without it having to buy the inventory itself. Growth has been strong for the company, especially in the past year. In fiscal 2021, ended June 30, Mytheresa’s sales reached €612.1 million ($722.7 million), rising 36.2 percent above their level last year and marking their fastest pace of growth in years.
Kliger attributed the acceleration to an ongoing shift among luxury shoppers toward buying online, with some assistance from the boost the pandemic has given e-commerce. But while the company still anticipates strong growth in the year ahead, it expects growth to moderate some.
As the company’s new curated platform model takes effect, and Mytheresa shifts to collecting a fee on what previously would have been regular sales, it could also see a slight slowdown in revenue, even as its overall merchandise sales continue to rise. The potential impact on Mytheresa’s profit and loss statement drew a number of questions from analysts on the company’s earnings call to discuss its latest results. The stock closed nearly 14 percent lower than its close the prior day. Kliger, however, was confident any such effect will be temporary.
Targeting big spenders with busy schedules, not discount hunters, has been a profitable approach that led to an IPO exceeding expectations. However, competition for those clients is fierce.