The Take-No-Prisoners Rivalries in Online Luxury Fashion
Here’s how online-only fashion retailers such as Moda Operandi try to outshine competitors and woo customers who favor experiences over things
While Issa Rae and other celebrities were watching the Proenza Schouler show at New York Fashion Week this month, Lisa Aiken, an executive at online retailer Moda Operandi, already was thinking about getting her hands on the jewelry on the runway—and dangling it before her customers in a matter of days.
Ms. Aiken, Moda Operandi’s womenswear fashion and buying director, wanted to be the first retailer to have the chunky aluminum coil necklaces, and lobbied Proenza Schouler’s account executive Alexandra Cook for them at the Monday night show.
However, it wasn’t clear whether Proenza Schouler planned to produce the jewelry and sell it—or just use it in the show. But Ms. Aiken pressed Ms. Cook hard and the fashion house came through. The gold and silver necklaces from the Monday night show were online Friday—for $990 apiece—exclusively from Moda Operandi, along with much of Proenza Schouler’s Fall 2020 runway collection. Ms. Aiken’s lobbying and the subsequent three-day sprint from runway to online sale—which included a seven-hour photo shoot in Brooklyn that ended at 3 a.m.—demonstrates the lengths to which high-end online retailers will go to get an edge on the competition.
Online-only luxury retailers such as Moda Operandi, Net-a-Porter and Farfetch make up more than 40% of online luxury sales, said Federica Levato, a partner at consulting firm Bain & Co. In the increasingly competitive realm, the sites are trying to distinguish themselves by promoting exclusive merchandise and being the first to offer it to customers online. They are also aiming to specialize. “Having a distinct point of view is something that can create a unique customer base,” Ms. Levato said.
Like all high-end fashion retailers, Moda Operandi has to persuade shoppers who value experiences over things to pay three or four figures for a dress or a bag. Retailers also are grappling with a glut of merchandise, sustainability concerns, and consumers turning to secondhand shopping or pouncing on discount sales of designer goods.
Online sales of personal luxury goods rose 22% in 2019 to an estimated $35.9 billion from $29.5 billion in 2018, according to Bain. Online sales are expected to represent 25% of total spending on personal luxury goods world-wide in 2025, up from 12% in 2019.
Moda Operandi was founded in 2010 by Lauren Santo Domingo, a former editor at Vogue, and Aslaug Magnusdottir, an alum of Gilt Groupe, a designer discount-sale site. Their seed money came from friends and relatives; the company since has raised $345 million in financing from venture capital and private equity firms.
To stand out from the competition, Moda Operandi offers many items months before they appear on rival sites, through exclusive deals with designers. The site showcases entire collections—not just some items, like other retailers—and sells them at full price. Such arrangements appeal to designers, who are spared discounting. Those customers like pre-ordering clothes just days after they appear on the runway—a shift from the usual retail calendar in which collections typically don’t arrive in stores until at least six months after shows.
The site sells runway collections through digital trunk shows, which consist of runway shots, photographs and descriptions of items that shoppers can scroll through. Traditional trunk shows, a mainstay of high-end boutiques and some department stores, are exclusive, in-person affairs where customers can preview and order items months before the general public.
Ms. Aiken, who joined Moda Operandi in November 2018 after seven years at Net-a-Porter, described the retailer’s customer as “very fashion forward. She wants [the clothes] to be special but she doesn’t want to feel like something’s wearing her versus the other way around.” The company said trunk show shoppers spend, on average, $2,000 per order.
Patti McGuire, a 66-year-old former hospital co-owner in Anchorage, Ala., became a Moda Operandi trunk-show shopper in late 2016, after spotting a Brandon Maxwell outfit in a magazine. Ms. McGuire, who also was a model and television reporter, attends many charity galas. Moda Operandi’s trunk shows introduce her to newer designers like Mr. Maxwell, Gabriela Hearst and Peter Do, who was born in Vietnam and is based in Brooklyn.
Pre-ordering, Ms. McGuire says, lets her keep pace with stylish women in fashion capitals such as New York or Paris. The early access “does make you feel like you’re part of the gang,” she said, referring to fashion insiders who are the first to wear new looks.
Sales associated with trunk shows represent two-thirds of total revenue, according to Moda Operandi, which declined to provide revenue figures. Deborah Nicodemus, who stepped down as chief executive in 2018, predicted in 2016 that revenue would reach about $165 million in 2017.
Ms. Aiken and her team decide whom to feature in trunk shows. She discovers up-and-coming brands by scouring Instagram or following tips from colleagues. During the month of fashion weeks in New York, London, Milan and Paris, Ms. Aiken hits 101 shows, snapping pictures with a Leica digital camera, and blitzes through 100 showroom appointments. The frenzy concludes with Paris Fashion Week, which runs Feb. 24 through March 3.
After the recent Monday night Proenza Schouler show where Ms. Aiken spotted the necklaces, she and members of her team identified pieces to highlight on social media and their site. To prepare the digital trunk show, they headed to Proenza Schouler’s Manhattan showroom on Wednesday. Ms. Aiken and her colleagues jotted notes on orders and examined clothes, jewelry, bags and shoes. They also selected a number of items that weren’t on the runway—known as “commercial” styles—for the trunk show. Sales of the commercial pieces help Moda Operandi decide what kinds of styles to offer outside trunk shows.
About eight hours later, a van carrying the Proenza Schouler collection arrived at a 30,000-square-foot warehouse studio in Brooklyn. Moda Operandi staff unpacked and prepped each item, more than 50 pieces in all, for a photo shoot that stretched into the wee hours. On Thursday they retouched pictures and worked into the night preparing the trunk show’s web page. Shortly after 11:00 a.m. on Friday, the show went live. A week in, the company said, sales are ahead of their expectations, thanks in part to brisk demand for Proenza Schouler’s thigh-high boots in faux leather, going for $975 a pair.