After days of speculation that Amazon was planning to buy UK online luxury retailer Net-A-Porter, the latter has announced that it will be merging with Italy’s online retailer YOOX, which sells out-of-season luxury fashion at discounted prices.

YOOX’s €3.2bn merger agreement with Net-A-Porter’s controlling shareholder, the Swiss firm Compagnie Financiere Richemont, will create the combined company of YOOX Net-A-Porter Group, covering 180 countries.

Details of how Net-A-Porter's and YOOX's tech platforms will be merged have not been revealed. Image credit: Net-A-Porter

In a press release, YOOX said that the merger will help to cut operational costs as the companies move to “one common global technology and logistics platform that will connect all storefronts and distribution centres...thus allowing for one virtual global inventory”.

However, no details have been provided about how the companies will go about creating the single shared technology platform, and how it will affect the work currently being led by Net-A-Porter’s CIO Hugh Fahy to transform the company’s technology platform to enable it to be more innovative.

A tale of two tech platforms

Net-A-Porter is a “dotcom startup that succeeded”, according to Fahy, who is responsible for a 300-strong technology team at the company. He recently told Techworld how the firm, which was founded in 2000, was pursuing innovation by going back to its startup roots.

In addition to providing the technology for its three brands, Net-A-Porter.com, Mr Porter and The Outnet, the group also provides white label services to some of the world’s biggest designer brands. For example, the Jimmy Choo website is run by Net-A-Porter, and it also provides Givenchy’s mobile app.

YOOX also boasts a strong technology background, and bears some similarities with Net-A-Porter. As well as providing the platform for its three sites, Yoox.com, Thecorner.com and Shoescribe.com, the company provides the technology platform for the e-commerce sites of more than 30 designer brands, including Armani, Dolce & Gabbana, Valentino, Lanvin, Diesel, Moschino, Stella McCartney and Alexander McQueen. It refers to the white-labelled service as its ‘mono-brand’ offering.

Is YOOX the favourite?

Although it is not clear how the two companies’ technology platforms will be merged, the scales may be tipped towards YOOX’s technology platform. The company’s statement said that it hopes to provide “YOOX’s leading mono-brand offer to Net-a-Porter’s top brands” and to use the unique aspects of both companies, such as “Net-A-Porter’s award-winning editorial, integrated marketing platforms and luxury customer service” and “YOOX’s creative web agency expertise”. Apart from the marketing platform, the statement notably did not refer to Net-A-Porter’s technology platform, which is based on the Perl programming language.

Meanwhile, YOOX does make it clear that it expects to see cost savings from “technology and operations”.

“The optimisation of the global logistics platform combined with a more efficient localisation of inventories, closer to the customer, will drive efficiencies in delivery and fulfilment costs. Additional scale scale benefits are expected from bundling top logistics and technology suppliers,” it said.

“Capex synergies are expected to primarily arise from optimisation of research and development investment across the two organisations.”

The combined company hopes to achieve €60 million of annual run rate EBITDA and capex savings by the third full year following completion, with half coming from revenues and half from cost and capex savings. The transaction is expected to close in September 2015.

Net-A-Porter’s founder, Natalie Massenet, will become executive chairman of the new company, while Federico Marchetti, founder and CEO of YOOX, will become its CEO.

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