Luxury online. Is anyone making money?

As Robert M. Pirsig wrote in Zen and the Art of Motorcycle maintenance," there are issues similar to discovering a tooth with a missing filling. You can never leave it alone. . You have to work around it, push it, think about it, not because it's enjoyable but because it's on your mind and won't get off your mind". I've been thinking about the false expertise for a while now. The base scenario for this: as soon as people become "liked" on SM they become an ultimate authority on basically everything. Exactly a year ago there were numerous epidemiologists given advice on corona, last week shipbuilding engineers told us in detail what to do with the vessel in the Suez channel (none of those people have any credentials). 

Fashion is not an exception to this phenomenon. 

One of the hottest subjects is selling luxury online. All types of publications from Bloomberg to Jing Daily are publishing the experts' opinion:" if your luxury business is not fully integrated into an online format - you can start digging yourself a grave on 5th ave". The fact that many "seasoned", established online luxury retailer like Net a Porter or Matches are making losses lately instead of profit (Matches has just let go the CEO who was hired right before the pandemic, even with the majority of physical stores been closed, the company failed to perform) is not taking into consideration. Why? We are in a digital era, everything has to go online! Profit? Margin? What is this?

I would like to list a few specifics that contribute to not so successful high fashion business online.

1. The time of staying on a floor at a regular price for runway items is about 8 weeks. Delays are very common because this is highly intricate production work, every season (we are talking designer's brands) there are new patterns, fabrics, factories, etc.

2. Availability is low: only a few (sometimes 1 or 2) items of each size are purchased, because of the high price. Therefore when items are shipped to the client and later returned the size/ sizes that were purchased often missing from the site. Because this is a designer's collection clients often don't know his/her exact sizes, sometimes few sizes are purchased and returned later.

3. Price of the transaction is high: because of the competition, shipping and returns are often free (even for the 2nd day). This cost also includes the process of the order, picking the order, packaging, processing returns steaming the merch, etc.

4. Very little human interaction: salespeople on a floor can do magic, and if brands have good brand ambassadors - you are golden.

5. Markup: WS to retail mark up is not 4 or 5. It's 2.1-2.3.

So, taking all of this into consideration, plus minding the competition, try to make a profit. 

 Almost impossible. The logistics (its technology) is not there yet. A lot of functions are way too expensive at this point.