Thought Economics

A Conversation with Federico Marchetti

by Vikas Shah MBE, June 9, 2021

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Photography by Alex Majoli

Federico Marchetti is a remarkable entrepreneur defined by the New York Times as “the man who put fashion on the net”, has revolutionised the fashion industry. Marchetti founded YOOX, the world’s first lifestyle e-commerce destination, in 2000, way before the launch of Facebook and the iPhone. YOOX was listed on the Milan Stock Exchange in 2009; today, it remains Italy’s sole “unicorn”. In 2015, Marchetti drove the game-changing merger of YOOX and NET-A-PORTER to create the world leader in online luxury and fashion. Today, the Group is a unique eco-system connecting more than 1 billion people every year with the joy of luxury and fashion that lasts a lifetime and beyond. Marchetti has forged important strategic alliances worldwide, including in 2012 a joint venture with the French luxury group Kering, in 2016 with Mohamed Alabbar, the most visionary entrepreneur in the Gulf and in 2018 with Alibaba in China, following YOOX NET-A-PORTER’s acquisition for over 6 billion US dollars by Richemont, one of the world’s leading luxury groups.

Back in 2009 he launched YOOXYGEN, the sustainability platform with collaborations including Katherine Hamnett, Amber Valletta, Vivienne Westwood, Edun and Stella Jean. Around that time, Marchetti’s team developed YOOX’s “ECOBOX”, which is fully recyclable and plastic-free, and is now the standard across NET- A-PORTER, MR PORTER and THE OUTNET. In 2021 His Royal Highness the Prince of Wales invited Marchetti to take on the role of Champion of HRH’s Sustainable Markets Initiative Task Force on Fashion. This follows the success of The Modern Artisan project between The Prince’s Foundation and YOOX NET-A-PORTER, a first of its kind training programme invented by Marchetti, promoting sustainable luxury design and craftsmanship through the use of data and technology.

Alongside sustainability, inclusion and diversity have been central to the ethical approach that Marchetti has adopted over the last twenty years. He runs a mentorship programme for aspiring entrepreneurs from backgrounds that are typically underrepresented in the industry and is a founding member of the Champions of Change Coalition Global Technology Group, which works to advance gender equality in the tech sector. In 2020 Marchetti became the first non-family member to join the Giorgio Armani S.p.A Board of Directors as Independent Non-Executive Director. In 2017 Marchetti has been recognized by the President of the Italian Republic who knighted him as a Cavaliere.

Q: How did entrepreneurship come into your life?
[Federico Marchetti]: Perhaps entrepreneurship is something in my DNA… I don’t come from a family of entrepreneurs and in Italy we don’t have this ‘Silicon Valley’ culture where poor kids get rich. Let me put it to you this way – in Italy, the social strata are stable, and difficult to change. My father worked in a warehouse for Fiat, and my mother worked at a call-centre for Telecom Italia.

Since I was a child, I was always dreaming about new ideas, about the future, about having my own projects. That’s always been a driver for me to create something. I come from a small town in Italy that is close to Venice. In summer, we went to the beach, and I sold Disney comics to my little friends!
My instinct has always been to be an early adopter to differentiate myself, so I remember even in fashion, I tried to spot trends before everyone else. I guess that’s been my biggest quality – to understand what customer’s what, 3 or 4 years ahead of time. That’s more or less probably my biggest quality as an entrepreneur.

Q: Where did your passion for luxury come from?
[Federico Marchetti]: It was 1999 when I came back to Milan, after coming back from completing my MBA at Colombia University in New York. I wasn’t happy with my consulting job and was desperate to go to work on my own project. My roots are Italian, and one of the biggest competitive advantages I could see in product was the Made in Italy aspect of luxury brands. In fact, it isn’t just Italian brands, but many of the world’s luxury brands manufacture in Italy! My time in New York also got me fascinated about the internet, and I just envisioned those two worlds colliding rather than being separate. Luxury brands thought the internet was some marginal technology in 1999, but I could see they would converge. That’s how I came-up with the idea of YOOX.

Q: How did you disconnect luxury brands successfully from the high-street retail-centric model?
[Federico Marchetti]: Today, we are asking the opposite question – will luxury brands continue to be sold offline? 20 years after we started, when people were suspicious about whether luxury brands could be sold on the internet, the opposite question is now the big consideration!

At the beginning, it was important for me to be able to sell online without diminishing the value of the goods I was selling – in fact, I wanted to increase the value. I started in 1999 with end-of-season products – I wanted to give them another life, something which is now seen as a contemporary, sustainable concept.
Ultimately, the answer is always quality. In eCommerce, that means you need transparent and amazing service – people need to believe in delivery dates, they need to trust their data will be private and secure… Everything needs to be at the top level in terms of quality of service- and that’s what I did. I invested most of our money, not in marketing, but in service. That was crucial to our early growth- starting in Europe, but then in America, Japan and the USA.

Content was also critical. Today, Yoox Net-A-Porter has the biggest archive of digital fashion pictures in the world. 20 years of fashion images – more than Amazon! Consumers want magazine style and shoppable images – but also want to interact with innovative techniques such as AI, streaming and more. Content is key.

Q:  Did your passion for arts and culture drive your entrepreneurship journey?
[Federico Marchetti]: An appreciation for culture, art and aesthetic is super-important. Being Italian definitely helped me- we are surrounded here by beauty.

If, in 1999/2000, we had come up with a basic catalogue website – I wouldn’t be talking with you now. We tried really hard to make our website beautiful as well as fast. I focussed all my efforts on this – and in the last 20 years I believe I have become a hybrid entrepreneur – believing in the power of technology and process, but also in the very deep humanistic point of view. I guess it’s a weird mix of Italian with Silicon Valley.

Do you know which company started mixing aesthetic and technology? It was an Italian company called Olivetti. They made typewriters which were designed by amazing architects. They were just beautiful – and they were the precursor to the Apple Mac. Steve Jobs came to Italy and wanted to meet with Olivetti. He didn’t want to meet the CEO or owners, he wanted to meet the architect, Mr. Bellini. He knew how to make a beautiful, functioning, product.

Q: What has been the role of sustainability in your journey?
[Federico Marchetti]: I started the sustainability journey with my company back in 2008, at the time, sustainability was basically non-existent.  I launched a beautiful project on YOOX called YOOXYGEN. All these journalists came but didn’t know what to write about – sustainability wasn’t something associated with fashion!

Sustainability firstly is about the durability and longevity of product. Think about watches- we can buy a watch that will be worn for 10-20 years, and pass it on from generation to generation. That’s a durable product. Fast fashion is the opposite extreme- it’s something you wear perhaps for a season. 40% of the total number of products bought in fashion eCommerce are never used, what a total waste. Let’s also be frank – the luxury fashion industry has some issues in terms of sustainability. In the last decade, there’s been an acceleration in terms of sustainability – and the pandemic has accelerated this even more. Today, more than ever, customers want sustainable products – especially younger customers. They take more care of our planet.

The most important thing now is to engage all fashion brands in accelerating the sustainability journey. I’m very honoured to have been appointed as Champion of His Royal Highness’ Sustainable Markets Initiative Task Force on Fashion. I’ve put together a dozen of the biggest brands in the world, the biggest retailers, and we’re creating specific, measurable, concrete goals.

I have an innovator mindset and try to look at things differently. I believe that technology, data and innovation can definitely help to save the planet.

At the end of 2020, we launched a 10-year program called Infinity to tackle sustainability. It’s a program designed to be people positive and planet positive which encourages circular business and the circular economy. Fashion has always been a linear business terms of production, consumption and so-on. We need to move it from linear to circular to make it more sustainable. In supply chain, there are also many technologies which are helping transparency. For our own private labels, we’re creating digital ID, like a product passport. Each garment has information attached so that people can see right up the supply chain to the people who made the product and can also learn more about how to re-commerce the product, how to care for it, and repair it. This gives a circular life to the garment.

We need participation from the regulators. We still don’t have a standard-definition of what sustainability means for products. Is it something made of 80% sustainable materials? 100%? What is the definition? The sustainable markets initiative will tackle these questions and hopefully bring the biggest nations and businesses together around it.

Q: What does legacy mean to you?
[Federico Marchetti]: As an entrepreneur, you always want your creation to leave an impact on the world. I had a dream when I was 29, and today – 5 million customers share that dream with me, and we have more than 1 billion visits per year to our website. It’s been one of the most amazing experiences of my life.
I decided to step-down as CEO last year, and today I’m the Chairman for the transition to a new CEO, which is almost completed. The word legacy is therefore more important to me than ever.

In the Divine Comedy, Dante Alighieri travels through hell, purgatory and paradise. For the past 20 years, I’ve been taking globally renowned luxury brands on this digital journey – and one of the legacies I feel I have left, is to help the fashion industry become digitised. I was the first to do it, and for 20 years I’ve tried hard to show that you can deliver quality, service and brand online.

Moving forward, I want to help people build start-ups that become unicorns. I am still the only unicorn in Italy! Can you believe it? One of the best ways for me to give-back therefore was to become a professor, and to share my journey and advice with the next generation. I will be teaching at Bocconi University (from where I graduated) and will be teaching a course on creating start-ups in the digital and sustainable economy. I feel it’s important to share my experiences with the next generation, and more important now than ever before.

Originally published on Thought Economics