Yoox Merger With Net-a-Porter Creates A Force To Be Reckoned With

Online retail has traditionally been associated with low cost, but Italy's

and fashion website

have proven that there is also a market out there for online luxury retail. Now the two have decided to join forces and cement their position as a major player in the quickly growing industry. On Tuesday, Yoox announced its plans to buy high-end fashion website Net-a-Porter in an all stock deal that will create Yoox Net-a-Porter Group, estimated to be worth around $2.86 billion. The new company is expected to generate over $1.4 billion worth of revenue per year.

The merger comes at a time when online retail is taking off and luxury goods consumers are beginning to turn to the web rather than visiting brick and mortar stores. Its estimated that about 40 percent of the world's luxury brands can't be found online, but that statistic is slowly changing as high-end department stores like

and

establish more of an online presence.

The Best Of Both Worlds

Retailers like

Amazon.com Inc.

and

Alibaba Group Holding Ltd.

have become increasingly interested in the fast growing luxury market, but Yoox and Net-a-Porter have the advantage of experience on their side. Yoox is responsible for the technology behind several high-end designers' websites and runs three designer clothing retail sites of its own, while Net-a-Porter's business focuses exclusively on selling designer clothing and footwear. Yoox founder and CEO Federico Marchetti told the

that the merger will allow both companies to benefit from the other's strengths. Net-a-Porter is well known for its editorial content and ability to engage customers, something that Marchetti said Yoox is lacking.