The World is Not Enough

The thing people always talk about first, when they are talking about Net-a-Porter, is the packaging. For a company known for being on the leading edge of online fashion, it is surprisingly anachronistic: The black, beribboned bags that arrive, brimming with tissue paper and the promise of a life-changing ensemble, could just as easily have been delivered by uniformed footman to Eloise’s Plaza as summoned via the internet into the one inhabited by Russian oligarchs. “It’s like getting a present,” the company’s president, Natalie Massenet, likes to say, which sounds whimsical but isn’t. Elaborate packaging is integral to the Net-a-Porter brand. It was central to Massenet’s vision when she started the company in her apartment in 1999, on the premise that good old-fashioned luxury and the utilitarian promise of the internet need not be mutually exclusive, and has remained so even as the company has expanded to become one of the leading players of global e-commerce.

“I love the personalized label,” a fashion blogger commented to Toby Bateman on a Wednesday evening in July. Bateman is the head buyer for Net-a-Porter’s men’s site, Mr. Porter, where $2,600 Missoni sweaters and $25 vintage pencil sets arrive in boxes on which the customer’s name is written in elaborate script. “How do you do that?”

Bateman took a sip of his Champagne. The company was celebrating, as it often is. On this night, the party was in conjunction with a new vendor, shoemaker Harrys of London, which has an outpost in the Burlington Arcade, a cobblestoned alley lined with 19th-century shopfronts that had been transformed for the evening into the site of an alfresco dinner party. At 60 degrees, the evening air was balmy for London and tingled with the smell of expensive aftershave. Handmade paper mobiles by artist Zoe Bradley twirled above the dinner table, which was set with fresh flowers, place cards for 100, and menus promising cuisine from a Michelin-starred chef. Waiters passed plates heaped with delicately sliced prosciutto among guests that included an actor whose character had been killed off on Game of Thrones and a member of Irish pop band Boyzone. But the journalists in attendance were focused on Bateman. “We said, If we wanted to do this, how would we go about it?” he recalled about asking members of the tech team, who, he said, were used to above-and-beyond requests. They quickly came back with a solution, although it involved buying a specialized printer for each desk where packages were wrapped. “We asked, Should we do it? I mean, it’s really expensive.” Bateman shrugged in bemusement. The journalists chuckled.

“Now you are going to be getting those long, multisyllabic Thai names,” one of them pointed out, referring to the upcoming merger with the Italian e-commerce company Yoox, which is expected to help grow Net-a-Porter’s market in Asia.

“Yes,” Bateman said, looking down into his Champagne glass, which was empty.

Back in March, after its parent company, the Swiss luxury retailer Richemont, announced it had struck a deal to merge the site with its rival at a $1.5 billion valuation and in exchange for half of the combined company, Net-a-Porter did its best to make it seem like cause for celebration. It wasn’t losing a family; it was gaining a new one. “Today, we open the doors to the world’s biggest luxury-fashion store,” Massenet said in a press release that noted she would be staying on as chairman while Federico Marchetti, Yoox’s founder, took over the role of CEO. “Together, with our world-class teams in technology, logistics, content, and commerce, we are redefining the fashion media and retail landscape.”

There was a Brady Bunch sort of symmetry to the match. The companies had started at the same time. They did pretty much the same thing — selling designer clothes on the internet — but they were in some ways polar opposites: Yoox is known primarily as a discount shop, one that sells end-of-season stock on a bare-bones website and uses its technology to run back-end operations for brands like Armani. Net-a-Porter is a mainly full-price site for which selling stuff can sometimes seem incidental to creating beautiful editorial content. For all the talk of togetherness, it was unclear how the companies would get along. But if there was any doubt about who was going to be in charge, Marchetti cleared it up during a “Lunch With the FT” interview this spring: There is one boss, the Italian CEO said while deboning his fish, “and that’s me.”

Since then, there has been an undercurrent of anxiety within Net-a-Porter about what awaits the staff in October, when the merger is expected to close, and how such an haute-couture company will take to being marketed to the masses. At the moment, they’re drinking Champagne while they can. “Should we get another?” Bateman asked.

The Champagne was still fizzing from the last dot-com boom when Massenet launched Net-a-Porter. Growing up in Los Angeles as Natalie Rooney, the daughter of a Chanel model and Hollywood publicist, she’d dreamed of becoming a magazine editor, and in her 20s she landed in London at Condé Nast’s Tatler, working as an assistant to stylist Isabella Blow and ascending to senior fashion editor. Tatler, which mainly covered the doings of London’s “It” girls, was not an end goal: Massenet had a vision for new kind of fashion magazine. “A global fashion magazine” on the web, according to her then-colleague Lucy Yeomans, one that would take service a step further by helping people buy the things they read about online. Frustrated by Condé Nast’s disinterest in the internet, and turned down for a job at Vogue, Massenet struck out on her own. Using £1.2 million cobbled together from her then-husband, the French investment banker Arnaud Massenet, and a group of friends, she created Net-a-Porter. “At her kitchen table,” goes the lore, although the domesticity of that detail feels, again, a little too whimsical when you look at the results.

At the time, luxury brands had little interest in selling their wares online. The prevailing sentiment was that designer clothes did not belong in a marketplace known for trafficking primarily in electronics and porn. But Massenet managed to convince several designers, including Bottega Veneta and Anya Hindmarch, to trust her with their precious names. In an industry where charm is in short supply, Massenet is known for being “nice.”

More important, she was known for her good taste, and Net-a-Porter, as she conceived it, was a tasteful website. The selection of clothing is not aggregated by an algorithm but lovingly chosen by someone with authority and style. The clothes are presented on models, styled and shot by professionals, and the editorial content has the same aspirational, transportive qualities as that in fashion magazines. (“The elegant red sleeve folder they are presented in is also upcycled,” it says of the vintage pencils, “from cardboard that is 50 to 60 years old.”) The setup was comforting and familiar, both to designers, who were protective of their brands, and to consumers, who appreciated the sense of order in an otherwise-ragtag marketplace. “It’s so easy to navigate; you can look by designer, by size, by color,” says Leah Chernikoff, the online editorial director for Elle. “You feel taken care of. Hey, Ruthie,” she calls to a member of her team. “When do you look at Net-a-Porter? First thing in the morning, right?” Right.

“They were all packaged like presents,” Christian Louboutin once recalled of when he first saw Net-a-Porter’s signature black bags materialize at the home of Daphne Guinness. In 2002, Net-a-Porter sold out of 50 $1,000Chloé bags, and Chloé’s parent company, Richemont, made its first investment in the site. This helped the company weather the dot-com bust that took “e-tailers” like boo.com and LVMH’s eluxury.com off the map.

Being located an ocean away may have helped, too. Europe was slower to embrace the internet than the U.S., which meant the reverberations from the dot-com bust were less traumatic and the playing field less crowded with established players; there was an opportunity for start-ups to gain a foothold. London is now also home to Asos, a purveyor of trendy, lower-priced clothing; Matches, which is not unlike Net-a-Porter; and Farfetch, which sources its goods from a network of small boutiques. In Germany, there’s MyTheresa. And in Italy, there’s Yoox, which Marchetti, a former investment banker, named in part because it is easy to pronounce in China.

“Proximity” — not just to fashion houses in Europe but also to customers “in the rest of the world” — was another crucial reason behind European e-tailers’ success, says Chris Morton, who worked for a venture-capital firm that invested in Yoox and then, watching it take off, founded Lyst, an e-commerce platform that aggregates other sites’ sales. While businesses in the United States were struggling with how to sell to people in their own backyard, he points out, the European sites were snapping up global shipping rights and figuring out the necessary Customs procedures to sell everywhere else. When the market started to come back, they were well positioned to take advantage of it.

Both Yoox and Net-a-Porter quickly became forces to be reckoned with. Marchetti proved to be as persuasive as Massenet in getting brands on the web, although his selling point was more tech savvy than taste: Though luxury houses weren’t as impressed by Yoox’s aesthetics, they were intrigued by the company’s access to consumer data, as well as its ability to run their online operations. (In exchange for this service, Yoox takes a little over a quarter of sales.)

Meanwhile, Massenet, with her rusty-red bob, Mid-Atlantic accent, and eye for fashion, was like an Anna Wintour 2.0, the new person designers needed to impress. “She quickly became someone people watch,” says Julie Gilhart, the longtime buyer for Barneys, who now works as a consultant for luxury brands. “I remember seeing her at Paris Fashion Week one year, it was right after the iPad came out, and she was taking pictures and writing on it and sending them. And I was thinking, That really looks kind of uncool that you have this iPad. But then the pictures would be on Net-a-Porter, like, instantly, and meanwhile I was, like, fumbling with my point-and-shoot, and I felt like a Beverly Hillbilly.”

Massenet was no longer interested in being a mere editor-in-chief. She had bigger, global aspirations, as indicated by the name she gave to the London warehouse where Net-a-Porter housed its goods: Distribution Centre One. In 2007, Net-a-Porter opened Distribution Centre Two, as well as an office, in New York. Three years later, eager to expand more, she and a group of early investors agreed to sell a majority stake in the company to Richemont. The deal, which valued the company at $533 million, netted Massenet what the Guardian estimated to be $76 million — enough to retire to a private island. Instead, she stayed on as executive chairman and invested $23 million back into her company, which allowed her to retain a small stake against Richemont’s 93 percent. Not long after, Net-a-Porter opened Distribution Centre Three, in Hong Kong, and moved its headquarters to spacious new offices in London, where it held a tenth-anniversary party at which guests sipped margaritas (Massenet’s favorite) and subtly ogled Victoria Beckham.

Ascending the elevator to Net-a-Porter’s London office is a surreal experience, not just because it is located inside the Westfield mall, a high-end shopping center full of the kind of brick-and-mortar stores Net-a-Porter might put out of business, but because it is decorated in exactly the same way as every other Net-a-Porter office in the world. Even the distribution centers have the same black-and-white color scheme, the same white leather couches and glittering chandeliers, the same half-stairway, half-bleachers area where employees gather for announcements and pick up their own Net-a-Porter orders, and, this summer, the same television playing something called Net-a-Porter TV, on which the same stylist exhorted visitors to “make Roman sandals a part of your look.”

It’s a world not unlike a high-end hotel chain, which is the point: “I wanted to make sure that the whole company was unified, like you were opening one door from one office space and then entering another one,” explained Massenet, who was sitting in a glass conference room one day last month, crisply attired in a white shirt that contrasted elegantly with her black leather chair. “The wall treatments are meant to be a nod to a Parisian apartment, and the chandeliers are there to balance out the tech aspects of our business, because I believe in yin-and-yang balance,” she went on. “This is a business about fashion, but we’re also about service and technology, so there’s not one without the other.”

Massenet herself exhibits this duality. Even though she’s now a kingpin, she’s still known for being nice. As British Fashion Council president, she instituted a practice of making sure every table at gala events has its own bottle of tequila. She was an inspiration for the summer beach read The Knockoff, in which a fashion-magazine editor triumphs in the tech world by virtue of her humanity. “She is lovely,” a former employee, who does not view others in the company as kindly and therefore did not want to be named, told me. “You can literally email her, and she will email you back. She doesn’t believe in having a separate office, she wants to hear about everything. She is active at every company event, she stays the whole time, she will come and dance on the floor.”

But beneath this accessible, perfectly groomed exterior lie layers of sophisticated code. Talking about how Net-a-Porter jettisoned its website template when it launched Mr. Porter in 2011, because it “didn’t want to be encumbered by the old ways of thinking,” Massenet fully inhabits the role of tech-company founder. “Oh, it was probably Natalie” is the thing people at the company say when you ask where the idea for some detail originated, like the ticker at the bottom of the site’s home page that tells you what the world is buying right now. (No matter where, sales spike at night: “Wine o’clock,” they call it.) Or the Net Set, a social platform with Pinterest-like photos and a Shazam-like function that lets you take a picture of, say, someone’s shoes and find a similar pair to purchase. (“I told the mobile team that I wanted them to come up with something that would replace Net-a-Porter,” Massenet told me. “Something that showed me in real time what was happening and let me find it.” That was her directive, she said, laughing: “Show me. Find.”) She’s also the one who came up with the idea to film a good-bye video for retiring CEO Mark Sebba — featuring a live gospel choir, acrobats, costumed dancers, a mariachi band, a Chinese dragon, Scottish bagpipes, and thousands of employees doing a synchronized dance — that went viral last year.

Sebba has not been replaced. At the moment, Net-a-Porter is being run by Massenet and Alison Loehnis, another formidably toned and well-accessorized American expatriate, who, like Massenet, is pretty much the embodiment of the Net-a-Porter customer. Internally, this customer is known as She. Data and market research indicate She is “38 years old,” says Stephanie Phair, who runs the Outnet, the company’s discount site. “She travels six to nine times a year for leisure. She’s very fashion-forward. She wants it first. And she lives all over the place.” (He, the Mr. Porter customer, is essentially the same person, only more interested in analog writing utensils.)

The company bends over backward to service Them, providing same-day delivery in Hong Kong, New York, and London, and seasonally in the Hamptons. There are special sales for EIPs (Extremely Important People). Occasional collections are tailored to their needs, like this spring’s “Ramadan Edit” for the Shes of the Middle East. A squad of personal shoppers headed by Lupe Puerta, a globe-trotting former shopgirl fromVivienne Westwood, stocks the virtual carts of women from San Francisco to Moscow, most of whom they never physically lay eyes on. “Some of them send pictures,” said Puerta, who one day this summer was sitting in a Bridgehampton hotel room that her department had transformed into a Net-a-Porter “Style Suite,” so customers could interact with the brand and order clothes on an iPad if they felt like it. At noon, a pair of waiters wordlessly swapped out the untouched croissants for tea sandwiches and re-iced the Champagne.

In February, Net-a-Porter hired Sarah Rutson, the British fashion director for the Hong Kong department-store chain Lane Crawford, to be its vice-president of global buying. Tall, beanpole skinny, and charmingly batty, Rutson is revered by street-style aficionados for her ability to put together an outfit, which she says she finds absurd. “Look, I have been around 30 years,” she told me one day in London, talking a mile a minute, her blonde hair flapping into her face as she walked to the Pain Quotidien downstairs from the office. “I am one of the best in the business. I’m a left and a right brain and I am a businesswoman with vision and an opinion leader and one that’s respected. And you know, it’s lovely that people think I dress well, but the financial portfolio I’m running” — she patted the large sheaf of spreadsheets she had been carrying around under the arm — “I could stand very happily with some men on Wall Street. But it’s ‘I love Gucci, it’s so glamorous, you get to go to runway shows.’ Yeah, I do, that’s fine. But that’s actually the bit that drags the time. You can’t get to this level going, ‘Well, I really love pink and I really love a poppy shoe.’ ”

Though she admitted you do have to have a certain instinct. “History can tell you so much about the life cycle of a brand, and then you go into a showroom and you’re like, You know what? This collection is gonna do it.And that is my job to say, ‘I don’t care if we’ve had a rubbish sell-through for five seasons in a row. It doesn’t matter, we’re gonna pile in money.’ ”

Rutson’s mandate is to increase sales in Asia and the United States, so the pressure is on for her bets to be scrupulously correct. “It’s exciting, it’s extraordinary,” she says. “But oh my God, the pressure.”

“Do you go on that Net-a-Porter?” Jerry Seinfeld asked Julia Louis-Dreyfus on an episode of his web show Comedians in Cars Getting Coffeein June. “I thought so,” he said, nodding. “All you good-taste girls love that.” The exchange, which ended with Louis-Dreyfus calling Seinfeld’s wife for advice on how to get on the site’s EIP list, set Net-a-Porter World aflutter; I must have been asked five times if I’d seen it. When I did watch it, I noticed no one mentioned the part where Louis-Dreyfus, talking to Jessica Seinfeld, says, “Who buys this crap?”

The answer to who buys the merchandise is: not as many people as the company would like. Although Net-a-Porter has come to occupy a significant amount of what tech companies like to call “mind share,” being name-checked by comedians and A$AP Rocky hasn’t necessarily translated into immense sales. As the CEO of one company who sells merchandise on the site put it to me: “Everyone loves Net-a-Porter. They are great at everything. Except making money.”

In the years after it was acquired by Richemont, Net-a-Porter spent heavily on expansion and acquisitions. It bought a Chinese e-tailer, Shouke, which it transformed into an outpost of the Outnet, and equipped its distribution centers with robotic equipment that matched the black-and-white color scheme. (“There he goes,” an operations manager at the warehouse in Mahwah, New Jersey, said this summer, as a mechanized arm reached out to grab an Alexander Wang T-shirt. “She, I mean,” he said sheepishly.) The company launched Mr. Porter, created the Net Set, and, last year, debuted the fashion magazine of Massenet’s dreams: Porter, a quarterly publication with thick, glossy pages readers can shop from with a scan of their iPhones. Its arrival was heralded in a manner that recalled, well, Condé Nast in the ’90s: There were parties in New York and Milan, culminating in an extravaganza at the Hôtel Salomon de Rothschild during Paris Fashion Week, at which Alexander Wang and Rihanna danced until the wee hours. (“Net-a-Porter Means Ready to Party,” read the New YorkTimes headline.)

None of this was cheap. But even as Net-a-Porter posted losses — £27 million in 2012, £23 million in 2013, £10 million in 2014, according to filings with a U.K. regulator — Richemont allowed it room to grow. “I think they gave them leeway, which was important,” says Luca Solca, an analyst who covers the luxury industry for BNP Paribas. “But the true measure of value creation is that you outperform your peers.”

By this measure, Net-a-Porter was perhaps not measuring up to expectations. The first-mover advantage it enjoyed for the entirety of its existence was evaporating. People had gotten a lot more comfortable shopping on the internet. “Their customers don’t feel like they have to go to Net-a-Porter to buy a Chanel bag anymore,” says the former employee who had nothing but kind words for Massenet. “They are going to Farfetch. They are going to Matches. They are going to Yoox.”

During the same time period, Yoox had also expanded. It had started a spinoff site, thecorner.com, on which it sold mostly full-price luxury goods, and shoescribe.com, on the premise that women buy shoes online more than almost anything else. It was running the websites for 38 brands. And it was out of the red. “Business is meant to be profitable,” Marchettitold the Telegraph in a profile that compared his business favorably against Net-a-Porter’s.

The competition was only going to get stiffer: Neiman Marcus had recently purchased MyTheresa.com. Farfetch was acquiring Browns, a high-end boutique. Brands were selling clothes off their own websites, and department stores were gaining ground on the web. Even Condé Nast was getting in the game and is slated to relaunch Style.com next year as what its London-based CEO, Franck Zayan, calls a “luxury-lifestyle commerce destination.” Amazon was moving aggressively into high fashion, and though designers still blanched at the idea of selling $2,000 sequined cape dresses alongside the Kindle edition of Fifty Shades of Grey, they did so while conceding that capitulation was inevitable. And the specter of Alibaba loomed above them all.

Richemont’s CEO, Johann Rupert, the scion of a wealthy South African family whose economic views have earned him the nickname “Rupert the Bear,” has not been shy about his feelings on the Chinese e-commerce colossus. “You want to compete against that?” he asked an audience of entrepreneurs at an event last year. “Not me.”

In the year ending March 2015, Net-a-Porter declared a small profit, but by then, Richemont had made up its mind. “There’s going to be higher and higher competition, and Richemont is very smart about where they can make returns,” says Solca. “You combine forces.” This may not even be the last iteration of the newly christened Yoox Net-a-Porter Group. After the merger was announced, Rupert admitted at the Financial Times’ Business of Luxury summit that he’d called rivals and begged them to form an even larger alliance. “I was speaking to [LVMH CEO Bernard] Arnault, I was speaking to [the luxury holding company] Kering,” he said. But even though Richemont will own half of the combined company, it will enjoy only a quarter of the voting rights. The boss will be Federico Marchetti.

To all outward appearances, Massenet is confident Net-a-Porter will continue to operate as usual. “It’s a beautiful, well-oiled machine,” she says of the company in its current state. “It’s beautifully crafted and operates at intense speeds and it’s very sleek and it looks as beautiful on the inside as it does on the outside.”

Beauty, of course, is in the eye of the beholder. “I have known Federico, and he is a no-bullshit kind of guy,” says Solca. In his statements, Marchetti has praised the excellence of Net-a-Porter’s editorial content, but some are skeptical that the company’s more extravagant projects — like Porter and Mr. Porter Post, a quarterly published on newsprint — will survive. “It’s my expectation he will be streamlining lots of things,” continues Solca. “He’s an engineer kind of manager, and Yoox is a very quantitatively driven company, where Net-a-Porter is more artistic. It’s very clear that now that Marchetti is taking over, things will be different.”

Yoox did not make Marchetti available to talk about his plans, though it did reiterate that he was “the one and only spokeperson for all matters related to the merger.” This was clear enough at Net-a-Porter, where questions about it were deflected. In the glass room with Massenet, I started to ask about a recent interview with Bloomberg TV, after which it was widely reported she’d said she’d stay at the company. “That’s not what I said,” she interrupted. “They didn’t ask. I was talking about where I saw myself in the future. Which I always say, being happy and innovating and thriving.”

“Oh,” I said. I asked if she was in fact staying. “Nice try,” she said. So I went with another question. How did she react when Marchetti boasted to the Financial Times that he was going to be the sole boss?

“I don’t think I need to answer that,” she said evenly, and continued without changing her tone. “I just have to say that if you are going to pursue this kind of questioning and if your article in any way insinuates any kind of rift or difficulty or am I leaving or am I staying here — I am here to talk about the business. I am chairman of the combined entity, I have a responsibility to a publicly listed company, and I am not here to be gossipy or salacious about anything, and I think it’s important that we keep on that tone.”

So we did. Elsewhere in the building, a group of employees broke into a rousing rendition of “Happy Birthday,” which gave the moment an extra patina of awkwardness.

A few weeks later, it came out that minority shareholders in Net-a-Porter had exercised a right, written into the 2010 contract with Richemont, to seek an independent valuation of the company going into any merger. The $1.5 billion figure the deal had been based on was an “insult,” Carmen Busquets, an early investor and friend of Massenet’s, told WWD, adding that she believed the marriage to Yoox was “hasty,” that Massenet should have been named co-CEO, that she and Massenet had tried to buy back the company earlier in the year, and that she regretted giving Richemont the reins in the first place. “Natalie and her team have created a company that has a brand name in high fashion, with multiple business lines and editorial content,” she said. “Why merge it with a discounter? Would Cartier merge with Swatch?”

The minority shareholders secured a new valuation, of $2.34 billion. This is unlikely to affect the deal with Yoox but would increase their payout should they decide to cash out and cut loose. “I cannot speculate on whether Natalie will choose to stay,” Busquets wrote me in an email. “However the new structure will not be easy for her. I respect Federico, but I question the logic of these two companies together, and of the new personnel structure. Richemont has co-CEO’s, but as Johann put it, they are both ‘big boys.’ Maybe that is a quality where Natalie doesn’t qualify in their eyes.”

“Since the day I started the company, I have thought about what it will take for this business to have momentum and keep going forward regardless of who is in the company,” Massenet told me in London. Perhaps because she’s a female founder, people often refer to the company as her baby. “When you have a child, my whole goal is that my 15-year-old goes to university and is independent and can cook herself an omelette one day. And do her own laundry. And I think …” she trailed off.

It seemed like there was more to say, but instead we said our good-byes and a publicist walked me downstairs. On the steps, a uniformed worker was laying out bags containing orders of things employees had bought from the company. You couldn’t tell what was inside the bags. But it looked beautiful.

*This article appears in the August 10, 2015 issue of New York Magazine.