How Luxury Retailers Use Marketplace to Advance their Ecommerce Strategy while Maintaining their DNA

Produced by


RJ Cilley

Saks Fifth Avenue

Adrien Nussenbaum

Co-Founder and Co-CEO

In an era where e-commerce has become the backbone of retail, luxury retailers are finding innovative ways to advance their strategies while preserving their brand essence. This movement towards digital transformation was the focal point of a discussion between RJ Cilley, the COO of Saks Fifth Avenue, and Adrien Nussenbaum, Co-Founder and Co-CEO of Mirakl, during a session focused on how luxury retailers are utilizing marketplaces to their advantage. The insights shared provide a compelling narrative of adaptation, innovation, and strategic growth in the challenging yet opportune landscape of luxury retail e-commerce.

RJ Cilley, with a background that transitions from investment banking to becoming a pivotal figure in e-commerce within the luxury retail sector at Saks Fifth Avenue, shared a narrative of evolution and adaptation. He emphasized the journey from traditional retail models towards embracing marketplaces, a venture that began with skepticism but has now become a cornerstone of Saks Fifth Avenue's strategy. "It's been a journey," RJ stated, acknowledging the initial resistance and eventual embrace of the marketplace model as a scalable and flexible solution to expanding Saks' assortment and meeting brand partners' needs.

Adrien Nussenbaum, providing a broader industry perspective, underscored the importance of innovation and adaptability in retail. He painted a picture of an industry at a crossroads, where embracing new business models like marketplaces is not just an option but a necessity for growth and sustainability. Nussenbaum's views on the technical and business foundations necessary for a successful online marketplace were clear: It requires a deep understanding of brand DNA and a commitment to maintaining this essence through curated and personalized customer experiences.

Saks Fifth Avenue's marketplace journey, as detailed by RJ Cilley, is a testament to the retailer's strategic foresight. Beginning with a dropship business model, Saks evolved its approach to establish a marketplace that offers flexibility both to the retailer and its brand partners. This evolution was marked by a shift towards an asset-light model, allowing Saks to showcase a wider range of products without the constraints of inventory ownership. RJ highlighted the critical role of technology in scaling this model, noting the transition from a "scrappy, hacky, and not scalable" approach to leveraging Mirakl's platform for efficiency and growth.

The discussion ventured into the specifics of concession models, where brands retain certain controls, such as inventory and packaging. RJ clarified the nuanced relationship between concessions and marketplaces, emphasizing adaptability and the tailored approach Saks takes with each vendor. This flexibility has been crucial in maintaining the luxury retailer's brand integrity while expanding its product offerings.

One of the session's key themes was the challenge of balancing marketplace expansion with the preservation of brand DNA. RJ provided insightful examples, such as the strategic focus on high-margin, sought-after categories and the careful selection of brands that align with Saks' luxury image. This careful curation and the decision to remain a closed marketplace underscore Saks Fifth Avenue's commitment to its identity and customer expectations.

Operational challenges, particularly around seamless integration of third-party products with Saks' own inventory, were candidly discussed. RJ shared the guiding principle of owning and solving customer problems as their own, regardless of the product's origin. This customer-centric approach, coupled with robust vendor communication and problem-solving strategies, exemplifies Saks' dedication to an exceptional customer experience.

In reflecting on the marketplace's future, RJ projected significant growth, envisioning marketplaces and dropship ventures to constitute a substantial portion of Saks Fifth Avenue's business. This ambition speaks volumes about the strategic importance of the marketplace model in Saks' overall business strategy.

The session concluded with sage advice for retailers contemplating their own marketplace launches. RJ emphasized the importance of starting with a clear vision and a set of non-negotiables that align with the brand's core values. His advocacy for building a "100-year business" by focusing on long-term goals rather than short-term gains resonates as a strategic blueprint for success in the evolving landscape of luxury retail.

This rich discussion between RJ Cilley and Adrien Nussenbaum offers invaluable insights into the complexities, challenges, and opportunities that luxury retailers face in adapting their e-commerce strategies. Saks Fifth Avenue's journey from skepticism to strategic embrace of the marketplace model underlines the transformative potential of innovation, adaptability, and unwavering commitment to brand essence in the digital age.

APRIL 2024