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Fashion's best-kept secret

Yoox, as befits a website happy to be known as the "best kept secret in fashion", trades largely on cachet.

Since its launch in 2000, 30 million people have visited the e-tailer, lured by discounted couture from the major fashion houses and exclusive designs from up-and-coming stars.

The site now receives 1.5 million users a month. But Federico Marchetti, the company's chief executive, having flown in from Milan for London Fashion Week, insists that each customer is part of a distinct - if global - set.

'We are a mini-multinational aimed at internet-savvy fashion lovers,' he says.

'Our customers don't just want what's in the stores and they don't to be told what to wear by Vogue. They are fashion savvy, but not fashion victims.' Low prices – 50 per cent off last season's Alexander McQueen, for instance - are an obvious draw. But Signor Marchetti says it is the selection of goods that makes Yoox a 'uniquely compelling proposition'.

'Each item that you find on Yoox is only on Yoox," he says, “which means we do not really have any competitors.' The catchy pitch is supported by the fact that 70 per cent of Yoox's users are return customers. Signor Marchetti has made a point of sidestepping regular marketing ploys, preferring instead to rely on satisfied fashonistas spreading the word.

A no-questions-asked returns policy and a self professed 'constant attention to detail' have won followers across Europe and America. Japan will soon have its own virtual store and it is hoped that word-of-mouth will help send the Yoox message across Tokyo.

The buzz has also spread to the more conservative confines of the business world. Not least because, backed by Benchmark Capital, Yoox hails from the same finance stable as eBay, the e-tail behemoth.

Signor Marchetti has found himself in demand on the financial news channels as a string of deals - headed by Google - has brought online businesses back into focus.

But if eBay is the world's largest virtual jumble sale with revenues expected to reach £2 billion in 2004, Yoox is an exclusive - and tiny - boutique. It has sold £25 million worth of fashion this year and expects to return a profit for the first time.

Indeed, Signor Marchetti is suspicious of suggestions that e-commerce is enjoying a revival. 'We hear people saying that the internet is striking back. But this sense of a new dot.com cycle is driven by the media and by financiers,' he says.

He is critical of the wildly over-optimistic business projections that pumped up the 1990s bubble, insisting that that Yoox is built on an old-economy plan. 'We didn't try to say what each advert would earn, or what revenue we could put down for each user,' he says.

'Instead we looked at old fashioned things like costs and margins. This way we raised funds at the very worst time in the history of the internet.'

He admits, however, that his company would like in 'two or three years' to go public. In light of the internet’s very patchy record on the exchanges, Signor Marchetti will be aware that Yoox will have to prove itself highly market savvy if it wants to avoid becoming another market victim.