The luxury e-commerce crisis is a crisis for the entire fashion industry We asked industry insiders how to save it from itself

Last September marked a watershed in the world of online luxury retail with the failure of SSENSE, one of the marketplaces that just a few years ago promised to revolutionize the world of luxury and the accessibility of fashion. It was not to be. Announced at the end of 2024 and culminating in a bankruptcy filing last year, the collapse of SSENSE, which has now initiated a restructuring process, is not just an isolated story of crushing debts and unexpected customs duties, but a wake-up call for the entire sector, which has been hit across the board by a discretionary consumption crisis (some would argue it's a reorganization of spending patterns that penalizes fashion) during which both major brands and leading luxury e-commerce platforms have seen business volumes plummet and accumulate debts quarter after quarter. For years, the main players in the fashion system have favored rapid growth at the expense of financial sustainability, in an increasingly saturated market of brands, increasingly flooded with products but above all with brands that demand total control over distribution channels. 

Last week, as explained by BoF, SSENSE was still up for sale despite having rejected an attempt at forced cession. Co-founder and CEO Rami Atallah announced to employees on September 17 that he and his brothers, Firas and Bassel, would participate as bidders to acquire the company, following the same rules as other potential buyers. The decision will still be made by the court. After obtaining bankruptcy protection in Quebec to avoid sale by creditors, the company received temporary financing of 40 million dollars to seek external funds and settle debts. The financial difficulties stem from the 25-35% tariffs imposed by the Trump administration on Canadian imports and the closure of a tax loophole. Additionally, the company faces declining demand and the loss of products from major brands. In 2024, Ssense generated 1.3 billion dollars in sales, down to about 900 million or 1 billion in 2025 (with a 28% drop in the first half of the year), with liabilities of about 371 million dollars. Atallah also announced new layoffs and a temporary layoff for some employees, without immediate liquidation obligation, with possibilities for reinstatement or severance in the future.

«The collapse of SSENSE is a clear signal of how quickly the fashion market can change in times of uncertainty», states Meital Shapira, Menswear Buyer at Printemps. «In the past, e-commerce promised convenience, time savings, and more competitive prices, often thanks to de minimis exemptions that made online purchases cheaper than local ones. Today, however, consumers face longer shipping times, unexpected costs, and higher taxes. The value-to-cost ratio has changed, as have customer expectations. But even if tariffs and the elimination of de minimis exemptions have been cited as the cause of SSENSE's collapse, they have acted only as catalysts for a deeper crisis». And it is precisely on the complex chain of causes and consequences that are marking an increasingly acute disruption of the market that we wanted to investigate by interviewing buyers and multi-brand sector experts at both the Italian and European levels.

A Step Too Far

Starting from the particular, the collapse of SSENSE is rooted in a combination of internal and external factors that have exposed the cracks in its business model. The marketplace had thrived during and after the pandemic, but as the revenge spending came to an end, not a few critical issues emerged. The tariffs introduced by Trump, finally, delivered the final blow. Beyond these, Alina Flamel, founder of The Flamel, told us, «I believe one of the main causes of SSENSE's failure was the sudden price increases by major brands. […] Prices, which could have increased gradually over a decade, were raised in just a few years, alienating consumers more drastically. This was a key factor that led to the failure of SSENSE and other multibrands in the last two years». As Flamel points out, consumers have begun to invest their savings in experiences like travel and restaurants, accelerating an already ongoing trend. «Fashion today should be seen as an integral part of the entertainment industry and not just as a consumer goods sector», Flamel concludes.

But the roots are deeper. According to the buyer of a well-known multi-brand who preferred to remain anonymous, one of SSENSE's problems was «a strategy of permanent markdowns and overbuying» along with «a selection based on non-exclusive products and an assortment that was too broad and redundant». Furthermore, «the lack of a long-term strategy by top management, excess purchases, surcharges, and a shortage of innovation in the luxury market» contributed to the crisis according to the buyer, who concludes by hoping «that the top management of large groups becomes aware in choosing partners to collaborate with in an organic and sustainable way. For retailers, the collapse of SSENSE is positive because they won't be forced to practice price matching; though they shouldn't dance on the enemy's grave but learn from its mistakes».

For Manuel Marelli, buyer and creative director, the causes of SSENSE's bankruptcy «are multiple: a growing detachment from the real customer, a toxic obsession with numbers, non-existent margins, and a race to the bottom that has eroded every value». A macro-problem to which is added «a not very incisive research and a model that, as cool as it appeared, was already outdated. It is the symptom of a system that has privileged finance over substance». Meital Shapira of Printemps adds that one of SSENSE's mistakes was «blurring the boundaries between exclusivity and accessibility by positioning luxury brands alongside streetwear for Gen Z, while practicing constant discounts. The result was an overload of irrelevant information that confused customers instead of guiding them». This type of problem does not concern only SSENSE but the entire sector. We remember Farfetch, sold to Coupang in 2023 to avoid bankruptcy, or Matchesfashion in liquidation after acquisition by Frasers Group. Ynap, devalued by billions, was acquired by Mytheresa in 2024. 

SSENSE, with its focus on streetwear, amplified these problems: inflated prices post-Covid, logistics complicated by tariffs, and a consumer hunting for discounts. «Unfortunately, to date, the customer, given the continuously increasing prices, is always hunting for the discounted price, so a sort of race to the bottom has been created», notes Alessio Aramini, Head of Buyer Man at Luisaviaroma. The result is before our eyes. Even Francesco Tombolini, senior brand advisor whose résumé includes administrative roles at Giglio.com, Yoox-Net-a-Porter, Armani, and Gucci, describes a sector that has created «horizontal growth that has created more confusion than an IKEA on the weekend. Management costs have exploded, the treasury has gone to pieces». Expanding the scope of the reasoning, these causes reveal general patterns: luxury e-commerce has seen a reversal after Covid, with declining revenues and increasing debts. Only exceptions like Mytheresa, which acquired Ynap with 555 million in cash and zero debts (against 5.3 billion in 2018), or Zalando with the merger of About You for 1.1 billion, are thriving. But for SSENSE, returning to Manuel Marelli's words, the failure is «a clear signal: the system must change, and soon». But how?

The Impact of SSENSE's Collapse

The SSENSE case has the potential to create a domino effect. «Independent designers will lose the main platform to grow quickly: SSENSE was often the first to discover them and keep them constantly in stock when no other multibrand did», explains Alina Flamel. Without this platform, visibility vanishes, and the market contracts. The anonymous Milanese buyer agrees: «Independent designers will be penalized both financially and in terms of visibility». For multi-brand retailers, the impact is ambivalent. In the short term, they gain market share «but since the overall credibility of the sector decreases, the gain will be short-lived. Consumers will tend to prefer established brands over emerging ones, and this will also affect their purchasing choices. In my opinion, the greatest loss in this case is of a “cultural” nature», Flamel concludes. 

A point echoed also by Meital Shapira for whom «multi-brand retailers are fundamental to the sector, as they enable the discovery of new brands and create a curated universe in which customers can move fluidly between different brands». Also for Manuel Marelli the SSENSE crisis «is the photograph of a bubble that has now burst: inflated numbers and an unsustainable price war. For luxury, it means that the mass customer has lost interest and passion; for independent designers, it is a wake-up call to look beyond the sparkle of ephemeral illusions. For retail, finally, it is the moment to rethink the model: leaner, smarter, and closer to the real needs of the end customer».

We need people who truly understand the evolution of society and economic geopolitics - these will be the two basic ingredients of the future of retail. When you see sixty-year-old executives trying to decipher TikTok as if it were a Mayan code, you understand that the problem is not technological, it is anthropological». Alessio Aramini instead says that «luxury brands today are trying to restrict the number of customers to have greater control over the market, prices, and discounts; marketplaces can increase visibility, but the brand must preserve the experience and authenticity. To stand out, storytelling, tailored services, high-quality logistics, and transparency are needed».

For Alina Flamel, however, «the challenge of the multi-brand model in general is that it remains too focused exclusively on “things”. Consumers want a complete world of brands to immerse themselves in, not just a shelf of products. The future of multi-brand retail must include partnerships with restaurants, accommodations, and cultural brands, offering experiences that extend fashion to lifestyle and entertainment». And she is echoed by Marelli for whom «more specific realities are needed, with a more human dimension. Personalized selection is needed, no longer macro and undifferentiated. It is essential to truly know one's customer base: understand who has the real spending power and what the correct target is for one's model. It is no longer time to chase volume, but to build authentic and sustainable value».

From Boom to Decline

Moving to an even more general picture, the evolution of multi-brand retail in recent years has been a real rollercoaster: from the initial boom in the mid-2010s, in which fashion became democratic and accessible online, to the pandemic crisis, the explosive recovery, and now a contraction that for many could prove fatal. In the last ten or fifteen years «luxury brands have transformed into real giants thanks to multibrands, making both physical stores and e-commerce of once less distributed and niche products accessible», says Alessio Aramini. Yet, «today, however, both multibrands and marketplaces face a challenge: the homogenization that comes from a uniform acceleration of purchases among luxury brands, which risks removing part of the originality and personality of the shopping experience». 

Tombolini in fact paints a more chaotic picture: «Post-Covid we witnessed such explosive digital growth that it felt like being in the Wild West: everyone was shooting, few were aiming. [...] Talking about "luxury" with assortments of 200-300 brands is like saying you're running a Michelin-starred restaurant with the menu from a local festival». According to Tombolini, only about thirty-five of the top brands («25 of which are in the hands of LVMH and Kering», he specifies) managed the triple channel consisting of physical retail, proprietary e-commerce, and external multibrands; other luxury brands have lost relevance or market share, or there have been conflicts between marketplaces like in the case of Cettire which buys stock from third-party “gray” sources for aggressive discounts, eroding prices and exclusive control; as well as high management costs and an out-of-control treasury. «And now everyone is looking around wondering: "But who turned off the music?"».

According to Aramini, the change has also involved the consumers themselves who «today have returned to the search for the "original" brand, which offers higher margins to multibrands and, to the customer, that accessible exclusivity that is currently missing. I believe the key is targeted collaboration between luxury brands and marketplaces where personalized experience and exclusive launches can help convince the consumer». And in fact Tombolini says he has seen physical stores in South Korea but also in Central Europe «selling three times as much as established Milanese multibrands. Why? They have built assortments close to their consumers». For him, the main problem lies precisely in approximate strategies on which brands, consultants, and retailers have settled and which have resulted in a «channel conflict on all fronts: brands against multibrands, large e-commerce against small shops, and everyone selling to the same poor consumer who is now more confused than we are. The solution is not to eliminate someone from the game, but to stop treating all channels as if they were clones. Diversify assortments not only in products, but also in depths. Revolutionary, right?»

«Many brands confuse knowledge of the buyer with knowledge of the wholesale market», Tombolini continues. «It's like confusing knowing how to drive with knowing how to repair engines. Commercial directors should go back to driving around the squares instead of living in video conferences. Meanwhile, marketplaces are doing the dirty work: going from shop to shop, square to square, to really understand the potential. The uncomfortable truth? It doesn't matter if you have the coolest brands or the most beautiful store - today the differential is made by the team». But the problems go even further: «Brands are demonstrating with some reckless distribution choices that they do not know the market. They have fed the parallel market and given very low margins to many traders, putting some markets on their knees. Many brands do not understand that the logic of imposed budgets no longer works; they must understand the potential of their product within this assortment of each individual store». For Tombolini, moreover, «it would be appropriate to both cultivate a local clientele and provide products more tied to each Market. For example, a price designed for Dubai can never be a price designed for Milan or Venice».

The future of online marketplaces in luxury retail, for Tombolini, is marked by a new competition between digital and physical stores. According to him «digitals are closing like bars after lockdown, while physical ones resist». The brands, which have long benefited from digital partners, have not yet done a «mea culpa» for their role in the crisis of the latter: «It's like inviting someone to dinner for months and then disappearing when the bill arrives». Furthermore, the United States “de minimis” regulation, which limits cross-border sales exempt from tariffs, will drastically change the digital landscape. Tombolini suggests a rethinking of contracts: «No more seasonal orders, but annual volumes with defined delivery and payment plans», a model similar to that of watch dealers. He also proposes investing in «local micro events», because «a consumer from Trani has the same dignity as one from Sankt Moritz».

So What to Bet On?

Looking to the next season, Tombolini identifies three epochal problems that influence marketplace choices: a «generational conflict», with major brands no longer attracting Gen Alpha; a «geographical revolution», with the emergence of brands from unexpected markets; and an «AI-pocalypse», where «in three years many brands will sell thanks to their visibility in artificial intelligence search engines». Searches will shift from traditional engines to chatbots and language models, making expensive fashion shows obsolete. The winners? «Nordic brands, evolved retail labels, Korean brands», while the losers are those anchored to outdated concepts of “luxury” and “aspirational”. For Tombolini, success no longer comes from making «the right product», but from «knowing how to build one's consumer in advance», understanding «why they buy» through «the referentiality of communities and the transversality of messages».

For the future of the sector, Tombolini hopes for a «radical re-education» to build solid relationships between brands and traders. Tombolini concludes with a call to rethink the concept of agency: «Fewer budgets to strategic consulting firms that live in 2010, more investments in those who really know how to intermediate with 2025 customers». In a market where saying that something is bought «because it's beautiful» is «more outdated than Nokia 3310s», the future of luxury retail depends on the ability to understand and build the consumer, leveraging communities and local strategies to create authentic and lasting connections.