Back in April 2001, Mark Quinn Newall wrote a white paper on valuing the company he co-founded…

NAP is the best Fashion E-commerce Luxury content-based website in the world, and as such it is fairly valued and a good investment.

  • First round of private financing valued shares at £14
  • The second round of financing valued shares at £19
  • The current round shares valued at £23.5
  • When this round closes N.A.P. will approach any further financing/ deals with a higher valuation.

NAP has successfully navigated the most difficult period which included the building of a website, the creation of a brand, the establishment of worldwide duty paid delivery system, the creation of internal logistics and more – all of these which were not implemented at the initial £1.4 million valuation.

Since then, NAP has proven that it can consistently grow its revenue – according to plan, and controlling growth while insuring ZERO customer defection, growing the company valuation to £5 million today.

In some cases, business has had to be ARTIFICIALLY SLOWED DOWN, by not sending out emails to customers announcing new stock so that orders are slowed down.

NAP management who are investing in this round at the £5 million valuation believes it is a fair valuation.

1 – Business Margins:

Luxury market business: Gross margins are at 65-70% of Sale price on other brands, eventually up to 80-90% on own label products.

2 – Competition:

IE why the margins will remain high.

  • No one is selling same brands,
  • Barrier to entry, to create a viable website doing Worldwide fulfillment cost in excess of $5 million.
  • Designers will not support retail outlets that allow discounting so anyone coming into the market will have to keep margins high.
  • Single designers do not have the economic viability to go it alone on web, so they cannot set up their own sites doing worldwide distribution.
  • Competitors are going bankrupt. (See point 5 for analysis of current market competition.)

3 – Management team:

  • Has successfully executed B plan.
  • Has the lowest cost ratio per head of any Luxury business in the world, currently £21k (US$ 31k).
  • Continues to innovate and develop plan and create a better “mouse trap” for customers every month.
  • Continues to cut cost of underlying business expenses as efficiencies are found or economies of scale are achieved. (eg photograph costs 50% less, will drop still further with in house studio etc)

4 – Economic Macro Risk:

  • There is a recession coming or even a slowdown.
  • Absolutely possible however if you have a large % of total market place sales then you are vulnerable to Macro effects if you are only currently doing business with a small % of market place and the “market penetration growth rate is high” (nb NAP market penetration is not the same as overall market growth rate.)

IE the Luxury market can have a recession with total sales falling by 30% but if NAP is only currently selling to a tiny % of the market and achieving a further market penetration of over 100% then there is little Macro risk.

5 – Quality of NAP in comparison to others:

NAP is the best managed, and lowest cost Luxury site in the world.

  • It has the only Worldwide duties paid proprietary systems (DDP), covering 26 countries, which account for 95% of consumption of luxury goods.
  • NAP has built a reputation for quality which is completely unrivalled, even executives in other Luxury company’s acknowledge that we are far superior to them at ever level (see Luxlook quote in b-plan)

EL $300 million spent                 US only business

LL $ 35 million spent                   US and GB and Germany business

LF $19 million spent                    US only business

  • None of the above have any DDP systems.
  • NAP currently has invested $1.7 million before this round and has Worldwide DDP service (Delivery Duty paid).
  • Actual Sales levels
    (Gross number for comparison, as we do not know if LL or LF are running Net or Gross, most likely Gross)
  • Unique visitor spend:

This is an indication of two combined factors, firstly how efficient an ecommerce line has been built into the website and secondly how successful the business has been in attracting the correct demographic to buy from the site



Sales US$ ‘000

Sales per unique visitor ($)


MAR 01




MAR 01




MAR 01




MAR 01



Note: LL has spent $35,000,000 to generate $0.48/unique visitor in March &  NAP has spent $1,700,000 to generate $3.74/unique visitor in March

6 – Potential for Growth: (NB only some areas covered)

The b-plan can be exceeded in a number of different areas, some of the issues are as follows (The b-plan figures are conservative);

  • Continued sale growth irrespective of conditions in market.
  • Potential consolidation of market place may help growth rate as other weaker operations go to the wall.
  • Continued expansion of BtoB services to companies like JC or DVF who want access to World wide audience but cannot handle E commerce.
  • The business has now proved the model, what is going to happen in the next phase is implementing the model over a greater scale, with new areas being developed.
  • Given how many companies and executives could not create a model or implement the initial business model irrespective of how much money their shareholders gave them, it is reasonable that NAP management feel confident that they will move into the next phase of the business with the same degree of professionalism that they have achieved in this current level.

NAP is the best Fashion E-commerce Luxury content-based website in the world, and as such it is fairly valued and a good investment.

[Archive Note: This whitepaper on valuing NAP was written in April 2001 by co-founder Mark Quinn-Newall]

Net-a-Porter co-founder Mark Quinn-Newall