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FARFETCH: The bridge between luxury and online retailing



Have you ever heard of FARFETCH? 

Gathering over 1’300 of the world’s best brands, this online luxury retailer, present in more than 190 countries, portrays itself as the leading global platform for the luxury fashion industry.

 

Founded in 2007 by Portuguese entrepreneur José Neves, the main goal of FARFETCH was to overcome the changes in local customs and enable small independent boutiques to become market players while retaining their physical shops and their own visual identity. Although in line with the current societal evolution towards digital markets and technology, is this approach sustainable for the luxury industry? Can the consumer experience in the luxury industry be reinvented?

 

Despite the fact that the luxury industry does not set a strong emphasis on online sales, Farfetch has developed by focusing only on this channel of distribution. The disruptive aspect comes from the fact that typically, luxury businesses do not want to delegate the sale or delivery of their products. In fact, it is far the opposite, they want complete control over the customer experience, to collect as much information as possible in order to better serve their customers. Therefore, while luxury brands seek to provide a client experience that gives them the feeling of belonging to a private club through one-to-one relationships, Farfetch has opened a whole new door for certain customers who don't need personalization and store experience.

 

The control of the distribution channel is typically a sensitive subject for luxury brands, which are frequently damaged by counterfeits, and the fact that the sale of specific items at a discount can have a negative impact on the brand's prestige. By partnering up with Farfetch, luxury brands retain control over pricing and ensure the authenticity of their products on the secondary market.

 

The company also expanded their services to provide an all-in-one solution for brands, Farfetch Platform Solutions (FPS), a suite of products that allow companies to start their digital channel from scratch. Therefore, affirming their wishes to move the luxury industry into the digital and being known as the expert in this field.

 

 

The brand have for generations really focused on bringing customers into either their own fabulous boutiques, the multi-brand retailers and boutiques that exist within the industry, or the department stores - Elliot Jordan, Farfetech’s CFO.

 

 

Farfetch's success in a few figures: 

  • $3.2 billion: Total value of merchandise sold on Farfetch’s platforms in 2020
  • $1.7 billion: Farfetch’s revenue from those sales
  • 3,3 millions of customers in 12 months 
  • 190 countries and territories

 

Farfetch has taken a big risk by offering online retailing, which means that they have taken away the whole in-store experience from the customers. However, we can see that by daring this new way of selling they have created a new and purely digital retail chain in the luxury industry. Essentially positioning itself as the leading expert of digital luxury retailing.




They are not stopping there in their ideas and are proposing a new "Store of the Future" concept using new technologies such as augmented reality. Farfetch is moving with the times and in this area of luxury, technology is opening up new creative possibilities. 


 



Store of the Future 


From a global perspective, the Chinese market represents about a third of the luxury market's customers and Farfetch realised that it had to tap into it. That's why the firm bought CuriosityChina, the Chinese start-up that specialises in targeting customers on social networks, particularly WeChat. 

 

Because of its innovation and efficient distribution channel, this phenomenon seems to be sustainable. However, it may encounter some obstacles on its way. Indeed, it could be that brands want to develop their sales online and thus would not go through an intermediary anymore. But that is where the Farfetch Platform Solutions could make a difference, time will tell if this product becomes successful. Farfetch also lacks loyalty towards its customers, and this could prove to be negative for them in the long run. The growth in the digital market for luxury brands and its profitability could attract giants of technology like Amazon, which could launch their own retail luxury retailing platform to penetrate the digital luxury market and hurt Farfetch first mover position. 


Whereas before it was unthinkable for luxury to go digital, it is now essential for this industry to be interested in this channel. 




Article by Solenne, Hugo, Julien, Sarah & Fatma

 

 




References

Armstrong, L., 2013. What if the internet turns out to be the saviour of the high street?. [Online]
 Available at: http://fashion.telegraph.co.uk/news-features/TMG9946984/What-if-the-internet-turns-out-to-be-the-saviour-of-the-high-street.html
 [Accessed 27 September 2021].
Bain, M., 2021. Can Farfetch own online luxury?. [Online]
 Available at: https://qz.com/2031407/can-farfetch-own-online-luxury/
 [Accessed 27 September 2021].
Cacciotto, E., 2020. How the Chinese luxury market poised to become the largest in the world. [Online]
 Available at: https://daxueconsulting.com/chinese-luxury-market/
 [Accessed 27 September 2021].
Danziger, P. N., 2018. Digital Luxury Fashion Marketplace Farfetch Is On A Roll To An IPO. [Online]
 Available at: https://www.forbes.com/sites/pamdanziger/2018/03/20/digital-luxury-fashion-marketplace-farfetch-is-on-a-roll-to-an-ipo/#2b7151a89723
 [Accessed 27 September 2021].
Farfetch, 2020. 2020 Annual Report. [Online]
 Available at: https://s22.q4cdn.com/426100162/files/doc_financials/2020/ar/2020-Annual-Report.pdf
 [Accessed 27 September 2021].
Farfetch, 2021. Farfetch home page. [Online]
 Available at: https://www.farfetch.com/fr/shopping/women/items.aspx
 [Accessed 27 September 2021].
Farfetch, 2021. Store of the future. [Online]
 Available at: https://aboutfarfetch.com/about/store-of-the-future/
 [Accessed 27 September 2021].
Hall, C., 2018. Farfetch Acquires Chinese Digital Marketing Agency. [Online]
 Available at: https://www.businessoffashion.com/articles/global-markets/farfetch-acquires-digital-marketing-agency-curiosity-china
 [Accessed 27 September 2021].
Lohia, A., 2020. Farfetch: Tackling the Online Luxury Fashion Market. [Online]
 Available at: https://digital.hbs.edu/platform-digit/submission/farfetch-tackling-the-online-luxury-fashion-market/
 [Accessed 27 September 2021].
The Economist, 2013. Fetching far flung couture. [Online]
 Available at: https://www.economist.com/schumpeter/2013/02/28/fetching-far-flung-couture
 [Accessed 27 September 2021].

 

 

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