FarFetch is one of a new breed of online fashion marketplaces catering to the luxury end of the market. It has tapped into a growing ecosystem of younger luxury shoppers who are looking for unique products.
To fill this niche, FarFetch has built its business on providing an ecommerce platform for small luxury brands, boutiques and designers. The company now has more than 1,400 such sellers on its platform and, to expand, is increasingly reaching out directly to brand owners to host their wares on its site, giving these smaller players a chance to leap into ecommerce with minimal outlay.
This model has been very successful. Being online focussed, the company saw a boom in sales and traffic across 2019 and 2020 as shoppers were forced almost exclusively online. While this has tailed off to some degree, dropping 18% in 2021 as the market normalises, the site continues to look at new ways to service its customer base.
Having signed up all eligible and interested boutiques and designers that it can find, the company has shifted to a plan of expansion through acquisition and deals. For example, in January 2022, it bought leading luxury beauty marketplace Violet Grey, adding their vast array of beauty and cosmetic products. The move opens up the site to the burgeoning luxury beauty market, with an estimated annual worth of $69bn globally, as well as adding new content to its site to help drive traffic.
The company has looked to generate further growth by embedding its luxury marketplace model into the wider luxury sector. In mid-2022, the company effectively partnered with Richemont, buying a 47.5% stake in Richemont-owned YOOX Net-a-Porter (YNAP), a hybrid luxury clearance seller and shoppable digital magazine. Richemont chairman, Johann Rupert, says this is a step towards building an “independent neutral online platform for the luxury industry” for high-end brands and their customers.
The deal has attracted the attention of the UK’s Competition and Mergers Authority (CMA). Should the deal go through, it will see Richemont use Farfetch’s tech to sell its brands through a marketplace model, while giving FarFetch access to more luxury brands and products.
This article is an extract from our newly released RetailX Global Luxury Report 2023 which you can download here.
