Farfetch is an online luxury fashion retail platform founded by Portuguese entrepreneur José Neves, a stalwart of the fashion industry since the 1990s, with the vision of allowing anyone to purchase clothing from high-end brands from cities like Paris and Milan, from the comfort of their home. The company makes money through commissions, fulfillment services, and wholesale distributions.
Business Model Element
Analysis
Implications
Examples
Value Proposition
Farfetch’s value proposition is to offer consumers access to a curated selection of luxury fashion products from boutiques and brands globally. For Consumers, Farfetch provides: – Curated Selection: A vast array of unique and luxury fashion items. – Global Reach: Access to products from boutiques and brands worldwide. – Convenience: A seamless online shopping experience. For Boutique Partners, Farfetch offers: – Global Exposure: A platform to showcase and sell their products globally. – Technology Solutions: Tools and resources for enhancing their online presence. Farfetch’s value proposition revolves around luxury, variety, and convenience, catering to fashion-conscious consumers and providing boutiques with a global digital storefront.
Provides consumers with access to a curated selection of luxury fashion products. Offers a wide variety of unique and high-end fashion items. Facilitates convenient online shopping with a seamless experience. Empowers boutique partners to showcase and sell products globally. Equips boutiques with technology solutions for enhancing their online presence. Attracts fashion-conscious consumers and boutique partners seeking global exposure.
– Curated selection differentiates Farfetch from other online marketplaces. – Global reach expands product variety and customer base. – Convenience and a seamless experience enhance user satisfaction. – Technology solutions empower boutiques in the digital space.
Customer Segments
Farfetch serves two primary customer segments: 1. Fashion-Forward Consumers: Individuals who seek unique and luxury fashion items from a global selection. 2. Boutique Partners: Independent boutiques and luxury brands looking to expand their reach and sell products to a global audience. Farfetch customizes its platform to cater to the unique needs of both segments, offering a premium shopping experience for consumers and a digital storefront for boutiques.
Serves two main customer segments: 1. Fashion-forward consumers seeking luxury and unique fashion items. 2. Boutique partners looking to expand their global reach. Customizes the platform to meet the specific needs of each segment. Offers a premium shopping experience for consumers and a digital storefront for boutiques. Focuses on connecting consumers with luxury fashion products and empowering boutiques in the digital space.
– Catering to two customer segments creates a balanced marketplace. – Tailoring the platform enhances user satisfaction and engagement.
Distribution Strategy
Farfetch’s distribution strategy relies on its website and mobile app, which provide users with easy access to its extensive catalog of luxury fashion products. Consumers can browse, purchase, and track orders through the platform. Additionally, Farfetch partners with boutiques and brands worldwide, allowing them to showcase their products on the platform. The company also utilizes digital marketing and social media to engage with consumers, promote products, and drive traffic to the platform.
Relies on its website and mobile app for distribution. Offers easy access to a vast catalog of luxury fashion products for consumers. Facilitates browsing, purchasing, and order tracking through the platform. Partners with boutiques and brands globally to showcase their products. Utilizes digital marketing and social media for customer engagement and product promotion.
– Digital distribution aligns with the luxury fashion industry’s online presence. – Ease of access encourages user engagement and transactions. – Partnering with boutiques and brands expands product variety. – Digital marketing and social media increase market visibility and user interaction.
Revenue Streams
Farfetch generates revenue through multiple streams: 1. Sales Commissions: Farfetch earns a commission on each sale made through its platform, shared with boutique partners. 2. Platform Fees: Boutique partners pay fees for using Farfetch’s platform to list and sell their products. 3. Technology Solutions: Farfetch offers technology solutions and services to boutiques for a fee. 4. Brand Partnerships: Collaborations and exclusive collections with luxury brands generate revenue. These revenue streams contribute to the company’s income.
Relies on revenue streams from: 1. Sales commissions shared with boutique partners. 2. Platform fees paid by boutique partners. 3. Technology solutions and services provided to boutiques for a fee. 4. Brand partnerships and exclusive collections generating revenue. Diversifies income sources through sales commissions, platform fees, technology solutions, and brand collaborations.
– Sales commissions encourage boutique partnerships and sales growth. – Platform fees generate income from boutique partners. – Technology solutions expand revenue while providing value to boutiques. – Brand partnerships create exclusive offerings and generate revenue.
Marketing Strategy
Farfetch’s marketing strategy includes digital marketing, content creation, brand collaborations, and customer engagement. The company utilizes digital marketing channels, including online advertising and email campaigns, to reach fashion-conscious consumers and drive traffic to its platform. Content creation involves producing editorial content, trend reports, and fashion guides to engage users and enhance the platform’s appeal. Farfetch collaborates with luxury brands and designers for exclusive collections and promotions. The company also actively engages with its customer community through social media platforms like Instagram and Facebook.
Utilizes digital marketing, content creation, brand collaborations, and customer engagement for marketing. Employs digital channels for online advertising and email campaigns to reach fashion-conscious consumers. Produces editorial content, trend reports, and fashion guides to engage users and enhance the platform’s appeal. Collaborates with luxury brands and designers for exclusive collections and promotions. Actively engages with the customer community through social media platforms.
– Digital marketing channels reach fashion-conscious consumers effectively. – Editorial content establishes Farfetch as a valuable fashion resource. – Brand collaborations create exclusivity and attract luxury shoppers. – Social media engagement fosters a strong online community and maintains an active user base.
Organization Structure
Farfetch’s organizational structure includes teams dedicated to product development, technology, marketing, customer support, and brand partnerships. Product development and technology teams focus on enhancing the platform’s features and user experience. Marketing teams promote Farfetch’s services, engage with the user community, and collaborate with luxury brands. Customer support teams assist users with inquiries and issues. Brand partnership teams collaborate with luxury brands and designers for exclusive collections. This structure supports innovation, user satisfaction, and brand partnerships.
Employs specialized teams for product development, technology, marketing, customer support, and brand partnerships. Enhances platform features and user experience through product development and technology teams. Promotes services, community engagement, and brand collaborations through marketing teams. Assists users with inquiries and issues via customer support teams. Collaborates with luxury brands and designers through brand partnership teams to create exclusive offerings. Supports innovation, user satisfaction, and brand collaborations.
– Specialized teams ensure a user-friendly platform with evolving features. – Marketing teams drive user engagement, community growth, and brand partnerships. – Customer support enhances the user experience and maintains trust in the platform. – Brand partnerships create exclusive offerings and strengthen the luxury fashion appeal.
Competitive Advantage
Farfetch’s competitive advantage lies in its curated selection of luxury fashion items, global reach, and strong brand collaborations. Consumers benefit from access to a vast array of unique and high-end fashion products from boutiques and brands worldwide. The platform’s technology solutions empower boutique partners in the digital space. Farfetch’s collaborations with luxury brands and designers create exclusive offerings and strengthen its position in the luxury fashion market. The company’s global presence and ability to cater to fashion-conscious consumers provide a competitive edge in the luxury e-commerce industry.
Derives a competitive advantage from: – Curated selection of luxury fashion products. – Global reach and access to products from worldwide boutiques and brands. – Empowering boutique partners with technology solutions. – Collaborations with luxury brands and designers for exclusive offerings. Attracts fashion-conscious consumers and boutique partners looking for a global presence. Strengthens its position in the luxury fashion market through collaborations and a vast product catalog.
– Curated selection differentiates Farfetch from competitors. – Global reach expands product variety and customer base. – Technology solutions empower boutiques in the digital space. – Collaborations with luxury brands create exclusivity and enhance brand appeal.
Farfetch is an online luxury fashion retail platform founded by Portuguese entrepreneur José Neves, a stalwart of the fashion industry since the 1990s. Neves had a vision of allowing anyone to purchase clothing from high-end brands from cities like Paris and Milan from the comfort of their home.
Farfetch began as a platform in 2008 with around 40 boutique fashion stores. Although poorly timed with the onset of the GFC, the company quickly established itself as an innovator in the fashion industry. Instead of holding physical inventory in a warehouse, Farfetch utilizes retailers to pick and pack the merchandise in Farfetch-branded packaging. In this way, the company acts as an intermediary between the buyer and seller and avoids many of the risks associated with a typical retail business.
The company is also a leader in efficient worldwide fulfillment, using technology and economies of scale to reduce costs and delivery times.
Farfetch has a surprisingly diverse revenue generation model as an online marketplace.
Let’s dive straight into it.
Commissions
Farfetch collects a commission of 30% of the total sale price from every merchant using its platform. It’s important to note that merchants are not simply paying for access to Farfetch leads. Instead, they are gaining access to a proprietary integrated system that helps them track inventory levels across buyers, suppliers, and couriers.
They also get access to data analytics and other technological tools to leverage sales.
Fulfillment services
Farfetch also collects a fee of around 8% for its fulfillment services. These services include item delivery, return and refund management, and the storage of goods.
Software
Farfetch Platform Solutions is a suite of products designed to help fashion brands connect and interact with their customers. Brands can select from specific product or service bundles or can opt for a full end-to-end eCommerce experience.
Prices for this SaaS option are available upon request, but it can be assumed that it involves a setup fee plus a percentage fee of all subsequent revenue generated.
Bricks and mortar acquisitions
Over the years, Farfetch has acquired several physical retail stores including Stadium Goods, New Guards, and Browns.
As a result, it generates revenue via the sale of goods online or in-person.
Wholesale distribution
When Farfetch acquired New Guards Group in 2019, it automatically inherited several established luxury fashion brands. One of these was Off-White, an Italian brand founded in Milan in 2012. Others included knitwear label Alanui and men’s streetwear brand Heron Preston.
Products from each of these brand acquisitions are now sold to a variety of merchants on a wholesale basis.
Key takeaways:
Farfetch is a Portuguese digital marketplace for high-end fashion. It was founded by entrepreneur José Neves who had the vision to give consumers access to designer goods from the comfort of their homes.
Farfetch takes a 30% commission from each sale made on its platform. Merchants using its integrated and proprietary solution get access to a suite of tools in addition to prospective leads.
Farfetch Platform Solutions is a SaaS offering for merchants who want to better connect with their audience. The company also makes money via the wholesale distribution of products from brands it has acquired.
Key Highlights
Luxury Fashion Online Marketplace: Farfetch is an online luxury fashion retail platform founded by Portuguese entrepreneur José Neves. It aims to bring high-end fashion from cities like Paris and Milan to anyone’s doorstep, providing a convenient shopping experience.
Founder’s Vision: José Neves envisioned Farfetch in 2008 as a platform that allowed customers to purchase clothing from boutique fashion stores around the world. The company’s unique model utilizes retailers for merchandise packaging, acting as an intermediary between buyers and sellers.
Innovative Approach: Farfetch differentiated itself by avoiding physical inventory and leveraging retailers for packaging and shipping. This approach reduced traditional retail risks and overheads.
Global Fulfillment: Farfetch stands out in efficient worldwide fulfillment, using technology and economies of scale to deliver products to over 190 countries, partnering with a diverse range of brands.
Revenue Generation Model:
Commissions: Farfetch charges merchants a 30% commission on the total sale price for utilizing its platform. This fee covers access to an integrated system for inventory tracking, data analytics, and technological tools.
Fulfillment Services: Farfetch collects around 8% for fulfillment services, including delivery, return management, refund processes, and storage of goods.
Software: Farfetch Platform Solutions offers SaaS products for fashion brands to connect with customers. Brands can choose specific bundles or opt for a complete eCommerce experience, with fees likely involving setup costs and a percentage of generated revenue.
Brick-and-Mortar Acquisitions: Farfetch’s acquisition of physical retail stores like Stadium Goods, New Guards, and Browns generates revenue from online and in-person sales.
Wholesale Distribution: Through acquisitions like New Guards Group, Farfetch acquired luxury fashion brands such as Off-White. These brands’ products are sold to merchants on a wholesale basis.
Market Reach: Farfetch’s global reach includes shipping around 1300 brands to over 190 countries, providing luxury fashion options to a wide audience.
Integrated Solutions: Merchants using Farfetch’s platform gain access to an integrated suite of tools and analytics that enhance their ability to track inventory, manage sales, and interact with customers.
Diverse Revenue Streams: Farfetch’s revenue model encompasses commissions, fulfillment services, software solutions, brick-and-mortar acquisitions, and wholesale distribution, allowing the company to generate income from various aspects of the luxury fashion industry.
Slow fashion is a movement in contraposition with fast fashion. Where in fast fashion it’s all about speed from design to manufacturing and distribution, in slow fashion instead quality and sustainability of the supply chain are the key elements.
Fash fashion was a phenomenon that became popular in the late 1990s, and early 2000s, as players like Zara and H&M took over the fashion industry by leveraging shorter and shorter design-manufacturing-distribution cycles—reducing these cycles from months to a few weeks. With just-in-time logistics and flagship stores in iconic places in the largest cities in the world, these brands offered cheap, fashionable clothes and a wide variety of designs.
Zara is a brand part of the retail empire Inditex. Zara is the leading brand in what has been defined as “fast fashion.” With almost €20 billion in sales in 2021 (comprising Zara Home) and an integrated retail format with quick sales cycles. Zara follows an integrated retail format where customers are free to move from physical to digital experience.
With over €27 billion in sales in 2021, the Spanish Fast Fashion Empire, Inditex, which comprises eight sister brands, has grown thanks to a strategy of expanding its flagship stores in exclusive locations around the globe. Its largest brand, Zara, contributed over 70% of the group’s revenue. The country that contributed the most to the fast fashion Empire sales was Spain, with over 15% of its revenues.
ASOS is a British online fashion retailer founded in 2000 by Nick Robertson, Andrew Regan, Quentin Griffiths, and Deborah Thorpe. As an online fashion retailer, ASOS makes money by purchasing clothes from wholesalers and then selling them for a profit. This includes the sale of private label or own-brand products. ASOS further expanded on the fast fashion business model to create an ultra-fast fashion model driven by short sales cycles and online mobile e-commerce as main drivers.
SHEIN is an international B2C fast fashion eCommerce platform founded in 2008 by Chris Xu. The company improved on the ultra-fast fashion model by leveraging real-time retail, which quickly turned fashion trends in clothes’ collections through its strong digital presence and successful branding campaigns.
Depop is a peer-to-peer shopping app founded by Simon Beckerman in 2011 at the Italian technological incubator and start-up center H-FARM. Depop experienced tremendous growth in the following years, thanks largely to word-of-mouth advertising and social sharing. The platform now boasts more than 21 million users. Marketplace giant Etsy has plans to acquire Depop in the third quarter of 2021 for a cash deal worth $1.625 billion.
Boohoo – sometimes referred to as Boohoo.com – is an English online fashion retailer founded in 2006 by Mahmud Kamani and Carol Kane in the historic textile district of Manchester. Boohoo makes money by selling fashion items for more than the cost of manufacturing, advertising, marketing, and distributing them.
Urban Outfitters is a multinational lifestyle retail corporation with a company headquarters in Philadelphia, Pennsylvania. The company was founded in 1970 by Richard Hayne, Judy Wicks, and Scott Belair.
Farfetch is an online luxury fashion retail platform founded by Portuguese entrepreneur José Neves, a stalwart of the fashion industry since the 1990s, with the vision of allowing anyone to purchase clothing from high-end brands from cities like Paris and Milan, from the comfort of their home. The company makes money through commissions, fulfillment services, and wholesale distributions.
Zalando is a multi-national eCommerce company founded in 2008 by David Schneider and Robert Gentz, created under the name Ifansho, changed to Zalando as a reference to the Italian word zalare – or “making jokes”. Zalando generates revenues by purchasing stock and then selling it for a profit. Zalando also charges brands it partners with a commission for the privilege of selling on its platform. The commission Zalando collects on each sale is undisclosed. Zalando also collects advertising revenue from ads placed on its website and app.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
Discover more from FourWeekMBA
Subscribe now to keep reading and get access to the full archive.
