Anabela Teixeira, a London College of Fashion student, couldn’t believe her luck when she got a summer internship with Farfetch, which had offices in her hometown of Porto. Her first task was to contribute to the workings of innovation hub at Farfetch. However, first, she needed to do some desk research in order to get an in-depth understand of the global luxury market, the state of online luxury commerce, Farfetch’s business model and its position in the sector as well as consumer drivers. The below is her report .
Introduction
24 August 2022 was a whirlwind for Farfetch CEO José Neves. First, Farfetch announced an group along with replatforming most of Richemont’s Maisons, including Cartier, Van Cleef & Arpels, and Piaget, under Farfetch Platform Solution (FPS). Then a day later, it reported second-quarter earnings ending 30 June 2022 (Danziger, 2022) In their press release, José Neves, Farfetch Founder, Chairman and CEO, said :
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“At Farfetch our mission is to be THE Global Platform for Luxury. This week we celebrated a major step towards that mission, with a transformational deal advancing our Luxury New Retail (LNR) partnership with Richemont. Since the acquisition of Browns, through the launch of Richemont and Kering, and more recent signings of Neiman Marcus and Salvatore Ferragamo, to name just some of the milestones, we have built upon this vision relentlessly – year after year – and this week we celebrate a landmark partnership where we are partnering with Richemont to deliver LNR to their entire group, with their Maisons and YNAP adopting Farfetch Platform Solutions and also joining the Marketplace.
This is our long-term vision coming to life. And while our eyes are fixed on our North Star, our feet remain planted firmly on the ground. We are navigating a volatile macro environment adeptly, continuing to post growth compounding on what has been a tremendous 3-year run for Farfetch, a period that saw our business double as measured by our GMV. This makes me extremely bullish for 2023, a year when we will lap the closure of our Russia operations, expect China to turn into a tailwind, and will start to see the fruits of large deals signed this year with Reebok, Neiman Marcus Group, and Salvatore Ferragamo. These 2023 vectors of growth, combined with the rationalization of costs we are implementing this year, make me very confident about our 2023 top line, profitability, and cash generation.”
After its recent acquisition of a 47.5% stake in Richemont’s YNAP, Farfetch has undoubtedly become the leader in the luxury e-commerce world. early 2000’s, key luxury e-commerce players pursued to grow their businesses through investment, acquisitions, research and development to stay ahead of their competitors.
Launched in 2008, Farfetch began as an e-commerce marketplace for luxury boutiques around the world. In that sense Farfetch has been different from most rivals as its business model consisted in making third-party sellers, from small boutiques to global brands and retailers list products on their site. Farfetch processes sales and handles logistics, but does not hold inventory. How it operates can be likened to business platforms (such as Uber, Deliveroo and Airbnb) rather than a retailer. Neves reiterated this point when he said in am interview last year “What makes us different is that everyone else is operating on a retail model, but we are a platform, not a shop, an enabler, not a competitor, and are reaping all the advantages that such a position entails. We believe we are the only global luxury platform at scale”.
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