“Around 90pc of luxury goods are still sold in shops. It is changing but I think we will reach a maximum of 25pc to 35pc of luxury goods sold online. So, at the end of the day, around two thirds of sales will still be in physical shops”, Farfetch CEO Jose Neves told The Telegraph.
Neves and his company have been admired in fashion circles since launching. But in the last few years its status from “one to watch” to serious player in the industry has been cemented, partly due to attracting some of the most established players. In February, it lured Dame Natalie Massenet, chairman of the British Fashion Council and Net-a-Porter founder, to its board as non-executive co-chairman.
Swiftly after Massenet joined, Farfetch announced that it would be taking over Condé Nast’s Style.com online shopping venture after the Vogue and GQ publisher’s offering underwhelmed the market. The move has given Farfetch access to the type of glossy editorial content that attracts readers to the fashion bible.
Most recently, Farfetch has set its sights overseas since bagging a $397m (£308m) investment from JD.com, China’s second biggest online player. Even before the deal, Farfetch generated 10pc of its sales from China, but Neves said he realised this couldn’t continue without bringing in a local partner. While 270m Chinese users shop on JD.com, Farfetch will also immediately gain access to the mind-boggling 900m users of instant messaging and shopping service WeChat, which is owned by JD’s majority shareholder Tencent.
Like Uber, which has become the world’s biggest car service but owns no cars, or the world’s largest accommodation provider, Airbnb, which owns no rooms, Farfetch owns no shops or even an inventory of the clothes, shoes and handbags it sells for hundreds of pounds.
But unlike the online luxury fashion rivals it is often compared to – Net-a-Porter, Yoox and Matches Fashion – Farfetch is entirely dependent on old-fashioned bricks and mortar retailers for its stock.
In addition to buying Mayfair boutique Browns Fashion in 2015, the business has a network of 700 hand-picked fashion boutiques spanning 40 countries, including Japan, Finland, Mexico and Dubai in UAE.
“It means that these boutiques, often family-run, can have a booming export business and not have to worry about doing deliveries or working out import duty. There are many who have said that they wouldn’t have survived without us.”
“We operate in real-time in the same way that you can search for reservations at restaurants that have availability at 9pm that evening on OpenTable. And then we have the logistics and the deliveries to get the food, or clothes to you, like Deliveroo.”
Theoretically, Farfetch’s technology, which tracks what the boutiques in its network are selling both online and in store, means that a shopper should never be confronted with a frustrating “sold out” message when clicking on their desired item.
Neves is currently concerned about the messy negotiations surrounding the UK’s exit from the European Union. “I see no upside to Brexit from a business point of view. I won’t get into the politics. We won’t be, and haven’t been, too affected so far as we source and ship to 40 different countries. But I am concerned about what happens to our talent as we have 25 different nationalities, including myself, at Farfetch.
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