BoF Exclusive | Farfetch Opens E-Commerce Platform to Brands
BOF EXCLUSIVE – BoF can exclusively reveal that billion-dollar fashion ‘unicorn’ Farfetch will power e-commerce sites for brands with an ‘omnichannel out-of-the-box’ solution.
LONDON, United Kingdom — BoF can exclusively reveal that billion-dollar fashion ‘unicorn’ Farfetch, a marketplace that connects consumers with a global network of boutiques, will begin powering e-commerce sites for brands. “This is a fully-fledged agency and white-label solution for brands, where we can make use of our platform to build another website and then deploy in a modular way whatever services or infrastructure they want to use,” explained José Neves, founder of Farfetch. “Some brands will want to have complete control over design, build and day-to-day operation of their website, while others can ask us to manage everything for them, from customer service to payment to online marketing.”
The first Farfetch-powered e-commerce sites are set to go live in the last quarter of 2015 and early 2016, though the company declined to disclose its clients ahead of these launches. The solution will be delivered through a new, independently-run business unit called Farfetch Black & White. The move puts Farfetch — which recently raised an $86 million Series E funding round in a deal that valued the company at $1 billion — in direct competition with e-commerce providers like Yoox and Demandware.
According to Neves, Farfetch Black & White offers several advantages over competitors. “The first is that it’s omnichannel out-of-the-box,” he said, meaning that brands can leverage the Farfetch platform to link inventory in their retail stores to their websites and deliver services like click-and-collect and in-store returns. “By using our API, the brands, even on their own websites, can offer inventory from their physical stores,” he explained. “Customers can also collect from physical stores or opt for same-day delivery, which will launch very soon in multiple cities. If you have an amazing flagship store in Los Angeles, why do some customers have to wait one week for something to be delivered from a warehouse in Europe? It doesn’t make any sense.”
Using Farfetch, brands can also deploy localised sites in nine languages and ship to a wide range of geographies, including key global markets like China, Japan, Brazil and Russia, continued Neves. The solution is API-based, which makes it easy to integrate with other services. “If a brand wants to sell on WeChat in China, they just need to use our API code and integrate their operations,” explained Neves. Brands who work with Farfetch Black & White can simply “flick the switch” and start selling on Farfetch.com, “where there is a huge amount of traffic and global exposure,” he added.
Neves declined to reveal the company’s pricing model for Farfetch Black & White, saying only: “We want to be successful if, and only if, the brands are successful, but the pricing is bespoke depending on what the brands want to do.”
“If we want to be the pioneers of the new retail future, we need to do it with boutiques and with brands. This is a strategic move for us.”
Farfetch has also begun adding mono-brand boutiques to its marketplace, which now includes inventory from retail stores operated by Vera Wang, Roksanda, AMI, Derek Lam, La Perla and Jason Wu. “Brands often put their best range in their flagship stores and then introduce a watered down range for their website,” noted Neves, characterising the move as a win-win for both consumers, who get access to a wider selection of product, and brands, which can use the platform to offer inventory housed in their physical stores to online shoppers in almost 190 countries.
On whether adding mono-brand stores to the Farfetch marketplace would eat into sales at boutique partners, Neves said: “What brands make available for wholesale is often different from what brands have at retail. But if both [channels] have the same product in the same size, we’ve developed an algorithm that is very balanced [and will determine how the sale is allocated]. We exposed this algorithm to our boutiques two months ago to give them a chance to comment and, obviously, we’ve negotiated with the brands as well.” Farfetch declined to reveal specifics on how this would work.
So how big a piece of the Farfetch business could brand partnerships become? “I think it’s difficult to say,” said Neves. “For us, it’s more about if we want to be the pioneers of the new retail future, we need to do it with boutiques and with brands. This is a strategic move for us. Consumers shop mono-brands, they shop multi-brands. They don’t come out of a store and say, ‘Oh I just shopped at a mono-brand’ or ‘Oh I just shopped at a boutique.’ They just shop where they feel like shopping.”
Farfetch is investing significant resources in developing and testing new in-store innovations, as part of as a programme the company calls ‘Store of the Future.’ As the initiative begins to bear fruit, the company also plans to start powering physical stores for its partners. “The idea is that all the innovation we’re going to do in terms of physical retail will also be available for brands and boutiques to use,” said Neves.
According to Farfetch, gross merchandise volume is currently on track to reach more than $500 million this year, putting estimated revenues in the ballpark of $125 million. (The business is said to take up to 25 percent commission from its current boutique partners.)
Editor’s Note: This article was updated on 9 September 2015 to reflect current business metrics supplied by Farfetch. www.businessoffashion.com