February 28, 2017

Natalie Massenet to Join Net-a-Porter Competitor Farfetch

WSJ – Massenet, who built Net-a-Porter into a leading e-commerce site, is joining forces with José Neves of Farfetch, a global shopping platform for luxury fashion

Natalie Massenet to Join Net-a-Porter Competitor Farfetch

“From a business perspective, not holding inventory is the holy grail,” says Massenet (right), with Nieves. PHOTO: TUNG WALSH

On a stormy night in London’s Shoreditch neighborhood, three stories up in a formerly gritty factory–turned–luxury loft building, a clandestine gathering is taking place. “In Sherlock Holmes movies, this is where they would come to find the criminals in opium dens,” says a bearded man sitting at the table, José Neves. Joining the 42-year-old founder and CEO of Farfetch, an online shopping website and platform that reached a $1 billion “unicorn” valuation in 2015, is Natalie Massenet, 51, the founder of Net-a-Porter, which changed the luxury e-commerce game when she launched it out of her apartment in 2000 after leaving a fashion job at Tatler. Eighteen months after her abrupt departure from Net-a-Porter just prior to its merger with the fashion e-commerce enterprise Yoox Group, and following four weeks of secret discussions, Massenet is joining Farfetch as Neves’s nonexecutive co-chairman and member of the board.

Although once adversaries, competing over the $22 billion online fashion market, the two are now teaming up. Of Farfetch’s business model, Massenet says, “If I were starting Net-a-Porter today, that’s exactly what I would do. But I don’t feel like doing a startup again in that way.” She’s been there, done that, and values her eight hours of sleep a night. (Her favorite new discovery is Pzizz, a power-napping app.) In addition to being a “cheerleader,” she’ll offer her expertise in customer experience and tap into the strong relationships with fashion brands and individual designers that she cultivated at Net-a-Porter and the British Fashion Council, where she has been chair since 2013. “Those are going to be called upon,” she says with a quick smile.

While Net-a-Porter upended luxury retail by selling merchandise without a physical store—enticing buyers of $25,000 gowns with 24-hour virtual service and doorstep delivery instead of plush dressing rooms and fawning staff—Farfetch pushes the idea one step further: It’s a retailer without any merchandise. (In Neves’s terms, it’s “an omni-channel e-commerce platform.”)

“Uber is one of the biggest transportation companies, but it doesn’t have its own cars,” says Massenet. “Farfetch also doesn’t hold inventory.” Instead it focuses on marketing and fulfillment, connecting customers with more than 500 boutiques and stores from more than 200 brands around the world via a website translated into nine languages, including Russian and Chinese. The company coordinates everything from photographing each item to digital marketing and international shipping and returns, for which it charges stores a fee of up to 25 percent of the purchase price.

In addition to a new London office, Farfetch maintains 11 global outposts, including locations in Shanghai; São Paulo, Brazil; Moscow; Tokyo; New York; Los Angeles; and three cities in Neves’s native Portugal. Same-day service is offered in nine international cities (and two summers ago included yacht deliveries in the Mediterranean). In 2016, Farfetch achieved $750 million in sales, taking a slice somewhere in the ballpark of $200 million—all without buying so much as a T-shirt or building a dressing room. “From a business perspective, not holding inventory is the holy grail,” says Massenet.

One of Farfetch’s strengths is the variety of its offerings. Someone living in Berlin might be looking for the latest Olympia Le-Tan clutch—hard-to-find embroidered purses often modeled after cult book covers—and find more than 40 iterations on Farfetch from boutiques ranging from Miami’s The Webster to Restir in Tokyo. (At press time, Net-a-Porter carried only four of Le-Tan’s limited-edition bags.) A fan of Gucci’s women’s designs, shopping in early February, would have found 629 items to choose from—including 233 items of ready-to-wear—versus Neiman Marcus’s offering of 455 items, only 33 of which were pieces of clothing.

Even so, Farfetch trails luxury e-commerce’s top players. According to a 2015 study by research company Technavio, the leading five were Nordstrom’s website (including its sale site Nordstrom Rack) followed by the Neiman Marcus Group, Saks Fifth Avenue, Ralph Lauren and finally Net-a-Porter.

Neves, who founded the company in 2008, was initially a software developer and later launched a shoe line, Swear, in 1996, along with a showroom, SIX London, and then a London-based boutique, B-Store, in 2001. “I was never a marketing executive or a brand builder or, as in Natalie’s case, a journalist with an understanding of content,” says Neves.

He hopes that together they will tackle Farfetch’s weaker points, particularly in customer service and editorial. Farfetch “is consumer-centric, but maybe we haven’t looked at all the touch points,” he says.

“I think there is room for storytelling,” adds Massenet, though she says she will not be starting a glossy monthly along the lines of Porter, the shoppable magazine she launched in 2014. “Farfetch is going to be putting on its best dress and its best suit.”

Massenet’s departure from Net-a-Porter was fraught: The majority shareholder, Compagnie Financière Richemont, had struck a deal to sell the company to Yoox at a valuation far lower than she expected—$1.4 billion rather than $2.3 billion. After initially announcing that she would stay on at the renamed Yoox Net-a-Porter Group (YNAP) under Yoox’s founder and CEO, Federico Marchetti, she shocked the fashion world by announcing her departure from the company that she had nurtured for the past 15 years. Fashion’s front row was captivated by the matter, which was eventually settled via arbitration, resulting in an extra $150 million for Massenet. (Richemont declined to comment.)

She took a year off to focus on her two daughters, Isabelle, 17, and Ava, 11, and her partner, Erik Torstensson, who owns a fashion branding agency and a denim line. On her painful split from Net-a-Porter, she quotes from Woody Allen’s Hannah and Her Sisters: “ ‘The heart is a very, very resilient little muscle.’ So it’s all about looking forward and not being afraid of change.” An active proponent of creative visualization (think The Secret), she often identifies goals five years out and starts plotting a path toward achieving them. “The reason that people get money is that it’s not lying on the beach with a piña colada—it’s called work,” she says.

And yet, heading to Farfetch—even in an advisory capacity, in which, as she says, she’ll send late-night messages via WhatsApp—looks an awful lot like throwing down the gauntlet to YNAP. “And why not? What’s wrong with that?” says Massenet. “The goal has always been the same: to build the fashion platform. That hasn’t changed. I’m still going to do it.”

Neves—who last year closed a $110 million round of funding—has been challenging YNAP in other ways. In 2015, Farfetch launched a division called Black & White that competes with Yoox’s business-to-business division: creating turnkey e-commerce sites for existing brands. So far, clients include DKNY, Manolo Blahnik and Christopher Kane. (YNAP, which declined to comment, works with Giorgio Armani, Lanvin, Dolce & Gabbana and Ermenegildo Zegna, among others.) In April, Neves and Massenet will announce a new initiative dubbed Store of the Future, exploring ways for brands to meld digital capabilities with real-life in-store experiences. Browns, the revered London boutique that Farfetch acquired in 2015—where Holli Rogers, a former Massenet protégé, is CEO—will serve as a sort of shopping laboratory.

“Farfetch is at the beginning of what will potentially be one of the biggest tipping points of how fashion is consumed and bought and marketed,” Massenet says. It’s a topic that she is constantly exploring, in part through making personal investments. She’s been meeting with tech entrepreneurs, and in 2015, she also registered a company, Imaginary Ventures Ltd., causing much speculation in the press. “It’s a holding company that I created for my future projects,” she says. Among these is a startup, she hints.

“I am very ambitious and very patient,” says Massenet. “Which is a killer combination, as it turns out.” www.wsj.com