Farfetch launched in 2008 with a clever premise: It would use the reach of the internet to create a single luxury-fashion marketplace, through which brick-and-mortar boutiques scattered around the world could easily find a global audience. Rather than each retailer having to figure out how to build and manage its own e-commerce site, Farfetch would handle the technical side. The stores just had to provide the products, and Farfetch would get a cut of the sales it enabled.
The idea worked. By 2015, the company was worth an estimated $1 billion, and today (Aug. 20), after months of anticipation, Farfetch filed for its IPO on the New York Stock Exchange. The number of shares and their price has not yet been determined, but previous reports have said Farfetch’s target is a $6 billion valuation.
Farfetch has grown rapidly over the last several years. From 2015 to 2017, it more than doubled its sales. In that period, it bought the luxury department store Browns (paywall); signed a global “content and commerce” partnership with Vogue-publisher Condé Nast; and inked a deal with the Chalhoub Group, one of the largest luxury fashion players in the Middle East, as it makes a play into the region.
At this stage it’s something like an Amazon for luxury fashion, a massive marketplace where you can find the biggest sellers from top brands or that obscure item from an emerging label. Farfetch also operates much like Amazon. For example, Amazon’s third-party marketplace, which makes up more than half its sales, enables Amazon to sell goods without buying and holding inventory; Farfetch runs entirely on that model. Farfetch is also a logistics company like Amazon, having invested heavily in operations to get products up on its site quickly, and a fulfillment network that helps to ensure orders are processed and shipped quickly by their sellers.
But while Amazon itself has failed to court luxury brands to its site, Farfetch has succeeded—largely by being very unlike Amazon. Luxury sellers balk at the way products on Amazon feel like commodities. They’re all available next to each other with little differentiation and an emphasis on discounts, and Amazon appears to have scant control of what third parties are selling and how they present their products.
Farfetch, knowing that high-end fashion brands believe sales are as much about image as the transaction, has a very active hand in how everything on its site looks. Its supply chain starts with a “content creation” operation that includes “styling, photographing, photo-editing, and content management.” Farfetch helps with merchandise descriptions and size and fit information for the different items its disparate retailers list for sale, and operates four production centers around the world that process imagery for the site. It’s not a small operation. The number of products Farfetch offers keeps climbing, reaching 5.7 million as of the second quarter this year.
These efforts, as well as Farfetch’s focus on innovation, have helped it to persuade luxury retailers and brands such as Gucci and Thom Browne to partner with the company. They also continue to convince online shoppers who can’t touch and feel the pricey products they’re considering to go ahead and buy anyway. Through the first half of 2018, the average order value on the site was $622.