While online shopping has become as common as browsing the aisles of your favourite department store, you can’t deny that it’s a crowded market out there. At times, it feels that every venture capitalist is looking for the next fashion “unicorn” (a start-up that achieves a market value of US$1 billion), hoping to turn it into a company that can sustain rapid growth and become a household name in a matter of years.
In a field dominated by big players such as Net-a-Porter and Matches Fashion, it’s hard to make an impact, unless you have a wholly different point of view. This is where online luxury platform Farfetch comes in.
Farfetch has been giving fellow online players a run for their money thanks to its business model and its unique approach to retail. Although you’re probably not new to Farfetch (Greater China accounts for 12 percent of its sales), you’re likely to be unaware that every single piece available on the site comes from boutiques in countries such as Italy or Japan that have partnered with the company.
Instead of relying on the typical retail model of buying inventory and then selling it online before marking it down during sales season, Farfetch holds no stock whatsoever and acts as a connector among boutiques and consumers around the world. It’s the brainchild of a dapper Portuguese, José Neves, who established the brand in London almost a decade ago after forays into the tech and fashion industries
Can you tell me about your early days in technology and fashion?
I started as a computer programmer; fashion wasn’t my thing. I’m from the north of Portugal, Porto, a city where there are lots of fashion factories and design studios. I started developing software when I was 19. I was making software for the fashion industry and then making shoes with Swear and I opened shops in London, Tokyo, Hong Kong. Until 2007 I was running a fashion and tech business at the same time. I was never a good programmer and never a good designer but I combined the two and I had a little bit of an edge there.
How did the idea for Farfetch come about?
In 2007 I was in Paris for Fashion Week in my showroom and I was going through all the orders, as you do at the end of the shows. It became clear that online was going to be huge, because whoever had a strong online operation was growing and everyone else was feeling the pain.
I was thinking of what was going to happen to all these amazing small boutiques. They had everything: the best brands, a great point of view, great buyers. Even from the big brands, they bought in their own way. They had so much beautiful stock but it was sitting in these small boutiques like Forty Five Ten in Dallas or Penelope in Brescia, so the aim was to give them a platform, which they couldn’t create on their own.
So how did partnering with Farfetch help the boutiques?
On average, we’re 50 percent of their sales and in some cases 60 percent, especially in cities in Europe where there are not many tourists and that only rely on the locals. If you’re not in a place with tourists, the local market disappeared, so we gave these boutiques a new lease of life. But it’s not just the financial element – it’s also the quality and the choice. The boutiques were becoming boring; safer and safer, because they were just buying for their own town, but now they can buy whatever they want because they know they can sell in countries such as Singapore. It feels very rewarding for us. They say, “Thanks to Farfetch, not only is the business doing well but it’s fun again.”
What about the product range? How is Farfetch different from its competitors?
We want to be the platform for the high-end fashion industry and the place where you can find the best curators and creators of fashion. This is a completely different philosophy and mission from everyone else. They’re retailers – they buy and sell inventory – we’re not. We’re a tech platform that’s curated and obsessed with consumer experience. Our product is very different. We have 1,500 designers represented on the platform, versus about 500 on Net-a-Porter. We have small designers that no one else has online and also high-end brands. Our boutiques buy different pieces from the big brands; they don’t buy like department stores. We insist that the best representation of each store needs to be on Farfetch. It has to be everything they carry, except for brands that don’t sell online.
How do you feel about brands that still don’t sell online?
What I tell them is that they just don’t know that they’re already selling online. WeChat in China is a huge luxury retailer; it’s the biggest one. It’s not the brands selling there but the personal shoppers selling to their clients by sending pictures to them, so a brand like Céline is actually already selling online because customers buy from pictures. Not only are the brands missing out, but it’s also not good for their image because the pictures are terrible and the customer service is non-existent and sometimes fakes are mixed with the originals. This is terrible for the brands, so why not do it in a legitimate way?
Can you tell me about the recently launched e-commerce service to luxury brands, Black & White?
As in the real world, there are two experiences that need to coexist. You have the big brands on Fifth Avenue but they also need to be in Barneys. You need the multi-brand and mono-brand experiences online too.
Brands need their own e-commerce, too, and that’s why we started Black & White and we power the e-commerce of brands such as Manolo Blahnik. We develop their e-commerce platform from their sites but with a different model, because each order comes directly from their boutiques, so the assortment is better than what you can have in a warehouse and there’s also no inventory risk. We figure out what’s available and the closest boutique to ship it from.
What about your acquisition of London department store Browns?
When I moved to London in 1996, Browns was one of the best shops in the world. The Burstein family is amazing, but in the last few years, because of the competition from online and department stores, it’s been tougher, so the family and I saw the opportunity to revitalise the brand. We also run their website and added many designers and in one year we multiplied the turnover by five. The idea of buying Browns was also to create the retail experience of the future. We created a business unit inside Farfetch called Store of the Future, in which we test amazing technology that we run in stores. It’s retail tech that has to work. We’re developing a technology named Magic Rail. If you take a jacket from a rack and put it back, it goes straight to your wishlist on your Farfetch app and then you can order it to try in your dressing room in the shop or buy it later at home and we can follow up to remind you if you forgot. It’s being tested now at Browns. Things like that will redefine the store experience. The idea is to use Browns as a lab to see what works and then do it for other brands and boutiques.
How have you dealt with the fast growth of the company?
If you’re an entrepreneur, the problem in the beginning is always not having enough partners or customers. Later it’s the opposite: you have too much of everything and you have to please all of them. In the beginning, you have to do it all by yourself. But now, my role is strategy, making sure that the company’s cultural values stay strong and explaining what Farfetch is about.