Farfetch, the online luxury fashion marketplace valued at around $7 billion, is a notable player in the industry. But with challenges including heavy losses, rising debts and a more digital-focused luxury sector, it’s time to ask, is Farfetch’s problems fashion’s problem too? This article delves into why the challenges faced by the technology-driven platform is part of an industrywide trend, and what the implications are for the future of retail.
1.Understanding the Impact of Farfetch’s Struggles
Farfetch is a leading luxury fashion platform, however recently they have been going through a tough patch. The coming together of the coronavirus crisis and existing financial strain has laid them on challenging times.
The Impact on their Business Model
Farfetch’s business model relies heavily on partnerships and collaborations with small boutiques. With the current pandemic situation, local stores and boutiques are facing significant losses which in turn has impacted their core business model. Similarly, their logistics operations have also suffered with delivery delays and backlogs of orders.
The Impact on their Growth
The economic downturn has also put a halt on Farfetch’s ambitious growth plans, while they have shifted into new markets and categories the sales of luxury goods have fallen significantly. This has resulted in a delayed launching of new product categories and nail pulling of certain initiatives.
- Impact on their Business Model
- Impact on their Growth
2.Examining Farfetch’s Current Challenges
As one of the leading luxury fashion ecommerce platforms, Farfetch faces unique challenges that require its leadership to stay on their toes.
- Seasonality of fashion: Fashion has long been cyclical in nature, with trends changing from season-to-season. For Farfetch, this makes offering fresh and exciting inventory a priority, but also presents a challenge in terms of predicting demand and maintaining a continuous supply of new items throughout the year.
- International marketplace: Working with high-end fashion brands, Farfetch has a truly international presence, with customers, brands, and merchants located in countries throughout the world. Managing multiple currencies, taxes, payment methods, and international shipping are just a few of the challenges this online platform faces as it goes global.
- Customer experience: Last but not least, Farfetch must create a frictionless ecommerce experience for its customers, offering fast shipping, flexible returns, and a variety of payment options. This requires a high level of customer service, ranging from responsive customer support to a well-organized website.
The key to success for Farfetch lies in its ability to identify and prioritize which challenges are most pressing and how best to address them in order to create a successful international luxury fashion marketplace.
3.The Ripple Effect on the Fashion Industry
From Fast to Slow Fashion
The fashion industry has embraced the spirit of slow fashion to move away from the fast-fashion model and supply chain practices that caused terrible damage to the environment. Ripple effects continue to be felt, as many fashion brands are doing their best to support sustainability and ethical production in their product lines. Far from giving in to the nine times as fast new designs that used to be seen in stores, this is creating much longer lasting seasonal collections with far less waste, and more sustainable production tools and practices.
Small Changes, Big Difference
More and more fashion companies are discovering that some small changes can lead to big results. Working with smaller companies, using upcycled materials, or creating collections with a longer shelf-life are just some of the ways that fashion companies are looking towards sustainability. Support for waste-reduction, natural ecosystems and small-scale businesses is also playing a big role as the industry looks to the ripple effect that any changes will have on the environment as a whole.
- Far from giving in to the nine times as fast new designs
- More sustainable production tools and practices
- Support for waste-reduction, natural ecosystems and small-scale businesses
- Using upcycled materials, or creating collections with a longer shelf-life
4.The Path Ahead for Farfetch and the Fashion Industry
Looking into the future, Farfetch and the fashion industry will continue to search for solutions that cater to the needs of consumers and businesses alike. Consumers crave variety, convenience, and personalized experiences. For retailers, the challenges of standing out in a crowded market are difficult; combining the physical and digital worlds is now of utmost importance.
Farfetch aims to unify the fashion ecosystem and level the playing field for everyone; providing their innovative platform and All in the Same Network initiatives, the company is creating new doors to sustainably scale retail industry worldwide. With initiatives such as Baseline, Revolution By Farfetch, and Private Cloud, the company is pushing the envelope on customer experience and technology, reshaping the future of retail.
- Baseline: Protocol for provenance and product data for the entire industry (brands, retailers, platforms) with machine-readable standards
- Revolution by Farfetch: Modular, cloud native commerce platform to help retailers stay connected and achieve more, embracing innovation
- Private Cloud: Connected network which makes supply chain more efficient and produces high- conviction demand forecasts
Ultimately, Farfetch’s problems are our problems. As both consumers and producers in the fashion industry, we must remain aware of the trends that are driving companies to operate in the way they do – and hope for creative solutions to the challenges they face. By understanding the importance of Farfetch to the fashion industry, we can all play our part in learning how to be fashion’s problem solvers.
