As I nibbled on some mini eggs Florentine and listed to a presentation by Farfetch founder José Neves at the Soho Hotel this week, back in the Drapers office, I was unaware that a colleague was writing an analysis piece on the e-commerce portal market for independent retailers.
But I don’t think it was a coincidence; as the leader in and innovator of this new-ish market, Farfetch clearly wants to stay ahead of the game in the face of mounting competition from the likes of The Counter (the subject of my colleague’s analysis) and Miinto. And if it does, Farfetch could be the knight in shining armour for indies.
Farfetch’s presentation was a lesson in the power of strong branding. It was slick, cool (the theme tune to Drive played in the background), delivered with confidence and filled with facts and figures that aimed to highlight why it’s still the best in the market. You could tell they wanted to impress.
But when I spoke to José after the presentation, he insisted that he isn’t worried about the competition. “Once you have the critical mass of key, leading stores, it’s very difficult to copy, it’s very defendable,” he said. The business also operates in the luxury designer market, while Miinto targets mainstream retailers and The Counter is looking to attract premium indies. But I think there could be some overlap with the latter; while there’s enough distance between Farfetch and Miinto, I think The Counter could have its work cut out competing with Farfetch.
Farfetch has 250 boutiques in its portfolio, 3.8 million site visits per month, an average spend of £417 per order, annual sales of $129m with a current growth rate of over 145%.
This is all impressive, tangible stuff, but I think there’s more to the success of Farfetch and to José’s confidence in the business’ growth: it’s José himself. He came up with the business model back in 2008 because he had faith in the role of boutiques in the fashion sector, but could see that, if they didn’t get online, that value would be lost. “Something had to be done, something could be done,” he said. “Boutiques fulfil a crucial role of educating the consumer, of finding new brands. They have always been by the far the best fashion curators – and they still are today. This job will never, ever, be done by a big, major retailer.”
While I admire his entrepreneurial skills, I questioned Farfetch’s longevity. As the industry becomes more and more tech-savvy, and technology becomes more accessible, won’t retailers be able to run their own websites? “Although it’s easier than ever to create an amazing website, it’s harder than ever before to create a commercially viable [online] business [if you’re small],” Jose explained. “You need at least 25 people on an online team if you want it to be global. If you’re a photographer, you’re not a financial controller. It would be like trying to run a restaurant with just two people.”
Farfetch’s success is partly dependent on the buoyancy of the independent fashion sector. At the moment, that market is finding trading rather tough, so new openings are few and far between. “We believe in indie retail. We believe in omni-channel,” Jose insists. “Once boutiques join Farfetch, their sales rise. On average, we represent 30% of their sales.”
Given that Farfetch operates on a commission model and looks after all back-office and logistics operations, it appears to be a no-brainer, which is probably why other businesses have joined the bandwagon.
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