The far-sighted founder of indie etail portal Farfetch.com explains his plan to rapidly grow its client list from 110 boutiques to 1,000.
Tucked away on a side street near Spitalfields Market in east London, the Farfetch.com office provides a welcome sanctuary from the bitter January wind as a kettle boils and two employees sit gossiping over their tupperware.
In a quiet room away from the office, chief executive José Neves greets Drapers and apologises for being late.
The hive of activity in the office outside gives just a hint of the transformation the website has experienced over the past four years. Launched in 2008, Farfetch, which allows brands and indies to sell product online and provides the retailers with back-end software to allow them to control their stock on the Farfetch site, has grown incrementally and shows no sign of stopping.
Neves has ambitious plans to up the site’s 110 boutiques to 1,000 within the next 12 to 18 months. Some of his clients include Bernard Boutique in Esher, Ra in Antwerp and American Rag in the US.
Upping the headcount
After harnessing an impressive £11.7m of investment (a rather nice belated Christmas present from Index Ventures, Advent Venture Partners, and its first investor eVenture Capital Partners), Neves says he plans to increase the staff headcount from 150 to 220 within 18 months, depending on growth, with the company expected to generate more than $100m (£63m) turnover this year.
However, Farfetch will remain selective about the types of indies it partners with. “We get approached all the time and obviously we are honoured and flattered to be approached, but it’s really like building a fashion brand, so you need to choose who you partner with and grow it organically,” says Neves.
He adds: “It’s not a matter of price point and it’s not a matter of brand list. It’s a matter of the individual and unique take on fashion and the curation of the products. You’ll find people who have all the big labels like Gucci, Balenciaga and Lanvin, but [that’s not a given to us working with them]. They have to buy these household names in a very interesting way. You will have very alternative boutiques who will buy brands that are more directional and that is important for Farfetch.com.” He says Farfetch is eager to showcase brands at the creative edges of fashion.
With multichannel retailing evolving at a phenomenal rate, the key to Neves’ success was spotting a genuine gap in the market and creating a selling channel before anyone else. Four years later, Farfetch is way ahead of the pack.
“It was clear there was a change in consumer behaviour and it was clear that the online channel was going to become more and more important,” says Neves. “But at the same time, we saw it was impractical for most small, medium and even large boutiques to have a worldwide global ecommerce business. And if you look at the retailers that have done very well online and the independent boutiques, they have invested massively and they have dozens of employees.”
He goes on: “So it was clear that these retailers needed a solution and it would be difficult for any one of us – and I say this talking as a retailer [Neves opened premium London indie B Store in 2001, which he still operates] – to do it on our own, so it made more sense to have a co-operative effort. To have a common platform which could provide a top-notch service with a world-class team, because at the end of the day the selection and the curation of these boutiques is really at the global end.”
With added impetus from the recent investment, Neves now has his eyes set on global domination. The Farfetch website already boasts boutiques in Austria, Belgium, Canada, Denmark, France, Germany, Italy, Luxembourg, Spain, the UK and US; however, Neves says there are still unchartered territories he wishes to enter.
He says the US is earmarked for further expansion and that Farfetch has just “scratched the surface” with its 35 US member boutiques.
Ecommerce the Brazilian way
Brazil is set to be key, with Neves particularly optimistic about this prospect: “Brazil to us is very attractive; there is a huge appetite for luxury goods over there. Brazil is exploding in terms of ecommerce.” Farfetch has a separate site for its Brazilian boutiques, Farfetch.com.br, which boasts 70 boutiques after just a year, but this is set to grow over the next year.
Neves now has his eye on introducing new categories to the Farfetch line-up, including lingerie, swimwear and jewellery.
With such a successful business model, it’s surprising that no strong competitors have attempted to muscle in on Farfetch’s slice of the cake. Neves says similar sites have launched, including Asos’s Marketplace, but that there aren’t many boasting the same business model, although he believes this could soon change.
He may have been the one to come up with the Farfetch idea, but as indies become more tech-savvy, is he not worried that some indies might ditch Farfetch to go it alone? Not likely, says Neves.
“There are [great indies] who have tried to have their own web presence and were losing money, so dropped [their sites],” he explains. “When you have a bricks-and-mortar boutique, you need to be placed in a certain place like New Bond Street or Savile Row, and the internet is a bit like that. If you have an amazing boutique, but it’s in the middle of nowhere, you won’t have the footfall and it won’t work. So in terms of online, it’s the same thing.”
And as long as Farfetch continues to regularly rank as a top search result on internet search engines, it looks like indies will be setting up home at Farfetch for years to come.
Why are indies so important to the industry?
They will still be the foundation of any brand’s distribution. Also, and this is very important, they are the ones that scout new talent. It won’t be the big etailers or the huge department stores because they can’t take the risk as they need to buy in depth. Indies also help to nurture new talent and what we call the ‘buying diversity’ in fashion. They are passionate about it and explain where they source stock and why.
What is the ultimate recipe for online success?
Having a very easy-to-shop website, which has all the information, great pictures, with video if possible, with a streamlined checkout. The small invisible things, like site speed for example, are the things I think are sometimes neglected. People try to revamp their website and do something no one else has done before, and often that’s when things go awfully wrong because consumers are expecting a certain browsing experience and they can be put off if you change it too much.
What websites do you think are doing a good job?
Net-A-Porter and Mr Porter; they come from a very different perspective. They have an editorial and a magazine shop front, and they are doing an amazing job. Companies like Asos are successful in terms of site navigation and ease of use. I think these companies have achieved a very good balance in creating a brand, and at the same time providing a fast [shopping] experience.
2008 Launches Farfetch.com
2001 Opens London mens’s and women’s wear retailer B Store
1995 Founder, footwear brand Swear London and licensing firm Six