Global online luxury fashion platform, Farfetch is a tech company at heart. “We are the largest global technology platform for the luxury industry. We don’t consider Farfetch as a retailer nor an e-tailer, but a tech-enabled platform focused on the future of the luxury industry,” affirms Edward Sabbagh, managing director – Middle East, Farfetch.
Farfetch is an online marketplace that connects some of the biggest brands, department stores and multi-brand boutiques from across the world with consumers globally. Through a single platform, Farfetch connects over 1,200 retail partners from more than 50 countries with consumers across the world, shipping to 190-plus countries.
“We offer an end-to-end white-label e-commerce solution – from content production to logistics, from customer service to performance marketing. In February 2020, we did a large project with British luxury department store Harrods, becoming the technology partner for the retailer’s e-commerce channel,” Sabbagh shares.
A future-ready platform
Even as online is growing, brick-and-mortar still accounts for 88% of the luxury retail sales globally. A Bain & Company report suggests that this number will decline to 70% in 2025, but that’s still significant. Farfetch recognises the importance of physical retail. The brand has launched what’s called the Farfetch ‘Store of the Future’, offering augmented retail technology solutions to its offline partners. “We did a partnership with Chanel, creating a customised augmented retail experience for its flagship boutique in Paris that received positive customer response,” Sabbagh states.
Going by Bain & Company’s forecasts, there will be a significant growth in the online share of the personal luxury goods market from 12% in 2019 to 30% – up from 25% previously – in 2025.
“The biggest change we have seen since the COVID-19 outbreak is the rise in the number of customers who have made their first-ever luxury purchase online and on Farfetch. We have seen through our historical data insights that the first online luxury purchase can be a massive turning point in a customer’s purchase behaviour as they discover the benefits of online shopping. This transformation in consumption pattern can have a long-term impact even in a region like the Middle East boasting a strong shopping mall culture,” Sabbagh observes.
Farfetch recorded year-over-year growth in its Q1 2020 revenues of 90% touching $331 million, while gross merchandise value (GMV) rose 46% year-over-year. Its digital platform GMV was up 19% year-over-year during the first quarter of 2020.
In the words of its founder, CEO & co-chair, José Neves, “When I founded Farfetch 12 years ago, I never imagined that the global platform I was building for the luxury industry would be put to the test in such a devastating crisis…Over the past few months, as we have responded to an ever-changing environment to serve the community of creators, curators and consumers of this industry we so love, our teams have stretched beyond perceived limits, and demonstrated the resilience of our business model.”
In the Middle East too, Farfetch is seeing a year-over-year increase in customer demand, Sabbagh shares.
Focusing on tech-led innovation
In a post-COVID world, as structural changes are likely to impact the global luxury industry, Farfetch continues to strengthen its business model through investments towards building global logistics capabilities, geo-diversified supply network and localised services for a global consumer base.
“Currently, Farfetch is present in all the major luxury markets globally, with a dedicated regional team that curates localised experiences.” Sabbagh points out. “In the Middle East, we create content that appeals to the regional taste. Our brand marketing is done in the region and for the region, as is customer experience – which starts from inspiration and stretches until post-purchase. We have private stylists for our top-tier customers in the region, thereby delighting them with our unrivalled customer service.”
With an aim to stay ahead in the innovation race, Farfetch has been constantly researching and investing in new technologies. “In 2019, we implemented visual search, which allows the consumer to click a photo of a fashion piece using the iOS app, while we leverage machine learning (ML) algorithms to help them find the same or similar pieces. For categories with lower online adoption rate, like sunglasses, we have also implemented augmented reality (AR) try-on feature on the iOS app. We have also collaborated with universities to create a best-in-class chatbot for the future. We also leverage our in-house accelerator called the ‘Dream Assembly’ partnering with technology start-ups that are innovating the luxury industry,” Sabbagh elaborates.
“In addition, Farfetch’s distributed stock model has shown resilience amidst the on-going global crisis, as customers are able to purchase from our partner stores across over 50 countries. This has helped us to keep pace with the rise in demand even as some of our partners had to go offline in some countries due to lockdown-related restrictions. For some of our partners, Farfetch became their only sales channel for a certain period of time,” he adds.
Strengthening the sustainability mindset
Alongside innovation, another critical area of focus for Farfetch is sustainability. Over the years, Farfetch has consistently strengthened its sustainability commitment by taking steps to reduce carbon emission.
“We have been able to carbon offset our deliveries and returns process. We have launched a service called ‘Farfetch Second Life’, which allows our customers to sell their used bags against Farfetch credit. Recently, we have launched a sustainability calculator to examine the environmental impact of the pieces that customers purchase. We have also created ‘positively conscious’ Farfetch pages to help customers make informed purchase decisions,” Sabbagh shares.
As Farfetch is a tech company at heart, its partnership with the Chalhoub Group is quite symbiotic in nature, owing to similarities in people-centric culture, innovation mindedness and a common goal to build one of the leading platforms for luxury in the Middle East. “The Chalhoub Group has a deep understanding of the Middle East luxury market. They have supported us greatly with talent, customer and regional operations insights,” says Sabbagh.
“Nurturing talent will remain our key priority. For an online business, there is no high-traffic location; so, our success will depend on the actions taken by our team. Therefore, talent will be one of the critical success ingredients in ensuring Farfetch is future-ready and ahead in the innovation curve. Going forward, we will continue to increase our market share, while delighting customers and enhancing our platform capabilities further,” he concludes.
Words by Farimah Moeini, Snapchat Head of Industry – Retail and Travel TheJuly 5, 2021 | By RetailME Bureau
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