Malique Morris, an e-commerce correspondent known for his luxury market insights, joins the discussion to unravel the challenges Farfetch faces post-acquisition by Coupang. The focus is on how aggressive cost-cutting is jeopardizing relationships with VIP customers and the brand's luxury identity. Morris argues that prioritizing profitability threatens the high-end experience that luxury shoppers expect. The conversation also touches on shifting strategies, the impact of recent partnerships, and the future outlook for this once-pioneering marketplace.
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insights INSIGHT
Farfetch's Initial Business Model
Farfetch's initial business model was innovative but inherently unprofitable.
The costs of luxury e-commerce, including shipping, returns, and customer acquisition, were high.
question_answer ANECDOTE
Farfetch's Acquisition Spree
Farfetch's acquisition spree, including New Guards Group and Browns, distracted from its core business.
These acquisitions contributed to Farfetch's financial struggles and lack of focus.
volunteer_activism ADVICE
Prioritizing Customer Experience
Prioritize customer experience and brand relationships in luxury e-commerce.
Cutting costs at the expense of customer service and brand partnerships can be detrimental.
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Once hailed as a pioneering platform for online luxury, Farfetch is now undergoing a dramatic operational overhaul. The South Korean e-commerce giant Coupang acquired the luxury marketplace in 2023, rescuing it from near-bankruptcy. Since then, Coupang has implemented sweeping cost-cutting measures that have narrowed losses significantly, but are eroding Farfetch’s footing in the luxury e-commerce space and alienating its core customers.
DTC correspondent Malique Morris joins Executive Editor Brian Baskin and Senior Correspondent Sheena Butler-Young to examine Farfetch’s path to profitability.
Key Insights:
Coupang's relentless drive to push Farfetch toward profitability clashes with the premium expectations of luxury shoppers as cost-cutting is prioritised over customer experience. “Coupang is so hyper‐focused on getting Farfetch to profitability ... and when you're dealing with people who are spending $100,000 a year on the marketplace, it doesn't quite work that way,” explains Morris. “They’ve also cut teams dedicated to working with Farfetch’s VIP customers, who can make up as much as 30% of the company’s annual sales.” This tension between operational efficiency and delivering a high-end experience is at the heart of Farfetch's challenges.
Farfetch’s “sold by Farfetch” programme highlights its growing disconnect with luxury brands. As luxury powerhouses like Celine, Alaia and Kering – which includes Gucci, Saint Laurent and Bottega Veneta — pull their collections from the platform, Farfetch has turned to a grey market tactic to maintain its inventory. “Instead of sending the goods straight from the retailers to the customers, the items are now going to a warehouse in Amsterdam to be repackaged,” says Morris. “It's not only a knock to Farfetch's relationship with top brands, but it also risks deteriorating customer service.” This move, intended to sidestep brand resistance risks undermining transparency and trust among high-end partners.
Farfetch's biggest superpower is that many independent boutiques still rely on it. “If Farfetch can at least do right by those retail partners, then it probably has a shot of stabilising its footing in online luxury,” says Morris. “Coupang will eventually have to allow Farfetch to reinvest in their relationships with customers and brands. That might cost them a couple million, but hopefully with the renewed focus on just the marketplace, Farfetch won't go back into the red in the process.”
The Business of Fashion Podcast 