A good idea is still a good idea, even when the world is crumbling.
That’s what Farfetch founder and CEO José Neves learned nine years ago when he launched the luxury e-commerce platform—two weeks after Lehman Brothers collapsed, plunging financial markets and economies into the Great Recession. That year, he said during a podcast recording session for The Current at SXSW, was the only year on record that the luxury market contracted.
“The whole world dried up,” Neves said.
Fast forward to 2018, however, and it’s clear that the time had come for a concept like Farfetch, even if the launch timing wasn’t exactly ideal. It was among the first companies to offer a curated online marketplace concept for luxury, an industry that still leans heavily on the high-touch brick-and-mortar experience. Just 9 percent of luxury and high-end sales happen online, he says, describing the industry as “stuck in the past.”
Farfetch has proven its ability to lure brands both large and small. Timed to London Fashion Week in February, Burberry announced a new partnership with Farfetch, exposing its full inventory to the 150 countries where the luxury platform operates as it seeks to “reach a young fashion-conscious consumer,” said Daniel Heaf, the brand’s senior vice president of digital commerce & digital marketing. Plus, Chanel just acquired a minority stake in Farfetch to help drive digital innovation and connect with tech-savvy shoppers. Even the most old-school of brands is acknowledging that the future of luxury is digital.
Though bowing during the economic meltdown may seem inauspicious—and was in many ways—Neves said it wasn’t all bad. There’s a certain kind of freedom, he said, that comes with not knowing if your fledgling startup will survive to see another day, and that empowers entrepreneurs like himself to throw caution to the wind and take risks. “Crisis brings great opportunities,” Neves said, adding that Farfetch’s arrival in 2008 “created the DNA of resilience in the business.”
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That resilience has led Farfetch to significant growth, to the tune of a 74 percent year-over-year revenue increase in 2016, according to Business Insider. Neves, who described Farfetch as “OpenTable plus Postmates for high-end fashion,” said his company scours the globe for the most interesting designers and boutiques, gets them signed up onto the e-commerce platform, and gives them software tools designed in-house so they can sync up their inventory and offer customers round-the-clock real-time stock information. The Lisbon-based company typically gets orders to East Coast customers in three days, which stretches to five for West Coast shoppers.
Farfetch uses an open API so “brands and boutiques can build new businesses on…our platform,” Neves said. “A real platform is an enabler for other ideas to flourish on top of it.”
Like many digital-first companies, Farfetch ventured into physical retailing in 2015 with the acquisition of London’s iconic Browns store, which it’s using as a laboratory of sorts as it experiments with “store of the future” technologies. Despite Farfetch’s online success, “fashion cannot be digitized,” Neves said. However, consumers increasingly accustomed to highly personalized digital experiences want that type of tailored journey to translate into the in-store environment. That can lead to a conundrum, Neves said: sometimes a shopper may want to remain “anonymous” while browsing in a store, but still have access to traditionally “digital” features, such as a wish list or perhaps a record of products recently viewed online.
Retailers need to understand that allowing a consumer to be anonymous in-store can even be a form of personalization, Neves added.
The CEO would not comment on reports that Farfetch is heading toward a $5-billion IPO in September.