Business Model<\/u><\/strong><\/p>\n Unlike other pureplay e-tailers who aim to replace the traditional retailing model, Farfetch recognizes and in fact embraces the value of the brick-and-mortar shopping experience [6]. Equipped with 1,500+ carefully curated brands [3], Farfetch offers a differentiated value proposition \u2013 the seamless integration of online and offline.<\/p>\n To the consumer, the company delivers value by granting access to an unparalleled global selection of fashion-forward pieces rivaling that of Barneys or Bergdorf. To the boutique, the platform 1) helps to clear inventory by connecting the store to a vast network of international shoppers, 2) incentivizes taking riskier merchandising bets by mitigating constraints resulting from regional style preferences, and 3) enables brick-and-mortar establishments to operate 24\/7. In return, Farfetch receives a 25% commission from each transaction [6].<\/p>\n Exhibit 1: Product landing page. Farfetch.com<\/p>\n Operating Model<\/u><\/strong><\/p>\n Similar to eBay, Farfetch serves as a marketplace and does not carry inventory. Given that its boutique partners are typically small-scale operations with limited or no digital experience, Farfetch ensures a smooth offline to online transition by managing the presentation of products, processing payments, and negotiating attractive rates with logistics groups. To assuage shopper concerns around committing to big-ticket purchases without having worn the item, the company offers a \u201cClick-and-Collect\u201d service. Customers can pick up a previously placed order at a boutique, try on items, and return any unwanted goods at any participating store in the Farfetch network [7]. In addition, the platform is available in 9 different languages to both boutique partners and shoppers [2].<\/p>\n For boutiques, listing products on Farfetch is a multi-step process [1]:<\/p>\n Exhibit 2: Global boutique partners. Farfetch.com<\/p>\n Recently, Farfetch has made considerable investments to improve the execution of its omnichannel strategy. In May 2015, it acquired London-based boutique Browns with the goal of incubating and testing retail experience innovations at a physical store before implementing them across the broader Farfetch network [8]. Earlier this year, the company debuted its white label platform business, Farfetch Black & White, which builds e-commerce capabilities for monobrands that have historically eschewed digitization [9]. Its first client site, ManoloBlahnik.com, launched in March [9].<\/p>\n What\u2019s Next?<\/u><\/strong><\/p>\n While Farfetch is facing considerable competition from the likes of Moda Operandi that adhere to the traditional wholesale model and aggregators such as Lyst and Polyvore, few have its scale and omnichannel know-how. With more than half of luxury shoppers\u2019 searches now being conducted via mobile [10], the logical next step would be for Farfetch to further its mobile platform. The acquisition of Browns will likely play a considerable role in helping Farfetch identify opportunities to enhance the shopping experience, from brand discovery to ultimate purchase. In fact, it is already investing in an \u201cimage-recognition software that can identify a customer entering the shop and glean from electronic records whether she\u2019d like help, a dressing room, or a heads-up that a jacket she tried on a month ago is now on sale [11].\u201d<\/p>\n E-commerce is projected to become the world\u2019s third largest luxury market [3], and Farfetch is uniquely positioned to capitalize on favorable market trends. It is important to note that while Farfetch has enjoyed robust transaction volume growth, the retailer has yet to turn a profit. Nevertheless, by leveraging its rich experience in both offline and online, and beta-testing potential innovations at its Browns boutiques, I am confident that Farfetch is on its way to becoming the preeminent voice in luxury fashion.<\/p>\n (Word Count: 795)<\/em><\/strong><\/p>\n Sources<\/u><\/strong><\/p>\n [1] Elizabeth Holmes, \u201cWhere Luxury Fashion Is a High-Speed, High-Volume Business,\u201d Wall Street Journal <\/em>(26 October 2016), accessed 18 November 2016, http:\/\/www.wsj.com\/articles\/where-luxury-fashion-is-a-high-speed-high-volume-business-1477504330<\/a>.<\/p>\n [2] \u201cGlobal E-Commerce Marketplace Farfetch Announces $110 Million Series F Round,\u201d Index Ventures <\/em>(04 May 2016), accessed 17 November 2016, https:\/\/www.indexventures.com\/news-room\/news\/global-e-commerce-marketplace-farfetch-announces-us-110-million-series-f-round<\/a>.<\/p>\n [3] Limei Hoang, \u201cFarfetch Appoints Chief Strategy Officer, En Route to Eventual IPO,\u201d Business of Fashion <\/em>(09 November 2016), accessed 17 November 2016, https:\/\/www.businessoffashion.com\/articles\/bof-exclusive\/bof-exclusive-farfetch-appoints-chief-strategy-officer-en-route-to-eventual-ipo<\/a>.<\/p>\n [4] Maghan McDowell, \u201cFarfetch Hits One Million Customers,\u201d Women\u2019s Wear Daily <\/em>(15 August 2016), accessed 18 November 2016, http:\/\/wwd.com\/business-news\/retail\/farfetch-hits-one-million-customers-10506380<\/a>.<\/p>\n [5] Ruth David and Matthew Campbell, \u201cFashion Startup Farfetch Said to Plan IPO as Soon as 2017,\u201d Bloomberg <\/em>(4 November 2016), accessed 17 November 2016, https:\/\/www.bloomberg.com\/news\/articles\/2016-11-04\/fashion-startup-farfetch-said-to-plan-ipo-as-soon-as-next-year<\/a>.<\/p>\n [6] Vikram Alexei Kansara, \u201cFarfetch’s Global Platform Play,\u201d Business of Fashion <\/em>(05 April 2015), accessed 17 November 2016, https:\/\/www.businessoffashion.com\/articles\/fashion-tech\/farfetchs-global-platform-play<\/a>.<\/p>\n [7] Farfetch.com, accessed 17 November 2016, https:\/\/www.farfetch.com\/click-and-collect<\/a>.<\/p>\n [8] Kate Abnett, \u201cBrowns Acquired by Farfetch as Part of Omni-Channel Growth Strategy,\u201d Business of Fashion<\/em> (12 May 2015), accessed 17 November 2016, https:\/\/www.businessoffashion.com\/articles\/news-analysis\/browns-acquired-by-farfetch-as-part-of-omni-channel-growth-strategy<\/a>.<\/p>\n [9] Rachel Strugatz, \u201cFarfetch Jumps Into Monobrand E-commerce With Manolo Blahnik,\u201d Women\u2019s Wear Daily <\/em>(30 March 2016), accessed 17 November 2016, http:\/\/wwd.com\/business-news\/retail\/farfetch-jumps-into-monobrand-e-commerce-with-manolo-blahnik-10399673<\/a>.<\/p>\n [10] Linda Dauriz, Nathalie Remy, and Nicola Sandri, \u201cLuxury shopping in the digital age,\u201d McKinsey <\/em>(May 2014), accessed 17 November 2016, http:\/\/www.mckinsey.com\/industries\/retail\/our-insights\/luxury-shopping-in-the-digital-age<\/a>.<\/p>\n![\"ff1\"](\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/FF1-300x167.png\")
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