What will the future hold for Farfetch?

As bankruptcy loomed, Farfetch found a last-minute rescuer in Korean e-commerce giant Coupang, which bought the British luxury e-tailer and bailed it out by injecting $500 million into it. A surprise acquisition that will allow Farfetch to breathe a sigh of relief, and look to the coming months with a degree of optimism. But questions remain about the luxury e-tailer’s future profile and the way in which it plans to bounce back, while the acquisition will surely have repercussions on the e-tail sector, currently experiencing a generalised slump.

Coupang’s acquisition of Farfetch could in fact be the first in a long list, within a market that is set to reconfigure itself. According to the latest rumours, British retail group Frasers is reportedly negotiating to buy luxury e-tailer Matchesfashion. Meanwhile, as soon as Farfetch’s acquisition was announced, Swiss luxury group Richemont, which in August 2022 had inked a deal to sell its own luxury e-tail sites under the Yoox-Net-A-Porter (YNAP) banner to Farfetch, immediately stated it was pulling back from the deal, and would not sell YNAP to Farfetch.

In a press release, Richemont said that it has “no financial obligations towards Farfetch, and does not envisage lending or investing into Farfetch. Richemont’s labels will continue to operate on their own platforms and have neither adopted the Farfetch Platform Solutions (FPS) system, nor launched e-concessions on the Farfetch marketplace.” The deal notably envisaged that Farfetch would become the main e-tail technology provider to the labels owned by Richemont. “As a result of the termination of the (…) arrangements [with Farfetch], Richemont will consider alternative options to pursue the realisation of its Luxury New Retail (LNR) vision,” added Richemont, referring to its omni-channel distribution strategy.

The outlook for YNAP, which Richemont bought in 2016 but whose results have never quite reached expectations, seems less promising. In the press release, Richemont underlined that YNAP will continue to use its own tech solutions and has not deployed FPS technology, but didn’t clearly spell out YNAP’s future. It simply stated that “Richemont will re-evaluate options for YNAP to best harness its strengths and potential under a new stewardship.” The Swiss group isn’t keen to invest in YNAP, which has been a financial burden in the last few years. According to some analysts, YNAP might be doomed, unless another buyer is found.

Also, Richemont has failed to mention the partnership it heralded in 2020 with Alibaba and Farfetch to boost its online business in China. At the time, Artemis, the holding company of the Pinault family, Kering’s owner, also entered the fray, saying it was willing to increase its existing stake in Farfetch by buying $50 million worth of shares. Kering isn’t the only luxury player to have forged closer ties with Farfetch. In 2018, Chanel signed a partnership agreement with the e-tailer to expand its digital services and create new customer experiences. There is no expectation there will be significant changes in the coming months with regards to Farfetch’s various partnerships, but some modifications are surely on the cards.

The Farfetch group was founded by José Neves in 2008, and its main asset is its digital tech expertise, and notably its ability to support labels with e-tail and customer experience solutions. The group is now likely to refocus on its core business, jettisoning other activities that are less consistent with it. Last summer, Farfetch stepped away from the beauty sector, and might do the same for some of its other, less profitable investments. For example, the Browns chain, which it is reportedly considering selling, or fashion group New Guards Group (NGG), about which rumours are rife.

In 2019, Farfetch shelled out nearly €550 million to buy NGG, which in a few years has become a key player in the streetwear sector. Among others, the Italian group owns Palm Angels, Marcelo Burlon, Opening Ceremony and Heron Preston, and is in charge of production and distribution for Off-White. By buying NGG, Farfetch morphed into a kind of brand incubator, at a time when streetwear’s popularity was beginning to wane. The most likely scenario is that NGG itself, or its labels, will be put up for sale. LVMH, which owns Off-White, might be interested in taking control also of its operations, in other words the license held by NGG for the label founded by Virgil Abloh.