Founded in 2007 by Portuguese entrepreneur José Neves, Farfetch took nine years to hit the one million customer mark. But a few weeks ago, less than 18 months later, the online luxury marketplace operator crossed the 2 million customer threshold—and it’s moving aggressively to keep growing, especially in the United States and China.
No doubt many of the second million customers came courtesy of Farfetch’s new alliance with Chinese e-retail powerhouse JD.com Inc., No. 1 in Internet Retailer’s Asia 500 ranking of the region’s leading online retailers, which invested $397 million last year in U.K.-based Farfetch. (Farfetch would not comment on the number of customers it has by country.) That investment brought total funding in Farfetch to $721.5 million.
The deal enables Farfetch to leverage JD.com’s massive store of customer data in marketing programs and the Chinese retailer’s far-flung delivery network. That includes the newly launched JD Luxury Express service in which couriers wearing suits and white gloves arrive in electric cars, instead of the scooters that typically fulfill online orders in China, to deliver luxury goods in major cities.
Farfetch, whose online shopping malls feature luxury items from 850 brands and boutiques in 47 countries, further expanded its reach with a deal announced in January to work with the Chalhoub Group, the operator of more than 600 bricks-and-mortar luxury stores and four e-commerce sites in the Middle East. Goods from Chalhoub stores will be sold on Farfetch and the two companies will work together to launch an Arabic-language Farfetch site in the first half of 2018.
But it’s single largest market remains the United States, says John Veichmanis, chief marketing officer of Farfetch, and the company plans to double its brand marketing spend in the U.S. this year as it seeks to increase consumer awareness of what Farfetch offers. He says the prime target is millennials, the consumers in their 20s and 30s, who make up nearly 60% of Farfetch’s customers.
Farfetch will unveil a new content platform this year that features contributions from fashion influencers and the boutiques and brands that sell their merchandise on Farfetch sites. While he declines to go into detail about the new platform, he says the focus will be on reaching shoppers in “micro-moments” when they’re glancing on their smartphones throughout the day to check out an Instagram post, tweet or email.
Whereas years ago luxury shoppers may have spent an hour reading a long article in a magazine like Vogue, that’s not how Farfetch shoppers follow trends today, he says. “When we talk to our customers about how they interact with brands and content, it’s changed massively from long-form content to micro-formats,” Veichmanis says. “That’s a really important shift.”
Perrin Paris, a luxury handbag brand that sells on Farfetch as well as PerrinParis.com and through bricks-and-mortar boutiques throughout the world, worked with Farfetch on the recent launch of its Perrin X Zaha Hadid Design clutch bag, says Olga Pancenko, chief operating officer of Perrin Paris.
“Farfetch was excellent in executing the launch strategy and push notification was one of the features that we had access to,” Pancenko says, referring to text messages sent to customers’ smartphones. “We found it to be a very smart and progressive way to notify millions of customers of something they cannot miss via a new communication medium.”
Farfetch, which is privately held but reported to be contemplating an IPO this year on a U.S. stock market, doesn’t report its sales. But Internet Retailer estimates the value of merchandise sold on its websites totaled $800 million in 2016, an increase of 60% over the prior year. The company, a pure marketplace like eBay Inc. that does not own the goods offered for sale on its e-commerce sites, operates websites in 10 languages—English, French, German, Italian, Japanese, Korean, Mandarin Chinese, Portuguese, Russian and Spanish—with the Arabic site due to go live this year.
That sales total puts Farfetch well behind its major online rival, Yoox Net-A-Porter Group, which was formed by the 2015 merger of Yoox Group, a seller of discounted out-of-season luxury goods, and Net-A-Porter, whose focus is on full-price, in-season merchandise. Yoox Net-A-Porter, No. 76 in the Internet Retailer Top 1000 ranking of North America’s leading online retailers, booked global online sales of $1.78 billion in 2016, a 12.4% increase from 2015, taking over the top spot from Neiman Marcus (No. 41 in the Top 1000) in Internet Retailer’s annual worldwide ranking of online sellers of luxury goods.
But, at least in terms of website traffic, Farfetch seems to be making headway. Website traffic monitoring firm SimilarWeb estimates there were 17.4 million visits to Farfetch.com in January 2018, a 36% increase from January 2017. That was higher traffic than to such competing English-language luxury e-commerce sites as Yoox.com, Net-A-Porter.com and NeimanMarcus.com, though Yoox and Net-A-Porter together attracted nearly 20 million visits. But none of Farfetch’s competitors generated double-digit traffic growth, according to SimilarWeb.
Veichmanis says the large selection of 240,000 SKUs on Farfetch.com drives online shoppers to the online mall, and in turn, gives Farfetch rich data about their preferences. That, he says, helps Farfetch use its online marketing dollars effectively.
“Our focus is to find people who love luxury and invest our marketing dollars behind those people,” he says. “And that’s fueled by the quality of data we have.”