The Trend that was Farfetch: A High Fashion, High Risk Platform Strategy

Farfetch, a pioneering luxury fashion e-commerce platform founded by José Neves in 2007 that attracted investment from Kering, Chanel and Alibaba was valued at $24 billion at its peak. The case describes (i) its innovative business model, which connects clients with a global network of boutiques and brands, offering a seamless online marketplace for luxury goods; (ii) its strategic pillars – technological advancements, partnerships, and acquisitions; (iii) its challenges – scaling operations, maintaining profitability, and navigating the increasingly competitive landscape of luxury retail. Students step into Neves shoes in 2023, at a point when revenues are stalling and its big investors are losing faith. A tense meeting with Kering executives, threatening to sever their collaboration, leaves him wondering how to convince luxury brands of the platform’s value proposition. After analyzing Farfetch’s meteoric rise, students dissect the industry’s complex dynamics, assess the decisions that overstretched the platform, and debate ways to respond to heightened competitive pressure and changing client behavior. The case provides the setting for a rich conversation about platform businesses, digital disruption, measuring sustainability, and the challenges of scaling in an industry built on high-touch retail experiences, exclusivity and control.

- Understand platform business models: Explore the strengths and weaknesses of marketplace models, especially when suppliers (luxury brands) gain digital capabilities and reduce their reliance on intermediaries. - Assess the challenges of scaling in luxury: Discuss how digital transformation in the luxury industry differs from other retail sectors, and why exclusivity and brand control matter. - Evaluate growth vs. profitability tradeoffs: Examine Farfetch’s rapid expansion strategy and debate whether its financial struggles were inevitable or a result of poor execution. - Analyze competitive responses to digital disruption: Identify how incumbents (e.g., Kering, LVMH) responded to Farfetch and why luxury brands resisted being reliant on a third-party platform. - Develop strategic recommendations: Debate possible strategic moves Farfetch could have taken in 2022-23 and whether an alternative approach might have saved the company.