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Farfetch detects a shift in the luxury industry – away from wholesale and towards direct distribution via its marketplace

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Farfetch says it’s seeing a shift in the luxury industry sales model as brands choose to distribute their wares directly via its marketplace, while at the same time reducing their wholesale operations. 

By the end of its second quarter, said Farfetch, which provides a technology platform for luxury fashion businesses, including brands and offline boutiques, businesses operating on its marketplace collectively turned over $488.5m (£404.0m) in gross merchandise value – 44% up on the same time last year. 

Its own revenue came 42% ahead, at $209.3m (£173.1m) in the three months to June 30 but its post-tax losses widened by 406% to $89.6m (£74.1m) from $17.7m (£14.6m) a year earlier. 

José Neves, founder, chief executive and co-chair of Farfetch, said: “Our unmatched proposition for luxury consumers drove growth beyond not only our expectations, but also the growth of the online personal luxury goods industry as we continued to gain market share.

He said that Farfetch’s ambition was not take the lion’s share of an expected $100bn (£82.7bn) growth of the online luxury industry. “Moreover,” he added, “the industry has only further validated our global e-concession model over the past year as we have seen major luxury groups increase their direct supply on our marketplace while at the same time announcing plans to reduce wholesale distribution, and our overall number of brand and boutique partners continued to increase to now exceed 1,100.”

During the quarter, Farfetch also bought the Milan-based New Guards Group, a collection of brands and a luxury fashion brand platform that it says has a proven track record of identifying the most relevant emerging new creatives and giving them the resources to develop profitable brands. 

Neves said that the acquisition added a brand platform layer to the technology, data and logistics of its luxury marketplace. 

Farfetch chief financial officer Elliot Jordan said: “The powerful network effect of the platform we have built and the rich unit economics that can be achieved underpins our future growth and will ultimately deliver strong profitability. Additionally, the acquisition of the New Guards Group brings profitable revenue streams and broadens our ability to leverage the Farfetch platform to further enable the luxury industry.”

Image courtesy of Farfetch

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