Retail Insider held its first Breakfast Event of 2019 with Andrew Robb, COO of Farfetch, who outlined how the business has successfully combined technology and fashion to create a platform that connects consumers with boutiques/retailers and brands globally.
Andrew gave some insights into how the company has over the years steadily built crucial relationships with the key fashion brands like Gucci and Chanel and how its network of retailers around the world gives it unique visibility of these branded items around the world that it can then surface for consumers.
Senior executives from Harrods, Amazon, Marks & Spencer, Belstaff, and John Lewis were among those gathered at The Delaunay in central London to hear how these factors have helped the company grow into an organisation with $1.4 billion of annual revenues that employs 3,500 people globally of which around 1,000 are engineers constantly developing the Farfetch technology capability.
“We have a single view of stock and this powers everything. Retailers have to integrate into our systems – and use our logistics – and so this gives us the visibility,” he says, adding that this marks Farfetch out from other sellers of goods online.
For the retailers it hosts on its platform the sales derived through Farfetch average around 35/40% of their total turnovers but it can be as high as 80% for some retailers. What they must adhere to in order to enjoy such returns is delivering a very high standard of service.
“We have sizeable account management teams and we’ll send specialists to our 1,000-plus sellers to help them be more successful. There are incentives and penalties around service. We have a deep service layer at Farfetch,” says Andrew.
Delivering exemplary service is made a little easier by what he describes as the unit economics of luxury fashion. The fact that the average order size is relatively high makes it possible for orders to be sent around the world via express delivery, which would be much tougher in other categories such as health & beauty.
Like all businesses involved with clothing, one area of challenge for Farfetch is returns. Although they run at a relatively modest 20% (and as low as 3-5% in Japan) when compared with other companies, Andrew says this will be reduced over time when the tolerance at the manufacturing stage is sorted and also richer content is provided by retailers to describe products online.
The other area where work is being done is with personalisation and the way recommendations are generated: “This is a holy grail and a very hard problem. We have a high spending customer group and humans do recommendations better [than algorithms] at the moment.”
As well as continuing to build the platform business Andrew says Farfetch also has its growing Black & White division that builds the online infrastructure for retailers and brand owners. The latest client is Harrods for whom Farfetch is to build out its global e-commerce capability.
Retail Insider would very much like to thank Andrew Robb and the morning’s sponsors K3, Webloyalty, Dimaps and Heads International. Without their much appreciated support this event would not have been possible.
Glynn Davis, editor, Retail Insider