ChicGeek Comment Farfetch is becoming the ‘Russia’ of online luxury etailers

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There’s nothing like kicking a man when he’s down. Multibrand etailer Farfetch was a star that burned big and bright, and looks like it is running out of gas quickly.

Following its rescue by the South Korean giant Coupang, luxury group Kering has announced it will end its contract with Farfetch. This means it will no longer supply brands like Gucci, Balenciaga and Saint Laurent directly.

BOF reported that Farfetch is trying to access brands such as Loewe, Givenchy and The Row by working with a wider range of third-party boutiques to upload their inventory to Farfetch in exchange for “complete anonymity” to avoid repercussions from luxury brands.

This makes Farfetch look like Russia, who, no longer directly supplied by brands, is still able to get what it wants. Reports suggest wealthy Russians continue to import Western luxury items into Russia, including cars, electronics, and other luxury goods. The New York Times reported department stores like Tsum still selling brands like Gucci, Prada and Saint Laurent. In 2023, Bloomberg Intelligence (BI) found that the Russia-Ukraine war has had a limited direct effect on the luxury-goods market, with light asset-impairment write downs and little lost revenue. In 2021, Russia ranked 12th globally in the sale of personal luxury goods, while China was number two in the market at $58b (£51b).

Farfetch can only hope it fares as well.

In terms of mega fashion brands, the only Dior, Chanel and Louis Vuitton Farfetch stocks is pre-owned.

Relying on its global boutiques to supply it with big brands takes Farfetch back to its origins, but it will be more difficult for them and relies on other people and added extra costs. It will be almost impossible to do the volumes it was doing before.

Some luxury brands have decided they no longer need Farfetch anymore. Luxury brands have been pulling away from wholesale and third-party retailers for a while. They want direct sales and the increased margins that gives them. Farfetch is reported to take a hefty 30% commission from each sale made on its platform.

The ball was once in Farfetch’s court, but brands have developed direct sales through online and stores and no longer want to play ball. The downturn and squeeze in luxury will have had the accountants looking at maximising current sales and 30% commission is juicy. Goodbye Farfetch.

If consumers can’t get what they want, they’ll go elsewhere. It’s a quick downward spiral from there on.