Farfetch vs Cettire: Luxury Fashion Marketplaces

In late 2023, Farfetch was bought before bankruptcy by South Korean online retailer Coupang. When it last reported earnings in Q2 2023, Farfetch had roughly $4 billion in annual GMV, ~$800 million in annualized operating losses and ~$1.6 billion in debt.

While there are a number of reasons why Farfetch might have failed, we explore a few key differences in how Farfetch and Australian luxury marketplace Cettire have approached sourcing inventory and pricing goods.

Farfetch

Supply sources

In its first years, Farfetch relied exclusively on inventory from small European multi-brand boutiques. To expand its inventory beyond boutique, Farfetch looked to brand partnerships for supply of unique inventory. By 2023, Farfetch sourced about 15% of supply from brands, 20-25% from 1P sources and 60-65% from boutiques. Our research suggests brand partnerships negatively affected Farfetch’s business model for 3 main reasons:

1. Price competitiveness due to geopricing
2. Non-differentiated brand inventory
3. Loss of unique boutique inventory

As Farfetch scaled, it signed direct partnerships with brands such as Kering and Burberry. While this provided potentially unique inventory and legitimized the platform, the brands captured more control over pricing and distribution terms. Brands demanded concessions from Farfetch that eventually led to reduced competitiveness.

“The global catalogue and competitive pricing of our partners are key features of the Farfetch Marketplace. (...) For example, during 2022, a limited number of brands sought to limit their distributors from selling their products on the Farfetch Marketplace, which impacted the supply and pricing of their products on the Marketplace. The adoption by brands of certain distribution models, including “selective distribution” models, may therefore lead to reduced supply and lost sales in key geographies, and could negatively affect our business, results of operation, financial condition and prospects. - Farfetch 20-F