Can Farfetch Be Fixed? – A Deep Dive into Farfetch’s Struggles and Future

Introduction to Farfetch and the Acquisition by Coupang

In the March 4, 2025 episode of The Business of Fashion Podcast titled "Can Farfetch Be Fixed?", host Brian Baskin and senior correspondent Sheena Butler Young explore the tumultuous journey of Farfetch, a leading luxury fashion marketplace, following its acquisition by South Korean e-commerce giant Coupang. The episode features an in-depth discussion with Malik Morris, BOF’s E-Commerce correspondent, who provides exclusive insights from his investigative reporting on the challenges and strategic shifts at Farfetch.

The Challenges Farfetch Faced Pre-Acquisition

Farfetch, founded in 2008, quickly established itself as a premier online destination for luxury fashion by curating inventory from independent boutiques worldwide. However, Malik Morris explains that despite its innovative approach, Farfetch struggled to achieve profitability. Key issues included:

• High Operational Costs: "You have to offer things like free shipping and returns, which is costly," Morris notes at [02:20].
• Customer Acquisition Difficulties: As online shopping was less prevalent before the pandemic, attracting and retaining customers was a significant hurdle.
• Increased Competition from Brands: "The brands that Farfetch sold on its marketplace started investing in their own e-commerce and competing directly with this multi-brand marketplace proposition" ([02:50]).

Farfetch's aggressive acquisition strategy, including the purchase of New Guards Group, Browns, Violet Gray, and attempts to offer white-label e-commerce software, further diverted focus from its core marketplace, exacerbating financial strains.

Coupang’s Intervention and Operational Changes

By the end of 2023, Farfetch was nearing bankruptcy, prompting Coupang to step in with a $500 million investment. Malik Morris details the immediate actions taken by Coupang to streamline operations:

• Divesting Non-Core Businesses: "They shuttered the Farfetch Platform Solutions, reducing distractions from the core marketplace" ([03:40]).
• Cutting Costs: Transitioning logistics from DHL and UPS to FedEx saved millions but also introduced shipping delays ([09:07]).
• Reducing Workforce: Farfetch's headcount was halved from 6,000 to 3,000 employees, including teams dedicated to VIP customers, which Malik describes as "incredibly insensitive" yet likely necessary ([03:55], [06:25]).

These measures were aimed at achieving profitability quickly but have raised concerns about the sustainability of Farfetch's luxury-focused business model under Coupang's more cost-driven approach.

Impact on Customer Relations and Brand Partnerships

One of the most significant repercussions of Coupang's takeover has been the deterioration of Farfetch's relationships with both customers and high-end brands:

• VIP Customer Service Decline: Cutting specialized teams that catered to high-spending clients led to diminished customer experiences, potentially alienating Farfetch's most lucrative segment ([06:25]).
• Strained Brand Relationships: Luxury conglomerates like Kering began cutting ties with Farfetch, withdrawing their brands from the platform. Malik highlights, "Kering... were cutting ties with Farfetch'd and so they would no longer be selling directly on the platform" ([10:47]).
• Introduction of the “Sold by Farfetch'd” Program: This initiative allowed retailers to sell high-end brands anonymously, bypassing traditional brand oversight and leading to longer shipping times and a compromised luxury experience ([11:53], [12:45]).

The Competitive Landscape: Farfetch vs. Mytheresa

The episode contrasts Farfetch's challenges with the successes of competitor Mytheresa. Unlike Farfetch, Mytheresa has focused on enhancing the premium shopping experience, fostering strong relationships with both customers and brands. Malik points out, "Mytheresa... has emerged as a standout in online luxury because they're focused on offering the top customers money can buy experiences and exclusive collections" ([13:14]).

Brian Baskin adds, "Farfetch sales, even after the decline, are still double Mytheresa's," but he questions the long-term viability given the strategic missteps ([16:30]).

Prospects for Farfetch’s Future under Coupang

Looking ahead, the podcast discusses potential pathways for Farfetch to regain its footing:

• Reinvestment in Relationships: Malik emphasizes the importance of "doubling down on those relationships with retail partners" and offering flexible commission structures to retain boutique partnerships ([18:44], [19:00]).
• Potential Synergy and Alignment: While Brian expresses skepticism about Coupang's ability to adapt to the luxury market, Malik remains cautiously optimistic that "Coupang could learn the ins and outs of luxury and start to bend to the will of the industry" ([22:11], [23:38]).

However, Brian remains doubtful, noting Amazon's struggles in the luxury sector as a cautionary example: "Amazon has struggled so much to break into luxury. [...] it has not led to Amazon becoming a luxury powerhouse" ([23:38]).

Closing Thoughts and Possible Outcomes

The episode concludes with a balanced perspective on Farfetch’s prospects. While some initiatives under Coupang’s management show promise, significant challenges remain:

• Marketplace vs. Luxury Experience: Farfetch must find a way to balance operational efficiency with the high-touch, curated experience expected in the luxury market.
• Competitive Pressure: As Mytheresa and other competitors enhance their offerings, Farfetch risks sliding into irrelevance if it cannot effectively cater to both brands and affluent customers.

Malik underscores the uncertainty, "It's just a lot to be taken into consideration to make this work. But ... Farfetch doubling down on those relationships with retail partners is a good first step" ([27:31]).

Ultimately, "Farfetch might just kind of be headed in [a direction of prominence decline], but it's a reality. It is absolutely a possibility" ([26:38]).

Conclusion

"Can Farfetch Be Fixed?" provides a comprehensive analysis of Farfetch’s strategic missteps, Coupang’s aggressive cost-cutting measures, and the broader implications for the luxury e-commerce landscape. As Farfetch navigates these challenges, the episode leaves listeners contemplating whether the platform can reinvent itself to uphold its luxury credentials or succumb to the operational strains imposed by its new parent company.

Notable Quotes:

• Malik Morris at [02:20]: "You have to offer things like free shipping and returns, which is costly."
• Malik Morris at [03:55]: "Cutting teams that were dedicated to working with Farfetch'd VIP customers... not great."
• Malik Morris at [10:47]: "Kering... were cutting ties with Farfetch'd and so they would no longer be selling directly on the platform."
• Brian Baskin at [23:38]: "Amazon has struggled so much to break into luxury. [...] it has not led to Amazon becoming a luxury powerhouse."
• Malik Morris at [27:31]: "Farfetch doubling down on those relationships with retail partners is a good first step."

This episode of The Business of Fashion Podcast serves as a crucial resource for fashion professionals and enthusiasts alike, offering a nuanced examination of Farfetch's current predicament and the future of luxury e-commerce.