What Went Wrong with Farfetch from a Customer Loyalty Perspective.
As an ex-senior leader of Farfetch, it saddens me to see what has happened to the business over the last two years – the overwhelmingly negative industry comments about the company’s future, the never-ending staff turnover and the plummeting share price.
Like what Imran Amed from The Business of Fashion experienced, I was really inspired by José Neves' vision of “Do what’s never been done” in the fashion industry, and his mission to support boutiques all over the world in making their beautiful products accessible globally.
Reflecting on my Farfetch journey and the business model, here are my thoughts on the potential challenges the business has and may continue to face:
· 𝗦𝗵𝗼𝗿𝘁 𝘃𝘀 𝗹𝗼𝗻𝗴-𝘁𝗲𝗿𝗺 𝘀𝗶𝗴𝗵𝘁𝗲𝗱: As a start-up that has a responsibility to deliver top-line growth and profitability, the company’s focus has constantly been on immediate sales deliveries. Gradually it dilutes the effort to drive a long-term vision, and even lesser the capacity to invest for the long game.
· 𝗧𝗼𝗼 𝗺𝘂𝗰𝗵 𝗳𝗼𝗰𝘂𝘀 𝘃𝘀 𝗻𝗼 𝗳𝗼𝗰𝘂𝘀: With the multi-faceted business models that Farfetch possesses, employees are often involved in various projects. Whilst delivering the GTV target for the marketplace is important, it is equally important to prioritise the white-label solutions. With limited resources, none of the business initiatives truly get the dedicated attention they deserve to thrive.
· 𝗛𝗶𝗴𝗵 𝘀𝘁𝗮𝗳𝗳 𝘁𝘂𝗿𝗻𝗼𝘃𝗲𝗿: If a business does not have the loyalty of internal clients, it is hardly possible to cultivate the loyalty of external clients. It is understandable that when business is challenging, the budget gets scrutinised. However, it seems that cutting headcount has been a consistent tactic to shrink expenses over the last two years. As talent leaves, so does the expertise, the morale and the relationship with partners, clients and so forth.
· 𝗠𝗮𝗸𝗶𝗻𝗴 𝗲𝗺𝗼𝘁𝗶𝗼𝗻𝗮𝗹 𝗰𝗼𝗻𝗻𝗲𝗰𝘁𝗶𝗼𝗻𝘀 𝘄𝗶𝘁𝗵 𝗰𝗹𝗶𝗲𝗻𝘁𝘀: One of the key challenges for luxury e-commerce players is to build true engagement with the customers. Although the Private Client function was built to make that bridge, it only connects to the top 1% of customers. Without emotional engagement, it is a lot harder to cultivate loyalty.
· 𝗖𝗿𝗲𝗮𝘁𝗲 𝗮 𝘂𝗻𝗶𝗾𝘂𝗲 𝘃𝗮𝗹𝘂𝗲 𝗽𝗿𝗼𝗽𝗼𝘀𝗶𝘁𝗶𝗼𝗻: When the subjective component (the human interaction) is missing, it is even more crucial for the business to have tangible benefits to entice retention. Yet with Farfetch’s business model, it is difficult to fulfil what luxury clients are usually seeking – be it exclusivity, fame or status just to name a few.
Sharing a meaningful campaign that Farfetch launched during the Covid period – “Supporting Boutiques” as captured below. The vision of Farfetch remains beautiful, and so I wish for the business to pivot, stay and thrive.
