Farfetch is shutting down its software service, called Farfetch Platform Solutions, to focus on its core marketplace, the company told its brand partners in an email viewed by The Business of Fashion.
“Over the past several months, we have continued to assess the strategic priorities for Farfetch, and it is clear that the Farfetch Marketplace has always been the core of our offering and will be the priority focus going forward,” Farfetch’s chief commercial officer, Stephen Eggleston, said in the email.
Farfetch Platform Solutions, which was formed in 2015 and provides online shopping tools for the likes of Harrods, Thom Browne and Chanel, was the brainchild of Farfetch’s founder and chief executive, José Neves, who left the business in February. During his tenure, the company raised more than $800 million in its IPO by positioning itself as a tech platform for the luxury industry.
But FPS was already losing business before it shuttered as more brands took their e-commerce operations in-house. Emilio Pucci, Proenza Schouler and Phillip Lim were a few of the brands that left the platform last year, according to a person familiar with the matter. In February, Neiman Marcus Group announced it was abandoning plans to use FPS and would revamp Bergdorf Goodman’s online storefront and app instead.
The shuttering of FPS comes as Farfetch’s operating losses drag down its parent company Coupang’s profits. The South Korean e-commerce giant, which acquired Farfetch last December, reported a net loss of $105 million in the second quarter that ended in June, its first in two years.
It’s unclear if the software service generated sales or profits for Farfetch. But investors and analysts previously criticised the e-tailer for prioritising business units like FPS and its brand management platform New Guards Group, over improving its core marketplace, which connects multi-brand luxury boutiques’ inventories to its e-commerce site. That part of the business generated more than $3 billion in gross merchandise volume — a measure of sales on its marketplace — in 2022.
Farfetch has yet to announce plans for New Guards Group, which is reportedly being shopped around. But Coupang said it expects Farfetch to move closer to profitability by the end of the year.
“Our disciplined investment and operational excellence enable us to deliver exceptional shopping experiences to our customers, providing them with the best selection, service, and savings,” Farfetch said in an emailed statement. “With our focus on the Farfetch marketplace, we will continue building the best luxury experiences for customers, brands, and boutiques.”
Learn more:
Can Farfetch Survive Coupang’s Shock Therapy?
Founder José Neves and eight other C-suite executives are departing the luxury marketplace, which faces an uncertain future under its new owner.
