Farfetch is an exemplar of a matchmaking business model that brings together independent boutique stores that do not have an e-commerce website, with shoppers looking for unique and curated fashion clothing and accessories. It does not hold inventory, which distinguishes it from a Product business model.
Farfetch was launched in 2008 by José Neves (a Portuguese entrepreneur), as an online website that matches independent boutiques all around the global, with shoppers who are looking for a curated shopping experience. The company divides its fashion brands into two shoppable categories: lux brands that offer high-end luxury products, and lab brands that include emerging and experimental labels. The average spend on the website is $650 per order as of May 2014, and annual sales surpassed $250 million in 2014.
Online Shoppers: Shoppers looking for unique merchandise not found everywhere. These shoppers are usually affluent consumers who buy fashionable clothes but have few places to shop locally.
Independent Boutiques: Small boutique stores looking to sell their products on an online platform. They are given access to a global customer base looking for distinctive articles of fashion and accessories. The main focus is smaller businesses that could not build the same experience on a smaller scale.
Learn more about the Matchmaking Business Model
You identify two or more customer groups and brings them together in your marketplace.
Engagement — Value Creation Proposition
Independent boutiques are offered an opportunity to compete in the online marketplace while still maintaining their brick-and-mortar stores and visual identity. At the same time, they can avoid the hassle of establishing and managing their own e-commerce site, customer service, fraud control, technology and maintenance. In addition, Farfetch allows these stores to boost their brand awareness. Farfetch gives shoppers the ability to view and purchase clothing from a collection that has been refined by hundreds of different buyers, each with their own unique style and vision. This gives shoppers the sense of viewing a curated collection of fashion items.
Delivery — Value Chain
The Farfetch website provides a simple marketplace where shoppers who want to buy clothes are linked to boutiques who sell them. Shoppers can search the Farfetch website by color, size, product type and then directly purchase the product over the Internet using Paypal or a credit card. The boutique is then required to ship the order directly to the customer. As well as its website, the company has iPhone and Android apps called “Farfetch Discover” through which customers can access the boutique vendors.
Monetisation — Value Capture
Farfetch provides the marketplace and takes a percent commission on every purchase – rumored to be 25%. The shopper pays a shipping fee depending on the size and weight of the order.
Like a High-Fashion Etsy: FarFetch Puts the world’s Rarest Fashion at Your Fingertips. http://www.fastcompany.com/3029848/like-a-high-fashion-etsy-farfetch-puts-the-worlds-rarest-fashion-at-your-fingertips
What are Farfetch’s Terms and Fees with Boutiques? http://www.quora.com/What-are-Farfetchs-terms-and-fees-with-boutiques
Fashion Marketplace Farfetch raises $86M. March 4, 2015. http://techcrunch.com/2015/03/04/farfetch/
Boutique at his fingertips. March 4, 2014. http://www.ft.com/cms/s/0/60fc9728-9ee1-11e3-a48e-00144feab7de.html#axzz3ZjjXkQBS
Disclaimer — Written by Adele Lewis and edited by James Knuckles under the direction of Prof Charles Baden-Fuller, Cass Business School. This case is designed to illustrate a business model category. It leverages public sources and is written to further management understanding, and it is not meant to suggest individuals made either correct or incorrect decisions. © 2016 Published 20 April 2016