The question more and more luxury fashion brands (and retailers) have been asking themselves. Its answer can be clear as day, but it requires some soul-searching and a solid long-term vision.

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So, let’s take a look at when it makes sense to do business with luxury fashion’s most illustrious marketplace…

The first thing to know about FarFetch is that it is a tech, not a fashion, business. Unlike its retailer counterparts – such as Net-a-Porter, MatchesFashion.com, etc… – FarFetch does not buy or hold any stock. Instead, it operates a marketplace approach to eCommerce, connecting a curated selection of over 3,000+ luxury fashion brands with an audience of global customers.

For the customer, the benefits are clear – FarFetch offers access to an extensive variety of products and brands (in terms of both depth and width of range), delivered through a strong, secure user-experience, with a high service level in one, online destination.

However, if you are a luxury brand or retailer, you may be pondering whether to join the FarFetch network or build your own direct-to-consumer eCommerce proposition. The answer is often a complex one…

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Here’s the facts:

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FarFetch: What are the BENEFITS?

FarFetch offers luxury brands and retailers:

• Access to eCommerce without any investment in digital infrastructure and a quick time to market –  the development of direct-to-consumer eCommerce can represent a significant CAPEX investment for young or growing luxury brands. The FarFetch model negates the need for any such investment, offering an intuitive “plug & play” approach to selling your products online.
• Access to a substantial, engaged audience of potential luxury customers – for a young or growing brand, driving even a respectable level of traffic requires significant investment in media and marketing expertise. However, the FarFetch network facilitates your access to thousands of engaged luxury consumers.
• Access to optimised eCommerce UX and trading technologies – as FarFetch is a tech company, it makes a considerable investment in its platform to ensure a highly optimized transactional environment.
• Ease of catalogue creation – if a product has been sold previously on FarFetch, both the product description and photography can be used from the FarFetch archive, reducing content creation costs. If the product is new, FarFetch photographs the product, charging the merchant only the cost of shipping.
• Shipping rates and supply chain – FarFetch negotiates discounted shipping rates for its network and partners with well-known couriers to ensure a high level of service and security.

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FarFetch: What are the LIMITATIONS?

Luxury brands and retailers may find the following limitations with FarFetch:

• Limited sharing of consumer data and insight – you will learn nothing about how your customers behave on the platform: it’s a closed system.
• A considerable impact on gross product margin with a commission structure of around 25%1.
• Lack of brand expression: you won’t own nor direct the brand experience on the site.

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So, when should you sell on FarFetch? ...and when should you go at it direct?

FarFetch is an excellent platform for young or growing brands, enabling them to connect with a large, engaged audience of luxury customers without the need for significant CAPEX investment or dedicated in-house eCommerce resources.

The suitability of FarFetch as a platform for your brand has a strong correlation to the size, scale and maturity of your business. Once your brand hits a critical level of maturity, a business case for direct-to-consumer eCommerce should be investigated. Such an approach, if executed correctly, allows brands to create and nurture a direct relationship with their customers, access rich consumer data, increase product margin and create space for a branded experience.

However, taking such a critically strategic decision, requires diving into deeper details…

You’re at the crossroads now: which direction should you take?

Before making a decision, your brand should think very carefully and perform a serious opportunity/cost analysis. This should be based on your current market presence, team maturity and strength, and, most importantly, your growth ambitions.

Setting up direct-to-consumer eCommerce, brand building and CRM operations gets easier and more cost-effective by the day. So, if you are on a trajectory to scale fast, starting an ambitious growth journey without owning the eCommerce experience (with the limitations listed above) may put your business on the back-foot – deep-diving in the definition of a solid strategy and a sustainable roadmap is your next logical step.

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