Following yesterday’s news that South Korean e-commerce giant Coupang has acquired Farfetch;

Alice Price, Apparel Analyst at GlobalData, offers her view:

“Coupang’s rescue deal of Farfetch for $500m, after it was once valued in the region of £20bn, is a culmination of several factors, the first being its position as an online pureplay, as luxury consumers prefer to see and try on products instore due to their hefty price tags. As a third-party retailer, Farfetch has also been impacted by luxury brands reducing their reliance on wholesalers, as they strive to obtain greater control over their brand images and inventories by focusing investments in their direct-to-consumer channels.

“The recent slowdown of the wider luxury market has no doubt been the nail in the coffin for Farfetch, with players like LVMH and Prada, which were previous outperformers, now seeing sales decelerate. This is due to aspirational shoppers in the US and Europe reigning in non-essential spend, as high inflation inhibits their discretionary incomes and the savings they accrued during the pandemic begin to run out. The downturn in the tech industry will have also impacted the performance of Farfetch’s Platform Solutions division, with the retailer offering its e-commerce services to the likes of Harrods, Ferragamo and Balenciaga.

“Coupang’s exceptional online and technological expertise make it well placed to steer the troubled retailer back to growth, while the player’s strong presence in Asia lends Farfetch the opportunity to tap into the region’s booming luxury market. Asia’s strong economy and growing middle class populations will enable the luxury online pureplay to turn its attention away from the struggling regions of the US and Europe and showcase its proposition to a more receptive consumer base.”