Coupang shutters Farfetch white label unit after $105M loss

What happened Farfetch Platform Solutions, struggling online retailer Farfetch’s white label business unit, is being shuttered. The white label division was initially designed to provide technology and logistics solutions to luxury brands around the world. The decision was announced on August 21 by Farfetch’s parent company South Korean e-commerce firm Coupang. The floundering British e-tailer Farfetch was purchased in 2023 by Coupang at a knockdown price of $500 million. According to WWD, Stephen Eggleston, chief commercial officer at Farfetch, said: “The company will focus more on its core marketplace business going forward after assessing its strategic priorities.” The move comes as part of Coupang's broader strategy to streamline Farfetch's operations and focus on more profitable ventures. This decision reflects Coupang's intention to prioritize its core markets, such as South Korea and Taiwan, while gradually integrating Farfetch into its broader e-commerce ecosystem. This move underscores the challenges Farfetch faces as it navigates this new phase under Coupang's ownership, which has been met with mixed reactions from industry stakeholders. The Jing Take This news comes after Coupang posted a net loss of $105 million for Q2 2024, which followed a net profit of $145 million in Q2 2023. According to reports, Farfetch has brought in $748 million in sales since it was first acquired by the SoftBank-backed Coupang. But will this move be enough to save the troubled luxury retailer? “We came across a rare opportunity to buy a sector-leading service with $4 billion in GMV for a $500 million investment,” Coupang CEO Bom Kim was quoted as saying during a year-end earnings call, according to Forbes. “We hope in a few years we’ll be having the conversation about how Coupang turned Farfetch into a business that transformed the customer experience around luxury fashion, while also providing strategic value for Coupang … Even if that full potential is not fully realized, we’re highly confident that this will prove to be a prudent financial decision,” he added. Over the past year, this company, like many other luxury fashion retailers and brands including LVMH and Kering, have been affected by the luxury slowdown in China and across the world. But it's particularly Western e-commerce retailers like Farfetch, Yoox Net-A-Porter and Matches Fashion that have found themselves in turmoil. Net-A-Porter exited the competitive China market this summer, whilst Matches Fashion has closed down all together, owing designers millions. Farfetch was potentially saved from bankruptcy by the Coupang takeover, although this was not an acquisition with dramatic as existing investors attempted to derail the deal. In recent months, China's economic woes, which include a collapsing real estate market, low consumer confidence, and the government's crackdown on extravagant displays of wealth, are impacting the luxury sector. Due to increasing youth unemployment and economic instability, Chinese consumers – who have been the “engine” behind the luxury industry's rise in recent decades – are becoming more frugal. Meanwhile, the Chinese government's attempts to curtail displays of wealth and opulence have resulted in the removal of content that flaunts affluence on social media platforms including Weibo, Douyin, and Xiaohongshu, among others. Digital marketing strategies of luxury brands have been affected by this move. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Coupang shutters Farfetch white label unit after $105M loss

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Published August 22, 2024

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Coupang shutters Farfetch white label unit after $105M loss