CEO Talk | José Neves, Founder and Chief Executive Officer, farfetch.com

Jose Neves, Founder and CEO, farfetch.com

Jose Neves, Founder and CEO, farfetch.com

LONDON, United Kingdom Everyone now acknowledges the importance of online retail in fashion. But how does a small fashion boutique, with limited resources break into the e-commerce game? The costs of building and maintaining a top-quality site can be prohibitive, not to mention the operational challenge of managing deliveries and returns. What’s more, with everyone piling in to the fashion e-commerce game, there is so much product out there, on so many niche sites, that it can be tough for small retailers to attract traffic.

Enter farfetch.com, the brainchild of José Neves, a serial fashion entrepreneur who is also an owner of B-Store, Swear and SIX, a manufacturer and showroom for shoes by Opening Ceremony, Ksubi and Surface to Air. Through these myriad experiences, Neves identified an opportunity to support independent fashion boutiques and designers so that they can compete in the burgeoning online retail space with the same level of resources and customer service the big guns.

I caught up with José to learn more about the farfetch model and his plans to take the business model to the United States and Brazil.

BoF: How was the idea for farfetch.com born and what makes you different from all of other fashion e-commerce players out there?

Our other business, SIX London, operates two retail stores in London and we wholesale our own brands and licenses to 600 prime retailers worldwide. I noticed that our web sites had reached a point where further progress could only be made with a significant investment in human resources and advertising. But as a small business, that would be difficult to be justify.

On the other hand, I also noticed that the retailers that work with SIX stock absolutely fantastic designers and products and have very talented buyers. Their stores are world renowned.  But, they either did not have any e-commerce operations altogether, or were facing the same problems our London stores faced in terms of growth and quality of service.

The idea of farfetch.com stems from these experiences and observations. The rationale of the business is to create a world class infrastructure supported by a top-notch team, and then put all that to the service of the world’s most interesting retailers and their web sites. In addition to that, we thought that creating a single “portal” where users could easily find products from 35 retailers instead of browsing 35 separate sites would greatly improve the customer experience, and also enable us to advertise the portal properly.

We do not buy stock, however we do select stock like pure e-tailers do. The fashion enthusiasts out there find in farfetch.com a carefully put-together selection of designers and products, with a focus on the quality of service and consistent experience, and that is the same as other pure e-tailers, however since we are a multi-channel operator we are able offer many designers and products which would be too risky for a pure e-tailer. Our forte is, therefore, the breadth of designers and items which I believe is truly unique. And the fact that they are carefully selected by 35 buyers who peruse the world scouting for the best designers and most exciting products makes us completely different from a “marketplace” like eBay.

I like to say we are the “third” model – not a pure e-tailer and not a marketplace, but a multi-channel e-tail network.

BoF: Working with more than 35 retailers all over Europe, farfetch.com is a complex operational machine. Can you tell us a bit about how you make it all hum?

Indeed, this is the biggest challenge of the business model. We have a strong operations team, some bilingual in French, some in Italian, so we ensure a good communication with our partners in those countries. We constantly train our retailers and we develop our own e-commerce platform, which keeps evolving to adapt to issues and problems we encounter.

We still depend on the proficiency of retailers in adhering to our operational guides, and not all have the same level of expertise. There is a learning curve. However, we have proven the business model works. The operations are running efficiently and the figures are a very pleasant surprise!

BoF: How is the new Internet channel offered by farfetch.com helping your retail partners to weather the recession?

Practically all our partners have enjoyed a big commercial success as part of their partnership with farfetch.com. Some of our partners are selling £2,000 of merchandise every day. For a small store, this is a very significant turnover sometimes greater  than what they are able to do in their stores. For many of our partners, their experience with farfetch.com has overwhelmingly surpassed their initial expectations.

Based on our experience, internet sales on average will make up 15 to 20 percent of the total sales of a specialist high-end retailer. No business can dismiss this kind of opportunity, especially in these tough times.

BoF: Which products or categories are working best at the moment?

Footwear is clearly our top category, followed by clothing. Women’s is performing much better than men’s, although this did not come as a surprise.

BoF: What are your future plans for growth?

We have curbed our expansion in Europe in terms of number of partners, trying to keep the operations and the size of our team at a stable level.

Our big step for this year is the launch of farfetch.com in the US. We have teamed up with the founders of revolveclothing.com, who have a very established e-tail business in America, and all the expertise we could wish for. We are also signing on some great American retailers, and will be up and running in the US by October 2009.

The other strategic shift is to extend our services to designers, and we have a major contract just recently signed (but still confidential), which will be our first step in this area.

We are also in advanced talks to launch in Brazil, a market which is fenced from outside competition by very high import duties. The project will target the free-trade region of Mercosul (Brazil, Argentina, Chile, Venezuela, and others). It is a huge market which is sophisticated and has spending power, but is riddled by a very traditional and stiff system with great barriers to entry for new players. We believe the Internet can make a huge difference and we can benefit from the exponential growth that this area of the world is experiencing.

Imran Amed is Editor of The Business of Fashion.

CEO Talk is BoF’s forum for in-depth discussions with the fashion industry’s global decision makers, conducted by founder and editor-in-chief Imran Amed.

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13 comments

  1. Farfetch does not do a perfect job of their massive e-commerce website and system. Whilst the website does provide a fuller picture of many products by designers not seen elsewhere, the pricing and customer service (i.e. delivery) prohibits the store to be directly engaging. Store owners wanting to setup an e-commerce website of their own should use their time to learn and how to setup one rather than co-joining Farfetch. It really disengages online customers when they are not interacting with the store that want to do business with but to face a middle-man. Frankly, Farfetch is like a super-duper supermarket. Not a very personalised experience.

    Michael from Padstow, New South Wales, Australia
  2. Buying from Farfetch.com has been absolutely the worst experience I’ve ever had. They sent the wrong order to me, was not proactive in correcting their mistake. As I needed the item urgently, I requested for item to be sent to another address and it wasn’t done. Finally, waiting for the exchange would have taken a longer time so on the advice of the staff, I bought the item a second time and did a return for the wrong order. I was told that all shipping and taxes would be paid but it was not done. I had to pay for express shipping through Fedex to get the item back to them on time and they refused to pay me back.
    WILL NEVER BUY FROM FARFETCH EVER!

    Rebecca from Singapore, Singapore (general), Singapore
  3. As CEO of farfetch.com I welcome any points of view and as a company we really listen to all complaints.

    We are a young company and we are improving our processes, feedback is, therefore, very important to us.

    I would like to comment on the 2 posts above.

    I don’t know where Rebecca is based, but judging from the post, I think this may have been an order shipped to the US from and European boutique (hence the mention to “taxes” in Rebecca’s post).

    It is true that if you live in the US buying in *any* European retailer does not offer the best shopping experience. First because there are import duties on the inbound, and second because in case there is an return, there are more duties applicable on the inbound.

    At farfetch.com we are very clear in our checkout information that these duties will apply and won’t be refunded in the case of a return to the EU from the US.

    We recommend US residents buy from our US boutiques whenever they can. Not only there are no import duties applicable, our LA based customer service staff will also be able to respond faster.

    We have plans to implement some measures which will facilitate EU-to-US sales in early 2011, as we continue to have US customers who – in spite of the costs associated with shipping and returns – still wish to shop from European boutiques.

    In what regards Michael’s comments, I understand the point of view and.

    I am an independent fashion retailer myself, as founder and owner of bstore ( http://www.bstorelondon.com ), so I understand the remarks.

    I think Michael is unaware of the fact that we actually build and power independent boutiques’ web sites (shop.leclaireur.com and feathersfashion.com to give 2 examples).

    This allows the boutiques to have their own independent web site where their aesthetics and ethos can really be “isolated” from other retailers, and the customer communicates without any “middle-man” to use Michael’s words.

    The investment and know-how needed to operate a fashion ecommerce web site should not be underestimated, and few retailers have the resources to be successful in the online market. Farfetch.com’s mission is to provide a platform for such retailers.

    The idea of gathering all these boutiques selection under “one roof” serves the purpose of generating traffic, optimizing marketing costs, and also providing a service to shoppers who do not wish to browse 70 web sites at the same time to find that specific product they are looking for.

    Some times we want to shop in a specific boutiques, and sometimes we want to “see everything” and are looking for a specific product which we want to find fast.

    farfetch.com also hopes to be a connector of a global fashion community.

    By supporting the boutiques who scout the world – not only for the best designers but also for young talent and the stars of tomorrow – farfetch.com hopes to be a platform for designers, retailers, and fashion enthusiasts.

    We know we have a long way to go, but we are determined to fulfil that mission and welcome any comments along the way!

    José Neves

    CEO
    farfetch.com

  4. do not buy from them! they cannot deal with shipping to the US. I returned something for a size exchange 3/7/2011 and am still waiting. It cost me 30 to ship to us and 47 to return to them. I will NEVER do this again but now I have too much invested. It will be very interesting to see at what exchange rate i get credited. the day i bought or current day so i can exchange. and now they offer free exchanges. i inquired becasue mine was just sent a few days before and they offered nothing. basically the worst ever. I’ll stick with the best Neiman Marcus!

    Lisa from Saint Louis, MO, United States
  5. farfetch.com has been working hard to improve our service, and make purchases from European retailers into the US much easier.

    We have, in the beginning of April 2011 introduced a free returns collection service worldwide.

    In particular, international customers will greatly benefit from this new service as it means any returns via our designated courier will be free of return transport charge and free of return duties. Please refer to our new returns policy for exact details.

    I am confident that with this new service, the satisfaction levels when purchasing in Farfetch.com will improve significantly.

    Following the introduction of our free returns and collection service, we took the initiative today (12th April 2011) of offering a 100 USD voucher to ALL US or non-EU customers who have ever bought and returned an item with us.

    We know we have a long way to go, but we are working hard to make sure the logistics challenges of international trade do not get in the way of customer satisfaction.

    José Neves

    CEO
    farfetch.com

  6. I personally think that the farfetch.com website and business model is fantastic. Supporting small businesses and boutiques is crucial in the world of global super power retailers who are taking over the world. If farfetch.com does one day become a global superpower online retailer, at least the one thing we can guarantee is that they will have supported and help keep a float a large number of independent businesses along the way.

    I totally understand the comments made by the disgruntled customers who have had bad experiences. If they have personally had a bad experience with the website you can’t blame them for feeling negativity towards the company. These micro experiences I am sure can however be isolated and dealt with by farfetch which will hopefully turn those negative feelings and thoughts towards the business around.

    On a macro scale I hope farfetch will deal with these issues and iron out the creases to create a website that really matters on the global fashion scene. The main reason for that being that it helps support independent boutiques across the globe stay alive, which in turn promotes entrepreneurship, creativity and individuality.

    Keep up the good work Jose and the rest of the team and before anyone says it. No I don’t work for farfetch nor do I know the team in anyway shape or form.

    Matthew Blanchard from Manchester, Manchester, United Kingdom
  7. I have bought shoes from them. I had to send them back. It has been almost 3 months now and I DO NOT HAVE THE MONEY BACK YET. AND NOBODY ANSWERS MY MAIL!!!!! SUPER COMPANY, REALLY….

    Maria Valentovicova from Bern, 05, Switzerland
  8. I made an order from the website on the 23rd of June. They sent me an email confirming that my order was sent to me by DHL, but when I checked my order through the tracking number on the DHL website, it said that my order was delivered back to the boutique in Paris, instead of me. I emailed the customer service, they confirmed that my order was at the boutique and they would send it again. It has been a week, and my order status still seems “Ready to Go”. I sent them another email this morning about when it was going to be sent, and the customer service answered that the package had been sent by the boutique, but there was probably a problem with DHL. WHAT?!!! They said that they were going to give me information about it, but no tracking number, no nothing, and I’m fed up with waiting and receiving the same answers. I didn’t even get my package and the payment has been made through PayPal. WHAT KIND OF COMPANY IS THIS?!!!

    Zeynep I. Isik Dursun from Karabük, Kastamonu Province, Turkey
  9. At farfetch.com we search to bring you the best fashion we find from the finest boutiques around the globe online so that fashion lovers can browse and buy from anywhere in the world. We love seeking out and finding the best boutiques and tackling the challenges of trying to do this on a global scale. Dealing with different customs and tax regulations and a wide variety of delivery challenges is not an easy task but it is one we continually strive to improve on to make the boutique shopping experience smooth for our customers.
     
    Typically we deliver items anywhere in the world from 1 to 5 days and we receive amazing feedback from the vast majority of our customers. Unfortunately from time to time things do go wrong, sometimes due to an error in our control and sometimes due to ones out of our control, but we always treat this as our responsibility and aim to solve the problems as fast as possible and with open communication with our customers. We have made many improvements here since Jose’s post above, including faster response times from our customer service teams and including duty in prices for US customers (and later this year for more countries) and have many other improvements planned for 2012 and beyond.
     
    I know from our customers’ feedback that we are doing a great job most of the time. We will never stop striving to make this all of the time and live up to our own aims and what our customers expect of us.
     
    Andrew Robb
    Chief Operating Officer
    farfetch.com

  10. I returned some boots that cost me £300 about two months ago and I am still waiting for my money to be refunded. I have written to the company twice without a response.

    Carol White from London, London, United Kingdom
  11. WORST ONLINE SHOPPING EXPERIENCE EVER. A MONTH LATER MY ORDER IS NOT DELIVERED. AFTER PAYING AND PAYING AND PAYING EXPENSIVE CUSTOM FEES. CONSULTANTS PROMISE TO FOLLOW UP AND NOTHING. NEVER EVER AGAIN!!!!

    mangwanya from Midrand, Gauteng, South Africa
  12. great concept , i would like more details about how i can get my company a Portal on your e-tailer site

    Julius Toussaint from New York, NY, United States
  13. Unfortunately, Farfetch.com is a shady operation, with poor customer service, dishonest reps and second-quality merchandise. Do not order through them unless you are okay with losing money on so-called “designer” clothing, shoes and accessories that are damaged, defective and that would not be taken back by Farfetch. In fact, they would lie to accuse the customer. I predict they would be out of business soon enough. And if they are not, we in this community, should make sure are. No retailer deserves to stay in business by lying and stealing from customers like Farfetch.com does.

    alice lk from Sherman Oaks, CA, United States