LONDON, United Kingdom —Luxury e-commerce platform Farfetch Limited is testing the waters in the fast-growing resale market with the launch of a new pilot program. The service, dubbed Second Life, will allow customers to trade in their old designer handbags for Farfetch credit that can be spent on new merchandise.
The new initiative is part of broader plans at Farfetch — a marketplace that connects consumers with a global network of fashion boutiques and, increasingly, brands — to experiment with a range of new business models as the company seeks scale. Farfetch already offers a selection of vintage merchandise and is also examining opportunities in rental.
The company has made no secret of its ambitions in the resale market snapping up peer-to-peer sneaker and streetwear marketplace Stadium Goods in December for $250 million, just three months after going public. For Farfetch, the Stadium Goods deal opened up access to a new segment of opportunity at a time when e-commerce players are engaged in what The Business of Fashion and McKinsey’s The State of Fashion 2019 report describes as a “digital land grab.”
Farfetch is gaining on online luxury leader Yoox Net-a-Porter, which digitised the traditional wholesale model. It generated just over $600 million in revenue last year, though its shares are down around 16 percent since it went public in September.
The global market for secondhand apparel is expected to reach $51 billion by 2023.
The next horizon for platforms like Farfetch, as they push to stay ahead of the curve, is business model diversification. “Whether through acquisitions, investments or internal R&D, those players who diversify their ecosystem will strengthen their lead over those who remain pure players relying solely on retail margins,” says the State of Fashion 2019 report.
Farfetch’s latest foray into resale comes soon after a move by luxury department store Neiman Marcus, which, last month, took a minority stake in secondhand luxury site Fashionphile. Last year, the global market for secondhand apparel totalled $24 billion, according to resale site ThredUp. It is expected to reach $51 billion by 2023 and has already given birth to a number of successful luxury “re-commerce” players, including The RealReal and Vestiaire Collective.
“The pre-owned luxury market is growing rapidly,” said Giorgio Belloli, chief commercial and sustainability officer at Farfetch, who is spearheading the Second Life project. “It allows us to enter this market and test the demand of Farfetch customers for this kind of service.”
Luxury brands have largely stayed away from resale due to concerns over damage to full-price sales and brand dilution, but attitudes may be shifting. For luxury consumers, the stigma of the secondary market has dissipated in recent years.
For its new resale venture, Farfetch is teaming up with an alumnus of its tech incubator program to power the service. While the Second Life platform will be branded Farfetch, behind the scenes Hong Kong-based Upteam will evaluate each new handbag put up for sale on the platform, provide sellers with an offer price based on photos, and take on the responsibility of authentication and finding a buyer if the offer is accepted.