Online fаѕhіоn rеtаіlеr Farfetch hаѕ confirmed the IPO on this Friday, 21st September 2018 on NYSE. Farfetch also tries to build a technology company not only a luxury e-commerce platform to increase the market competition.
Coincidentally Farfetch’s IPO day is almost the one-year listing anniversary for Secoo, Asia’s largest premium e-commerce platform. The two platforms have even more similar aspects: both Farfetch and Secoo were founded in 2008, which means the year of 2018 is ten-year anniversary for these two luxury e-commerce platform. JD.com – China’s largest online retailer – acquired 14% stake of Farfetch last year, and invested Secoo for a certain amount this year. As I mentioned at the first paragraph, Farfetch tries to transform to a technology company, Secoo also aimed to convert to a premium lifestyle company. For both companies, luxury e-commerce is only part of their business, the additional values created by technology and lifestyle will lead the luxury market in the near future.
In 2017, Secoo enlisted on 22nd September, and then became the only enlisted luxury e-commerce company.
After one year, Farfetch followed Secoo’s step to become another luxury e-commerce company listed in American stock market and worldwide. Besides, Farfetch and Secoo share many business, including luxury products selling and personal shopping service. Except for operation countries, the only difference for the two companies is that Secoo provides more customized products and personalized services.
With all these similarities and founded in UK, many media starts to use ‘British Secoo’ to describe Farfetch.
The nickname also indicates the huge online luxury market in China and Farfetch next strategy into Chinese market. As an evidence, Farfetch has acquired a Chinese digital marketing agency Curiosity China in a bid to boost its presence to compete with Secoo, Toplife and Luxury Pavilion in China.
After submitting IPO files, Farfetch got a $5 billion valuation, showing the luxury market has been considered optimistically from investor’s perspectives. In a comparison with ‘British Secoo’, the original Secoo only values for $500 million, ten times less than the valuation of Farfetch. However, both companies have nearly the same revenue and net income.
Apparently, Secoo has been underestimated with 20 million members and 575 million net revenue quarterly.
The way Farfetch and Secoo leaped to the top of premium e-commerce league only proves the huge potential in China’s online luxury market. E-commerce continues to play an increasingly important role for consumers across all demographics, and as evidenced by investments.
Perhaps luxury brands can do a lot more to wow Chinese consumers and capitalize on the trend that more and more of them are accustomed to shopping upscale items online. It seems only natural that these two e-commerce platforms carve out an even bigger share of the market.
Farfetch and Secoo have come a long way in only 10 short years, their impact on the entire luxury ecosystem in China and worldwide have been quite significant. They have been on a fast-paced journey to build an infrastructure that allows a more integrated marketplace for all things luxury, bridging the online to offline experience gap and covering various business.
This is no doubt a fascinating strategic development and prospects are bright as other major e-commerce sites followed suit and broke into the luxury segment.