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Farfetch bets big on resale with Luxclusif purchase

The luxury multi-brand online retailer is buying up its resale supplier and tech platform as it pushes deeper into the growing space.

 

Published December, 9th 2021

By: Ezreen Benissan

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Farfetch wants a bigger slice of the growing resale channel. 

Today, the global online marketplace has announced it is buying resale platform and stockist Luxclusif for an undisclosed sum. Luxclusif sources secondhand goods from brands and customers and sells them to platforms including Vestiaire Collective and Tradesy. With the deal, the Luxclusif platform will power Farfetch’s existing resale purchasing platform Second Life by expanding its assortment beyond handbags to include ready-to-wear and watches, while improving its authentication capabilities and global coverage. Farfetch already sells pre-owned clothing, bags and jewellery on its site from Christian Dior and Chanel vintage handbags to Hérmes clothes, so this will boost its inventory. Currently there are 13 pages of Chanel pre-owned listed on Farfetch’s UK site, including a 2013 Boy Brick clutch in blue for £9,235. For Hérmes, there are six bags of items including a 1997 pre-owned Kelly in cream for £13,385.

Farfetch’s chief commercial and sustainability officer Giorgio Belloli, says its primary marketplace goes hand-in-hand with resale. "The opportunity for us is selling new products and selling pre-owned products,” he says. “I think these two things are extremely complementary. We definitely see the opportunity to to become a more relevant player within the space by offering both.”

Resale is heating up across luxury, estimated to be worth €28 billion with growth rates outpacing the wider luxury market at 10 to 20 per cent, according to Bain & Company. Farfetch has offered pre-owned items since it launched but faces stiff competition from existing platforms including The Realreal and Vestiaire Collective, which have already partnered with various brands. Valentino, Isabel Marant, Gucci and most recently Burberry have also launched their own resale offerings this year.

Farfetch would not comment on the size of its pre-owned category. Second Life, which powers brands and customers to sell on Farfetch’s platform, launched in 2019, and has had double-digit growth from 2019 to 2020, according to Farfetch’s Conscious Luxury Trend report. Luxclusif will handle pricing and authentication for pre-owned goods to be sold on Second Life; customers who sell their pre-owned items will be paid in Farfetch credit. Eventually, Luxclusif’s technology will extend to luxury brands working with Farfetch Platform Solutions. Luxclusif will also continue to work with existing external partners including Vestiaire Collective as part of the deal.

As part of Farfetch’s sustainability goals, it plans to have more of its business made up of circular items, including pre-owned goods, rather than linear items, by 2030. Expanding Second Life will contribute to meeting that goal, says Belloli. “There's an opportunity for brands to understand that they don't necessarily have to produce new items and make more products in order to still make money,” says Belloli. “I definitely feel that the more brands can embrace pre-owned as a business opportunity, the less they will have to produce new items in order to drive growth.”

Farfetch says it is encouraging consumers to upcycle and recycle luxury goods. It recently partnered with The Restory, allowing consumers to repair damaged goods. “We're working hard with brands to make that part of the offering more prominent, and we're really pushing them to offer more and more sustainable materials,” says Belloli. “We also want to provide the industry with a platform to support this demand and to really drive the business towards a more sustainable way of operating.”

Resale businesses must account for two customers, the buyer and the seller; Luxclusif’s technology can help Farfetch boost the experience for each consumer, says Jessica Ramirez, a retail research analyst at Jane Hali & Associates. “When we look at it, it’s really two businesses within one in regards to the journey for a consumer and as well as its appeal,” she says. “The more technology that there is, especially to make the consumer feel more comfortable in purchasing, and also to facilitate how a consumer can do the resale, and take that off their hands, is a positive.”

Luxclusif will be responsible for pricing bags submitted to Farfetch Second Life, effectively getting more stock onto the platform faster. If the customer accepts the offer, the bag is sent in and authenticated by Luxclusif. Credit is then passed onto the seller to be spent on the Farfetch marketplace. That creates a cyclical relationship, which Belloli sees as an opportunity to deepen Farfetch’s relationship with customers. “We see an evolution of our offering to provide the service, to really allow the customers coming to the platform, to sell items, as well as buying new items. And this is creating a very, very interesting dynamic: it’s building customer acquisition, it’s building customer engagement,” Belloli says.

Diana Verde Nieto, co-founder of consultancy Positive Luxury, says that from a sustainability standpoint, Farfetch’s sign-on to secondhand could solve issues such as excess inventory and traceability. It also helps to validate the budding resale market for a growing pool of luxury brands. “When you start having players like this appearing, it’s recognition that this is a real channel and it can solve a lot of problems,” she says.

Correction: Removes incorrect reference to Luxclusif as a ‘white label’ supplier in the second paragraph. Luxclusif is a B2B tech platform only, that enables brands and customers to sell their clothing to then be resold. Also removes incorrect reference that Luxclusif "could" power Farfetch's brand pre-owned proposition in the 5th paragraph. Luxclusif "will" definitely do this. Also clarifies that credit is passed on to seller to be spent on Farfetch only in the 9th paragraph.

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