LONDON — Farfetch is entering the resale arena, and given its existing ecosystem of brand, boutique and technology partners, the retailer believes it has a competitive edge and can claim its space in the promising market, which is set to double in size and reach $51 billion in the next five years.
Dubbed Farfetch Second Life, the service will allow customers to sell their pre-owned luxury handbags in exchange for Farfetch credit, which will be given upfront.
The move is billed as part of the company’s sustainability efforts and builds on the growing popularity of the vintage offer it has been integrating on the platform alongside seasonal product.
“No matter what we do with conscious brands, it’s still the same model of making things, selling them and not seeing them again. But there’s a whole area of innovation around the pre-owned and resale market which is key for us to explore,” said Tom Berry, global director of sustainable business at Farfetch, who joined the retailer last year.
For Berry there’s an equally big commercial opportunity in resale, as the Farfetch credit system will give customers incentive to return to the site. “The sustainable business plan should be part of the broader business vision,” he said. “It’s not something we’re only doing on the side because we feel like it’s a good thing to do or because we feel responsible. It’s an integrated part of the business strategy.”
The company is also addressing upfront some of the major setbacks, such as authentication and poor customer experience, that more traditional consignment sites such as Vestiaire Collective or The RealReal have been facing.
Instead of relying on a peer-to-peer model, customers selling their pre-owned bags on Farfetch won’t have to wait for someone to buy their bag, but will be offered a price within two business days of uploading images of the item online. Upon accepting the price, customers will then send the bag to Farfetch via a free courier pick-up and receive the corresponding credit upon verification, which they can then spend on Farfetch.
The company said it tapped a resale start-up from its fashion and retail tech accelerator Dream Assembly. The start-up has expertise in the authentication field, and is also exploring new “technology-led” ways to expand its authentication services, such as blockchain. Customers will not receive credit and bags will not be uploaded on the site before the verification process is completed, to ensure that all products are genuine.
“We can really play a big part in moving brands comfortably toward the resale market,” added Giorgio Belloli, chief commercial and sustainability officer at Farfetch.
Luxury labels have traditionally shied away from the pre-owned market, but Belloli said that given the company’s existing relationships with brands and the growing importance of circularity, the new proposition was met with “interest and support.”
This is also a new growth channel of which Farfetch can take full ownership as luxury brands start to put more focus on growing their own digital channels. According to a report, Luca Solca, senior research associate at AB Bernstein, said, “Mega-brands who dominate the luxury industry today have little to gain from feeding ‘winner takes all’ third-party distribution platforms. We’d expect Gucci and Prada will soon realize this.”
Farfetch will introduce a pilot of this new service to U.K. customers this week, focusing on handbags, a category that makes up the biggest part of the resale market and eliminates any sizing challenges. Making the offer global and introducing new categories beyond handbags are in the company’s immediate plans.
The retailer has been testing these waters for a while now: Last year, it experimented with rentals through a partnership between U.S.-based rental site Armarium and its London concept boutique Browns, and also worked with Vestiaire Collective on a co-marketing initiative that encouraged customers to embrace resale.
Exploring more circular models is another goal, both by growing its new resale venture, but also by putting more focus on the site’s vintage categories and supporting vintage boutiques, as well as extending resale services to brands and boutiques, too.
To coincide with the launch of Farfetch Second Life, the company has joined the Make Fashion Circular initiative, spearheaded by the Ellen MacArthur Foundation to encourage collaboration and the sharing of knowledge between industry leaders, in order to drive change and improve the textile economy. Brands like Burberry and Stella McCartney, as well as a host of start-ups and NGOs are also part of the scheme.
“To really solve the challenges that we face in the fashion industry, it’s critical that we collaborate with others, to ensure the fashion system as a whole has a more positive impact. We can only do that through forums like the Ellen MacArthur Foundation,” Berry noted.
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