---
title: "The Farfetch Turnaround Strategy"
url: "https://lumosbusiness.com/analyses/farfetch-turnaround-strategy-coupang/"
date_published: "2025-04-10T03:23:07"
domain: "Commerce, retail & social selling"
format: "analysis"
author: "Joel Finningley"
source: "https://lumosbusiness.com/farfetch-turnaround-strategy-coupang/"
thesis: "Farfetch is back and this may only just be the beginning of the turnaround."
---

# The Farfetch Turnaround Strategy

**Thesis.** Farfetch is back and this may only just be the beginning of the turnaround.

## Key claims

- In December of 2023, Coupang acquired Farfetch’s assets for $500 Million.
- With about 1,500 brands, boutiques and department stores, Farfetch is still the largest online luxury platform in the world
- Farfetch certainly was not the first eCommerce platform in the luxury market, but they deployed a strategy that was built on back-end innovation, enabling the ‘customer experience’ to scale for luxury brands globally.
- Boutiques (who typically lacked a sophisticated website) and brands (who lacked the back-end supply chain infrastructure) effectively outsourced their digital operations to Farfetch, who was able to raise capital and scale their front-end marketplace to consumers globally.
- The big difference between other digital ads like social and search, and retail media, is that the latter doesn’t rely on 3rd party cookies, but rather can tap into direct 1st party customer data since they own the customer relationship.

---

Farfetch is back and this may only just be the beginning of the turnaround.

After rising like a phoenix to become a multi-billion dollar unicorn in the 2010s – hitting a peak valuation of $24 Billion in 2021 – the company was on the brink of bankruptcy before being scooped up by Coupang in late 2023.

**What happened then and how has the turnaround happened so quickly?**

## How Farfetch Scaled to a $Billion+ company

In a deeper analysis of the [Farfetch business model](https://lumosbusiness.com/business-model-canvas-farfetch/ "Business Model Canvas – Farfetch"), we can see how the company found its footing in the massive [luxury market](https://lumosbusiness.com/luxury-cac-the-next-farfetch/ "Luxury, CAC & The Next Farfetch") by pioneering a unique business model that was built on an advanced supply chain infrastructure.

[![](/assets/2022/03/BusinessModelCanvas_Farfetch.webp)](/assets/2022/03/Farfetch_Canvas.pdf)

[Farfetch Business Model Canvas (2019)](https://lumosbusiness.com/business-model-canvas-farfetch/ "Business Model Canvas – Farfetch")

Farfetch certainly was not the first eCommerce platform in the luxury market, but they deployed a strategy that was built on back-end innovation, enabling the ‘customer experience’ to scale for luxury brands globally.

> Farfetch, which Neves launched in 2008, delivered that growth, becoming one of the U.K.’s few unicorns with a $1 billion-plus valuation which, as the years passed, hit $24 billion. But all that unraveled in the final quarter of 2023, leaving Neves, and his remaining investors, out of pocket.In all that time, Farfetch never turned a profit, and spent most of its years hemorrhaging money.
> 
> [WWD](https://wwd.com/business-news/fashion-features/farfetch-reboots-under-coupang-focus-customer-marketplace-1237070888/ "WWD")

Boutiques (who typically lacked a sophisticated website) and brands (who lacked the back-end supply chain infrastructure) effectively outsourced their digital operations to Farfetch, who was able to raise capital and scale their front-end marketplace to consumers globally.

Multiple elements of the fulfillment process were handled by Farfetch, so if there was a return, for example, Farfetch technically handled it. But they didn’t have any inventory, it was ‘distributed inventory’ that was dropshipped to customers in a Farfetch package.

Commissions on sales (or take rate) were in the 30% range, which worked because the AOV (Average Order Value) was around $600 and margins were fat, **meaning both boutiques and brands earned enough per transaction for it to be worthwhile** **for all parties.**

Once they had the supply side of the market locked down (top brands and boutiques globally), they set out to build the demand side of the market, so they spent a lot of money on acquiring customers. One of the things that worked in Farfetch’s favor to reach scale was that the majority of their customers were repeat customers, meaning they didn’t have to constantly acquire news ones all the time.

In the go-go years of the 2010s, this strategy worked well. But post 2020-2021, when a lot of the eCommerce world lost their steam, they ran into trouble. Not only did luxury spending decline, especially in Eastern markets like China, but the cost of acquiring customers (CAC) went up.

This essentially put pressure on their core business model, which would have been fine if they had built up the requisite reserves to be able to withstand a crisis. But they made fairly large acquisitions and took on a lot of debt, meaning they didn’t have enough of a cash buffer to withstand the downturn in the market.

Thus, at a certain point in 2023, things unravelled rapidly for Farfetch, and as a result, South-Korean based Coupang was presented with what turned out to be a pretty epic opportunity.

## Coupang and the Farfetch Turnaround Story

In December of 2023, Coupang acquired Farfetch’s assets for $500 Million.

The TLDR of how it got to that point can be summarized below:

> Essentially, they took what should have been an extremely simple business model and bogged it down with unncessary complexity, leading us to today’s news.

[Fashion Dive](https://www.fashiondive.com/news/farfetch-acquired-by-coupang/702831/ "Fashion Dive")

Thus when Coupang acquired the company, the thesis for the turnaround was really quite simple – **get back to the basics** – and that is essentially what happened.

A year later, Coupang had the company back to quarterly profitability:

> In the final quarter of 2024, Farfetch’s adjusted earnings before interest, taxes, depreciation and amortisation reached $30 million, up from a $34 million loss during the same period in 2022. (The company stopped reporting earnings in the second half of 2023).
> 
> [Business of Fashion](https://www.businessoffashion.com/news/luxury/farfetch-reached-ebitda-profitability-in-2024-sales-remain-lower-than-2022-levels/#:~:text=Luxury-,Farfetch%20Reached%20EBITDA%20Profitability%20in%202024%2C%20Sales%20Remain%20Lower%20Than,profits%20as%20an%20independent%20business. "Business of Fashion")

How did they do it?

-   cutting costs, especially ‘frothy’ high-end expenses that were designed to cater to luxury customers
-   shed unprofitable business units
-   replace their logistics partner

> In the last year, Farfetch has saved millions by switching logistics partners, closing unprofitable business units like its white label e-commerce software service and selling off labels from its brand incubator including Off-White and Palm Angels.
> 
> [Business of Fashion](https://www.businessoffashion.com/news/luxury/farfetch-reached-ebitda-profitability-in-2024-sales-remain-lower-than-2022-levels/#:~:text=Luxury-,Farfetch%20Reached%20EBITDA%20Profitability%20in%202024%2C%20Sales%20Remain%20Lower%20Than,profits%20as%20an%20independent%20business. "Business of Fashion")

Granted, this has come at the expense of revenue, with Farfetch’s Q4 ’24 net revenue ($471 million) at about 25% less than it was in the same period in 2022.

An example of cost cutting is the [$2 Million](https://www.dmnews.com/coupang-drives-farfetch-turnaround-through-cost-cuts/ "$2 Million") the company used to spend on ‘Personalized VIP Services’ annually down to about $80,000!

To say it looks like a brilliant acquisition by Coupang is an understatement. Not only do they gain access to what was – at its peak – a strong business, but they also gain access to US and European markets to complement their core presence in Asian markets.

> “We worked really hard over the last 12 to 15 months to stabilize the business financially, and we’re in a great place. We are seeing green shoots,” said Stephen Eggleston, chief commercial officer of Farfetch, in an exclusive interview — the first since Coupang took over the business.
> 
> [WWD](https://wwd.com/business-news/fashion-features/farfetch-reboots-under-coupang-focus-customer-marketplace-1237070888/ "WWD")

## Farfetch – Future Growth Calalysts

The challenge with Farfetch now is to expand the customer base again and reignite top-line growth with the new operational infrastructure in place.

Coupang’s strategy with the company has been to restructure it from an operational and efficiency perspective, which has worked to stabilize its finances; yet simultaneously, they have seen significant declines in total revenue and continue to face intense competitions in all the markets where they operate.

What are some innovative ways that Farfetch can catalyze new interest among luxury consumers in the global marketplace?

With about 1,500 brands, boutiques and department stores, Farfetch is still the largest online luxury platform in the world, meaning that for many luxury consumers it is still the go-to place for the best of the fashion and hard goods worlds.

### Video Commerce

Video commerce is starting to hit its stride in 2025.

There are three major components to video commerce itself.

[![](/assets/2025/03/What-is-Video-Commerce-1.webp)](https://lumosbusiness.com/business-case-video-commerce-d2c-brands/)

[![](/assets/2025/03/shoppable_video_firewrok.webp)](https://lumosbusiness.com/live-shopping-video-commerce-intersection/)

[Shoppable Video / Live Shopping Intersection](https://lumosbusiness.com/live-shopping-video-commerce-intersection/ "The Live Shopping / Video Commerce Intersection")

-   **Shoppable Video** is the component of video commerce that is starting to take off in Western markets. It allows brands to repurpose existing videos and make them shoppable on the brand’s website itself, rather than relying on [social commerce](https://lumosbusiness.com/social-commerce-business-model-canvas/ "Social Commerce Business Model Canvas") like TikTok Shop
-   **Live Shopping** is the component of video commerce that is took off in Asian markets several years ago, and is slowly starting to gain prominence in Western markets. It pairs well with shoppable video, and other dimensions of retail media which will be discussed below
-   **1:1 Shopping** (or social shopping) is the more bespoke module that is suitable for more luxury players like Farfetch, where high-touch service via video helps drive higher order values and create brand loyalty

**Farfetch partnered with one of the pioneers of video commerce, [Bambuser](https://lumosbusiness.com/live-shopping-video-commerce-intersection/ "The Live Shopping / Video Commerce Intersection"), back in 2020, launching a [6 month trial project](https://www.retail-systems.com/rs/Farfetch_Partners_Bambuser_Live_Video_Streaming.php "6 month trial project") to test out the opportunity.** That was before video commerce itself was really ready to take off, however.

Below is an example of a live stream that [Zara did on the Bambuser platform](https://retailtechinnovationhub.com/home/2024/10/3/mother-daughter-duo-cindy-crawford-and-kaia-gerber-host-bambuser-powered-zarastreaming-shopping-event "Zara did on the Bambuser platform") with Cindy Crawford and Kaia Gerber as a test. Every item in the video shoot was made to be shoppable.

[![](/assets/2025/03/ZaraStreaming-1024x506.webp)](https://lumosbusiness.com/retail-media-future-of-advertising/)

[Retail Media and the future of Advertising](https://lumosbusiness.com/retail-media-future-of-advertising/ "Retail Media and The Future of Advertising")

Producing this type of content is obviously costly, which is against the current direction that Farfetch is headed under Coupang; nevertheless, shoppable video content and live shopping content can be paired in a continuum to drive multiple benefits.

[![](/assets/2025/03/Live-Shopping-to-Shoppable-1024x597.webp)](https://lumosbusiness.com/live-shopping-video-commerce-intersection/)

[Shoppable Video / Live Shopping Intersection](https://lumosbusiness.com/live-shopping-video-commerce-intersection/ "The Live Shopping / Video Commerce Intersection")

The above example could be easily turned into shoppable video clips and deployed on PDPs and Category pages, and run as a campaign across email, social, and retail media/programmatic.

[![](/assets/2025/03/Video-Commerce-Distro.webp)](https://lumosbusiness.com/business-case-video-commerce-d2c-brands/)

[Business Case for Video Commerce](https://lumosbusiness.com/business-case-video-commerce-d2c-brands/ "Business Case for Video Commerce – D2C Brands")

The business case for a platform like Farfetch is massive when you stack all of the possible benefits together.

[![](/assets/2025/03/3-Benefits-to-Video-Commerce-Macro-2.webp)](https://lumosbusiness.com/business-case-video-commerce-d2c-brands/)

[Business Case for Video Commerce](https://lumosbusiness.com/business-case-video-commerce-d2c-brands/ "Business Case for Video Commerce – D2C Brands")

It requires some investment, testing, and optimization, but a storied, well-run luxury platform like Farfetch could potentially make huge inroads in the global market – particularly in the US and Europe – by investing in a dynamic video commerce strategy.

### Retail Media

Farfetch was earning around [$20 – 25 million dollars per year](https://www.statista.com/statistics/1378773/farfetch-retail-media-ad-revenue/ "$20 - 25 million dollars per year") in retail media (advertising dollars) in the years leading up to the acquisition.

Retail media is another iteration of advertising in the global digital ad marketplace, following in the footsteps of search and social.

[![](/assets/2025/03/Digital-Ads-Evolution.webp)](https://lumosbusiness.com/retail-media-future-of-advertising/)

[Retail Media and the Future of Ads](https://lumosbusiness.com/retail-media-future-of-advertising/ "Retail Media and The Future of Advertising")

[![](/assets/2025/03/Retail-Medias-Boom-1024x529.webp)](https://lumosbusiness.com/retail-media-future-of-advertising/)

Amazon, Walmart, and Target are the dominant players in the industry, but retailers across the US and Europe have entered the fray, including luxury department stores like Bloomingdales and Saks. It can fit nicely with the category, and Farfetch itself has a huge amount of valuable 1P (1st Party) data that it can use to help closely target relevant ads to customers.

The big difference between other digital ads like social and search, and retail media, is that the latter doesn’t rely on 3rd party cookies, but rather can tap into direct 1st party customer data since they own the customer relationship.

[![](/assets/2025/03/RetailMedia_flywheel-1024x567.webp)](https://lumosbusiness.com/retail-media-future-of-advertising/)

In the aftermath of the Coupang acquisition, Farfetch lost its relationship with certain key ‘brand partners,’ which is always the way Farfetch referred to the players in the luxury fashion and hard goods space that it worked with.

> Although Kering and Richemont pulled their brands off Farfetch after the Coupang sale, other luxury names including Prada, Brunello Cucinelli, Giorgio Armani, Valentino, Ralph Lauren, Jenny Packham and Erdem chose to stay.
> 
> [WWD](https://wwd.com/business-news/fashion-features/farfetch-reboots-under-coupang-focus-customer-marketplace-1237070888/ "WWD")

A high-touch retail media strategy could work for both former and current clients to help deepen their own relationship with the customers, while simultaneously earning Farfetch extra revenue.

Margins for on-site retail media can be [between 70 – 90%](https://lumosbusiness.com/retail-media-future-of-advertising/ "Retail Media and The Future of Advertising"); in the case of Walmart, their retail media business grew 28% in 2024 and earned them a third of their operating income.

[![](/assets/2025/03/Video-Commerce-Future-1.webp)](https://lumosbusiness.com/retail-media-future-of-advertising/)

[Retail Media and the Future of Ads](https://lumosbusiness.com/retail-media-future-of-advertising/ "Retail Media and The Future of Advertising")

When paired with a video commerce strategy, it could open up a whole new channel for Farfetch to expand versus other luxury players, as the landscape of possible premium mediums to reach consumers expands into publishers and streaming platforms.

## Physical Retail

As part of the turnaround, Farfetch has held onto the physical retailers such as Browns in London, which were acquired under the direction of the original founder Jose Neves.

> Although the marketplace is the star of the show, Eggleston said Browns, Stadium Goods and the resale service remain important parts of the business.“Physical retail is a really important tool we can use to engage our top tier of customers,” he said, referring to Browns in London, which opened a high-tech store on Brook Street in Mayfair in 2021.
> 
> [WWD](https://wwd.com/business-news/fashion-features/farfetch-reboots-under-coupang-focus-customer-marketplace-1237070888/ "WWD")

Through elements of [connected commerce](https://lumosbusiness.com/connected-commerce-retail-medias-boom/ "Connected Commerce & Retail Media’s Boom"), the above components of video commerce can be fused into the ‘Farfetch experience’ in the physical environment, which will help the company pull in dollars from the all-important EICs (Extremely Important Customers).

> Just like its competitor Mytheresa, which had GMV of 913.6 million euros in fiscal 2024, Farfetch generates a large slice of its revenue from a small percentage of EICs, or extremely important customers.
> 
> [WWD](https://wwd.com/business-news/fashion-features/farfetch-reboots-under-coupang-focus-customer-marketplace-1237070888/ "WWD")

**Overall, the return of Farfetch to its core business** **model with the ‘Coupang turnaround strategy’ – focused on cost cutting,** **divestiture of non-core assets, and increased logistics efficiency – have brought Farfetch back into the luxury platform wars with a bang.**

A return to growth will undoubtedly look much different under Coupang’s leadership than it did the original Farfetch team, and video commerce and retail media can serve as levers to help achieve that growth without sacrificing profitability. The additional physical retail stores can serve as hubs to augment the overall customer experience and acquire/retain the all-important EICs that luxury platforms and brands alike are in constant competition for.