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The fallen luxury webshop Farfetch will become South Korean after its acquisition by Coupang. This not only gives the e-tailer a new lease of life, but also immediate access to a very rich market.
Only 1 % left
Farfetch had been in free fall for a while: two years ago the company was worth more than twenty billion euros on the stock exchange, but barely 1 % of that was left last week. Due to the global cost-of-living crisis, the upper middle class cannot or does not want to spend as much money on extravagant luxury products. As a result, Farfetch was in need of fresh capital for a while, but its main partners seemed reluctant to put in money.
Still, the new owner is very ambitious: Coupang founder Bom Kim calls South Korea “the country with the highest per capita spending on luxury products“, Belgian newspaper De Tijd reports – something participants in this year’s RetailHunt to Seoul were able to see with their own eyes. The Korean app, while largely unknown in Europe, is well placed to gauge the opportunities: with a revenue of twenty billion euros last year, it has antennae in a lot of consumer spending sectors. Coupang also recently experienced massive growth: in 2021, Deloitte called the Korean company “the fastest-growing retailer in the world“.
“Luxurious Amazon”
The road up was almost as steep for Farfetch as the fall was: when the company went public in 2018, it was not yet valued at a billion. Soon afterwards, however, collaborations formed with Alibaba as well as luxury giants Richemont and François-Henri Pinault (the CEO of Kering), all of whom also boarded the capital.
Founder José Neves had taken his cue from Amazon for his sales platform and mainly provided sellers of (in this case very luxurious) goods with data and customers. That went very well for him, but the pandemic changed the fashion landscape. Inspired by the huge push e-commerce got from the pandemic, more and more luxury brands also started selling directly online to be able to keep their own image (and margins) in their own hands.
