Farfetch Ltd. has acquired luxury resale platform Luxclusif as the sector’s interest in the secondhand market grows apace, marking the latest expansion at the British-Portuguese e-commerce firm.
said Thursday that it will acquire Luxclusif’s technology platform and team of employees under the deal. Luxclusif was founded by two Portuguese entrepreneurs and operates as a business-to-business venture enabling the sale of second-hand goods between retailers and platforms. It has an inventory of more than 8,000 luxury handbags and accessories, and also offers liquidation services for brands’ excess stock, according to its website.
The acquisition, for an undisclosed sum, will boost Farfetch’s resale service by enabling development of technological features such as automated pricing, and will also expand the service’s geographic and category reach, Farfetch said. The company’s chief commercial officer, Giorgio Belloli, pointed to China as among the markets where consumers are becoming increasingly conscious of resale. While Farfetch’s resale service currently only deals in handbags, ready-to-wear is an obvious next category to bring in next, and the company is also looking at watches and jewelry, Belloli told The Wall Street Journal.
The secondhand market is a growing focus for the luxury industry. With environmental concerns more and more important in consumers’ purchasing decisions, resale can serve as a way to maintain revenue growth without relying on indefinitely higher volumes, Bain and Co. said in a report earlier this year produced alongside sustainability-focused trade body Positive Luxury. Resale could by the end of the decade contribute up to 20% of a luxury-goods company’s revenue, while increasing a given garment’s profit margin by 40%, the report said. According to Farfetch’s own figures, more than half of its customers are involved in the secondhand market, whether through buying or selling.
The used-luxury market is set to reach a total 33 billion euros ($37.2 billion) this year, soaring 65% since 2017, Bain said in a separate report with Italian trade association Altagamma. French luxury group Kering, which owns Gucci among other fashion brands, in March this year bought a small stake in another luxury resale platform, Vestiaire Collective. The move indicated a thawing of previously icy attitudes toward the market from luxury players, Deutsche Bank analysts said at the time, noting that the investment would give Kering a seat on Vestiaire’s board and valuable insight into the workings of the secondhand business.
As a luxury-goods platform, Farfetch’s role is to provide brands with sustainability options, said Belloli, who is also chief sustainability officer at the company. Shipping is an environmental problem for e-commerce companies, he said, adding that Farfetch offsets the impact of every package it ships. “We strongly believe that we can be the force that pushes all the actors in the industry to choose and then act positively, he said.
Farfetch has worked with Luxclusif for several years, making the acquisition the latest instance of the company reaching M&A deals with its partners. Farfetch last month agreed to the creation of a 50-50 joint venture with London-listed Clipper Logistics PLC, expected to launch early in the new year. The JV will enable Farfetch to speed up deliveries to customers through access to Clipper’s global warehousing network, Chief Operations Officer Luis Teixeira said at the time.
Farfetch is also currently in talks with Swiss luxury giant Compagnie Financiere Richemont SA about the possibility of becoming a minority investor in Richemont’s own e-commerce business Yoox-Net-A-Porter, which has struggled financially since joining the group. Richemont is looking to divest overall control of YNAP, which it wants to become a “neutral platform” for the luxury-goods industry, with investment from various players.
Farfetch has stressed that there is no guarantee of the talks leading to a deal with Richemont. Nevertheless, a YNAP tie-up wouldn’t be the first time the companies have worked together. Last November, the Cartier owner and Chinese tech group Alibaba Group Holding Inc.
said they would invest $250 million each in Farfetch, in a deal that entailed the creation of a joint venture covering Farfetch’s operations in China. Analysts at the time said the JV showed the luxury sector’s confidence in Farfetch, and Richemont boss Johann Rupert has himself spoken admiringly of Farfetch’s technological prowess, calling the platform’s tech offer “quite remarkable” in a conference call following first-half results last month.