Farfetch Beauty Closure: What Sources Are Saying
PARIS – Farfetch Beauty is winding down operations, according to multiple industry sources, who say that nevertheless, the beauty businesses will continue at Violet Grey and Browns Fashion, which Farfetch also owns.
The sources said Farfetch contacted beauty brands sold on its platform in July to say that after a year of operating in the category it has chosen to reallocate resources to its core business, which is fashion. Farfetch’s intention is to return beauty inventory, which is on consignment, or allocate it through Violet Grey, the industry sources said.
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Meanwhile, Farfetch has remained publicly mum on plans for its beauty operation, which is expected to close by the end of August.
There are currently no visible signs on Farfetch Beauty to indicate that anything is changing.
Farfetch would be the latest fashion platform to throw in the towel when it comes to beauty. In March, the RealReal said it was renewing its focus on the platform’s luxury consignment business and shifting resources from its direct business, including beauty. At the time, a RealReal spokesperson told WWD that beauty signified only a small piece of its marketplace.
“A lot of these pure players and marketplace brands are trying to bring in beauty, and ultimately what happens is that they discredit how difficult it actually is, and how different it is to run beauty versus fashion,” said one industry source.
“They go in like a plug-and-play,” they said. “But ultimately, it’s quite different the way you’re in beauty versus the way you’re in fashion. The model is different.”
U.K.-based Farfetch launched into beauty in April 2022 with an assortment of more than 100 prestige brands. It set out to rewrite the retail playbook by differentiating itself with a gender-neutral assortment in an approach it dubbed “Beauty Beyond Boundaries.”
Featured brands on the site today include 111Skin, Aesop, Balmain Hair Couture, Charlotte Tilbury Beauty, Dr. Barbara Sturm, Gucci Beauty, Off-White Beauty and Westman Atelier.
Simultaneous to Farfetch’s most recent foray into beauty, Browns Fashion, the London-based luxury retailer, introduced a limited beauty assortment online and in its two brick-and-mortar doors.
While Violet Grey and Browns were to lean into small, curated assortments, as a marketplace, Farfetch was to fulfill orders with inventory from the two retailers, as well as buy its own.
However, Farfetch never launched a true marketplace with beauty brand shop-in-shops on its site. Instead, its current beauty platform is just another version of Violet Grey, the industry sources explained.
Farfetch originally tested beauty in 2016, when it teamed with Space NK on a limited offering available online. At that point it tried to replicate the boutique model, but there were a slew of logistical challenges.
Over the last few years, and with an acceleration over the past 12 months, online beauty marketplaces have become de rigueur among retailers, especially in Europe. Alongside Farfetch, Boots and Douglas were among those to have adopted the business model, involving multivendor platforms to help expand their product offer, drive volume and update image in the red-hot battle for prestige beauty shoppers.
“There are three reasons why this model seems like a really good idea. Digital retail sounds awesome. You don’t have the overhead of stores, you can get the products to customers faster, you don’t have to move them physically so many times or have to pay the same type of staff,” said Emily Pfeiffer, principal analyst at Forrester Research. “Digital retail sounds great, profitable and easier.”
Marketplaces can seem even better, since it’s not necessary for retailers to own the inventory.
“You can provide a much broader assortment, don’t have to take the risk on bringing it in and — again — you’re also saving time and cost in physically moving items to the right place if you’re selling it directly from the brand, manufacturer or distributor,” she continued.
Then, there’s the beauty of selling beauty.
“Beauty has been growing very fast globally. It’s a category consumers are still extremely interested in, and it’s been much more downturn-resistant than a lot of categories,” said Neil Saunders, managing director and retail analyst at data intelligence firm GlobalData Retail.
“It can be a really high-margin category,” said Pfeiffer, adding beauty requires constant reordering. “That should be a retailer’s dream.”
For beauty brands, there are multiple upsides to marketplaces, such as giving great exposure, margins and customer intelligence.
In Forrester’s 2023 predictions, however, it expected retailers and brands to pull back in a variety of ways, including on promises concerning deliveries, guarantees and returns, as well as on staffing.
“The narrowing of scope is a way to pull back, as well,” said Pfeiffer.
Saunders suggested a stumbling block for Farfetch Beauty could have been its product offer.
“It wasn’t that compelling,” he said. “There was nothing wrong with it, but it didn’t really have that much newness on there. It wasn’t really showcasing those innovative new products. It was all a bit subdued.
“What consumers like when shopping for beauty is both to have the staples that they always buy, but also to be inspired by a lot of new brands, upcoming things and solutions that they haven’t thought about before,” continued Saunders.
He said that arena is already owned by other companies, such as Sephora, Ulta Beauty and Boots.
“On top of that, you also have a lot of these brands going direct-to-consumer,” he said. “Farfetch just didn’t really differentiate or have a particular point of view in a market that, while growing, is just very crowded and very competitive.”
The marketplace model is historically challenging for prestige beauty.
“It is meant for high-volume sales,” said Pfeiffer. “They’re not really known for having a stellar experience. It makes sense that the higher you go, the tougher that model is going to be.”
Another major challenge is that luxury beauty legacy brands often have a hard time pivoting into marketplace models.
“The legacy brands don’t have the infrastructure or even the quick turnaround to build into a marketplace,” said an industry source, adding a few are needed to help generate the buzz and excitement of a beauty destination.
This phenomenon is reminiscent of the early 2000s, when Sephora was having trouble signing on legacy beauty labels as an anchor and lure for other brands.
Another, albeit less major, issue possibly impacting Farfetch Beauty, according to Saunders, could be many consumers prefer making their purchases of beauty distinct from their purchases of fashion — for psychological reasons.
“People will spend like $100 on an item of clothing, and then they might spend $50 on a beauty item,” he said. “They’ll quite happily do those things separately, maybe on separate days, in separate transactions, but put them together and it’s somehow a bit more difficult.”
Saunders said that’s why it’s been hard for many supermarkets to move into premium beauty, for instance.
“I do wonder how much that affected Farfetch’s conversion in beauty,” he said. “I do think it’s an issue for fashion brands expanding into beauty at the premium level.”
Industry experts are keen to see how beauty will evolve on marketplaces.
“Even Amazon has tried luxury beauty, and they failed,” an industry source said. “I think someone can — and will — ultimately [figure out the beauty marketplace model], but it’s just [about] the when and the who will rise up to that sort of feat.”
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