Luxury Brands Partner with Marketplaces - Alibaba & Farfetch

Increasingly, many transforming industries will have to perform some kind of tie-up with the big marketplaces.

Alibaba's recent investment in Farfetch tells the story - in a world where people buy 50-60%+ on marketplaces, and much of the growth is taken there, they are hard to ignore.

Farfetch has a great brand - I think the big question is, will they be co-opted? Especially in a luxury Alibaba environment which has also largely penetrated these large brands?

Farfetch's role could be with the smaller to midsize brands on these marketplaces that have trouble adopting TMall/Alibaba on their own due to the fees and up-front costs involved.

I find many of the software providers in the channel management space are only providing a small part of the overall solution to these brands. TP firms have been the power-players for some time, particularly in the international marketplaces.

Jason Greenwood shared some really worthwhile thoughts on this:

…Literally yesterday I posted about marketplaces and an often overlooked advantage they have and why they’ve come to dominate globally: unit cost of compliance. Marketplaces are rapidly growing marketshare of all eCommerce sales globally, and if we look at Australia as an APAC bellwether, a new one seems to launch every week. Much like daily deals sites, there’s going to be consolidation at some stage, but for now their growth opportunity is almost limitless. Between marketplaces and social commerce, many brands don’t even need an owned website these days. It’s hard for people to hear this, but the sad truth is the marketplaces have the attention and the value prop for consumers is clear. Marketplaces are the new malls. But as you point out, the enablers of cross border marketplaces, especially in China, make the unit economics totally non-viable for most retailers and only DTC brands can make it work long term.

Thanks, Jason, for adding these insights. There’s a lot to think about here.