What: The Financial Times reviews the overall situation of e-commerce players in the luxury sphere.

Why it is important: “Expect some further consolidation in the sector in the future”: good or bad news?

Farfetch, a luxury ecommerce platform, recently gained approval from the European Commission to acquire a significant stake in competitor Yoox Net-a-Porter. This deal allows Farfetch to sell Richemont brands, boosting its portfolio. However, the company has faced challenges, with its shares plummeting about 98% since their peak in 2021. The luxury ecommerce sector, in general, is struggling with several companies like Yoox Net-a-Porter, Matches, Lyst, and The RealReal facing losses, cost-cutting measures, and restructuring.

The challenges are attributed to a post-COVID cooling in the luxury and ecommerce sectors and the increased digital presence of luxury brands themselves. These brands are now directly engaging with customers, offering personal services and reducing reliance on wholesale models, impacting multi-brand retailers. Costly online advertising and changing distribution models add to the pressure.

Some companies are exploring new strategies like e-concession models or focusing on discount luxury and second-hand markets. Despite the challenges, multi-brand ecommerce sites are still seen as valuable for their curated collections and the discovery of new labels. However, more consolidation in the industry is expected as these companies search for sustainable and profitable business models.

Luxury ecommerce groups lose their appeal