What: The luxury platform should deliver its first annual profit this year

Why it is important: Marketplace model and uplift from Covid-19 have proven to be key to enter Chinese market

Last November, Farfetch got USD 1.1 billion from competitors Alibaba and Richemont (owner of Net-a-Porter) in order to push the luxury ecommerce platform into Chinese market. In addition, further endorsement came from Kering’s billionaire founder, François-Henri Pinault, who invested EUR 50 million via his personal holding company.

The fact that Farfetch founder José Neves had managed to collaborate with rivals was further proof that the pandemic had brought a reckoning in an industry that had once been slow to move online.

After casting doubt on Farfetch’s ability to turn profitable, analysts now estimate that sales should have leapt 60% in 2020 to reach USD 1.65 billion. Moreover, Farfetch has promised that the uplift from Covid-19 will help it deliver its first annual profit (on an adjusted basis) this year.

When the pandemic hit, the nature of Farfetch’s business meant that it could still deliver even when one region was shut down, unlike Net-a-Porter, which was paralysed last spring when its UK warehouse shut down.

Furthermore, Neves’s choice of a business model is key to eventually deliver profit as it differs from other online retailers such as Net-a-Porter or Matches Fashion and it’s crucial: Farfetch would not buy any inventory. Instead, it acted as a marketplace.

In 2015, the company also diversified by creating another business to provide technology, software and services to help department stores such as Harrods to run their e-commerce operations.

How Farfetch prospered in a pandemic year