Farfetch to shutter software service in strategic pivot

Farfetch, the luxury e-commerce platform now under Coupang's ownership, is reportedly ceasing operations of its Farfetch Platform Solutions (FPS), a once-flagship software-as-a-service product. This move, as reported by Business of Fashion, signals a strategic shift towards cost reduction and a renewed focus on its core marketplace business.

The South Korean e-commerce giant Coupang is discontinuing the end-to-end e-commerce suite that had been adopted by prominent fashion houses including Neiman Marcus, Harrods, and Chanel. This decision marks a significant departure from the vision articulated by former CEO José Neves in 2021, who stated: "We have a unique proposition, as I believe we are one of the few marketplace SaaS solutions in fashion and, in my view, the only one with at-scale credentials in luxury."

However, this ambitious vision failed to materialise as Farfetch grappled with declining share value. The precise contribution of software services to Farfetch's revenue remains unclear, but the exodus of key clients such as Neiman Marcus, who opted to manage e-commerce operations internally, likely influenced this strategic pivot.

Financial pressures appear to be a driving factor behind this decision. Farfetch reported a substantial loss of 105 million dollars in the second quarter of 2024. Nevertheless, Coupang has expressed optimism about narrowing the profitability gap by year-end.

In a statement to Business of Fashion, Farfetch emphasised its renewed focus: "Our disciplined investment and operational excellence enable us to deliver exceptional shopping experiences to our customers, providing them with the best selection, service, and savings. With our focus on the Farfetch marketplace, we will continue building the best luxury experiences for customers, brands, and boutiques."

As Farfetch refocuses on its core marketplace, industry observers will be keenly watching to see if this streamlined approach can deliver the financial turnaround Coupang seeks.