When we seek to bestow the highest praise on a new business venture, particularly a new tech business, we call it disruptive, meekly accepting the misery, havoc and sheer unmannerliness the word implies. That’s the price of progress; we say unless we’ve just been disrupted, in which case we say something else.
What word, then, to call José Neves’ Farfetch, the 400 or so fashion boutiques around the world and more than 100 brands, that Neves has stitched together into a globe-girdling e-commerce octopus? New it most certainly is. Nothing quite like it existed before or exists now. But if anything, it’s the opposite of disruptive. Perhaps you could call it ruptive. It appears to empower that most endearing of commercial institutions, the quirky corner merchant, without trying to eat anybody else’s bacon. (Neves does not look kindly upon Uber in London for precisely this reason: it is eating the bacon of his beloved black taxis.) I challenged Neves to explain why I should buy my Orlebar Brown shorts through a California boutique on Farfetch when I have an Orlebar Brown store just round the corner from where I am staying in Notting Hill. Neves was unfazed. So buy it round the corner, he told me cheerily.
“This is not like IOS competing with Android competing with Windows Phone where one will get utterly crushed, and then a bunch of artists disappear. Fashion was never a winner-takes-all industry,” says Neves. “At our executive board meetings, we spend about one percent of our time thinking about competition. The exercise is never against anyone, at least it isn’t for us.”
We are sitting in a small corner office at Farfetch’s new London headquarters on Old Street in Clerkenwell, drinking bottles of the coconut water that Neves keeps to hand. Neves, who was born in Portugal, is trim and compact with black hair, a neat black beard and a focused look that is both sharp and subdued. On this occasion, he is wearing a black silk jacket with little black flowers brocaded on it, which makes it sound more dandified that it looks. Neves is not a show-off. He meditates, he runs regularly, and his personal style falls nearer the techie end of the fashion spectrum. On the other hand, his sober wardrobe is expensive.
You can think of Farfetch as the e-retail version of cloud computing, with its inventory dispersed in boutiques around the world, while Net-a-Porter’s big, company-owned warehouses represent giant servers. When you order an item from Farfetch, it gets sent from one of those 400 boutiques in anywhere from three to six days. Farfetch itself holds no stock. It manages the logistics of online selling for whatever its member merchants choose to buy. Farfetch likes to say that it ‘curates the curators,’ which is one reason you may indeed want to buy your Orlebar Brown shorts on Farfetch instead of around the corner: its “curators” are more likely to choose more offbeat merchandise from a designer than the designer’s outlets. This, after all, is why people cherish those little boutiques in the first place.
“If you look at the Dolce & Gabbana website, we probably have three times the range it does because we’re aggregating 400 stores around the world. So if you’re a hardcore Dolce & Gabbana lover, you’ll probably go to Farfetch,” says Neves. “We’re a journey around the most beautiful stores in 35 countries.”
The journey has worked out well for him. Neves says Farfetch has sold over $1 billion in merchandise since he launched it in 2008. Last year’s sales were $512 million, up 70 percent from the year before, and Neves is predicting $800 million this year. Last month it served its millionth customer. And in case you were wondering about the key shoes-around-the-equator indicator, Farfetch is happy to tell you: lined up end to end, the shoe boxes it sold last year would encircle the globe twice (no word yet on when they’ll hit three). These kinds of figures have made Farfetch a start-up darling. In its latest round of financing, Farfetch raised $110 million under terms that valued the company at around $1.5 billion. That makes it a “unicorn,” which is what finance people call a start-up valued at over $1 billion. It also makes it a scarily expensive investment for a company that has yet to show a profit.
“If we were scared of that valuation, we wouldn’t be sitting around the table,” says Virginie Morgon, deputy chief executive of Eurazeo. One of the investors in Farfetch’s last financing round, Eurazeo also owns a substantial stake in Moncler. “Initially, I wondered if Farfetch’s reliance on old distribution was the right model, but after looking at it closely, we concluded it was a brilliant idea. They were early in seeing that omnichannel would be the winning bet.”
Omni-channel is a clunky way of describing the merging of physical stores and e-commerce into a shopping experience that, if done right, offers the most appealing aspects of each. It sounds weird to say that the word “omnichannel” hit Neves like a lightning bolt in 2007 when he was casting about for a new endeavour, but it did.
Neves had grown up in Porto, which, among other things, is a hub for fashion manufacturing. His grandfather had a shoe factory, but the young Neves preferred writing computer code (he started aged eight). He founded his first software company when he was 19 while studying economics at the Universidade de Porto. His second company, which he started two years later, provided software for small fashion brands.
In 1996, he recalls, the odd thought struck him: if I can code computers, I can design shoes. He concedes now that his logic may have been flawed, but it proved correct all the same. Neves founded his shoe brand, Swear, and moved to London, opening a store in Covent Garden. In 2001, he started a retail venture called b-Store. (The two still exist as part of Neves’ Six London holding company, which he no longer manages.) More importantly, he credits his hybrid resume for the skills he needed to run Farfetch. “I’m not very good at fashion, and I’m not very good at technology,” says Neves, “but it’s very rare to find people who understand both worlds.”
In 2007, Neves was looking around for his next thing; something, he says, “that could change the world. I could see the inefficiencies. Why do you have Forty Five Ten, one of the most beautiful stores in the world, in Dallas? The inventory that was picked with so much love and attention is just sitting there, and put to work for only 10 hours a day for such a limited geography when it’s relevant to the whole world. That was my “aha!” moment.”
Neves returned to Porto, where his back-office operations have always been based, and told his engineers to drop everything to work full-time on a Farfetch logistics platform. “It’s working today, but if anyone came to you eight years ago and said, “We’re going to ship from Krakow to Shanghai and back, and by the way the customer service is going to be top-notch, and it’s going to be customs-cleared in local currency each way and everybody’s going to be happy”, you’d say, “You are absolutely out of your mind’.’’ That’s pretty much what people did say, starting with Neves’ engineers (“By then, they were used to me being out of my mind,” he says) and extending to the venture capital community (it didn’t help that the financial crisis of 2008 had shut down virtually all funding). Neves ended up funding the development of Farfetch himself with money borrowed from his Swear shoe business. “This was an all-in poker bet,” recalls Neves. “If it hadn’t worked all of my companies would have gone bankrupt.”
It took Neves’ engineers a year to devise Farfetch’s software, which is the secret sauce of his whole enterprise. Farfetch launched in October 2008 with 25 boutiques. One of the first was Giulio’s, a shop in Cambridge that had been severely disrupted by the prevailing headwinds. Giulio’s knew it needed to get itself onto the net, but it didn’t quite know how. It found a Cambridge whizz-kid to slap together a website, but it didn’t help much and the whizz-kid soon left for London. “This was our big crisis moment,” recalls Giulio Cinque, who started Giulio’s in 1982. “I was complaining to a friend of mine and he asked me if I had heard of Farfetch. So I approached them. I make no apologies – José saved our business.”
Life in the Farfetch ecosystem has been liberating for Cinque. Take the £1,500 Saint Laurent jacket with a brash print of palm trees and tigers – not exactly a slam dunk in Cambridge concedes Cinque. “In the past, I would have been reluctant, but I bought three. I sold out in one day. I shipped the first to Liverpool and the other two to Gambia and Cambodia. Wow, Cambodia! Farfetch allows us to buy much more exciting products than we could have done before.”
Eight years on, Neves is readying Farfetch for its second act. Last year, Farfetch bought Browns, the mini-empire of chic boutiques that Joan Burstein built on London’s South Molton Street (Browns had joined the Farfetch network in 2012). Neves is convinced – and he’s not alone in this – that successful omni-channeling means melding the digital and physical into something more seamless, although nobody seems to know exactly what that will look like. Hence Neves’ decision to buy Browns, which gives Farfetch its local laboratory to play around with.
Neves won’t say what precisely he’s got in mind, but he does drop a few hints. “When you go on the Farfetch site, it will show you recently viewed items. Why not do that in the store? How cool would it be that a Farfetch app could remind you what you picked up and tried on the last time you came into the store? You don’t have to have bought an item, just touch it, lift it, and we know you’ve raised it.”
Early last year, Neves adapted the model to offer shoppers the chance to buy from mono- brand designer stores such asand on Farfetch. Then in September 2015 he branched out to create Black & White, a new division enabling third-party brands to set up their e-tail sites using Farfetch’s platform and expertise. Shoemaker Manolo Blahnik was first to join, with the Farfetch-powered launching in March this year. This approach puts Neves closer to head-to-head competition with the likes of the Yoox Net-a-Porter Group, which powers the e-tail operation of several Italian designer brands. To Neves, it’s just another digital avenue for a shopper to stroll down, and he doesn’t much care which one they choose. ‘You’re the same consumer whether you shop in a mono-brand environment or a multi-brand environment – you are just in a different mode,’ he says.
There’s plenty more where these came from. “He’s full of incredible ideas, even if there are some things we cannot do,” says Cipriano Sousa, Farfetch’s chief technical officer in Porto, who goes back some 20 years with Neves. Even Neves concedes that perpetual brainstorming can get tiring. “Sometimes we have a José moratorium where my engineers say, “No new ideas for the next 60 days, please’.’’
Carmen Busquets, the Venezuelan investor who backed Net-a-Porter, had been badgering Neves to take her money for years before he finally said yes. What she liked as much as his commercial vision was his temperament. “He’s always over-budget, but he never has excuses – only solutions. You see that with great entrepreneurs. It’s a kind of inner strength. He doesn’t have a turmoil of voices inside his head. He’s stubborn – no, stubborn isn’t the right word. He’s disciplined.”
Does he ever worry that success will make him all save-the-world-y, the way some Silicon Valley types can become? He doesn’t think so. “I sit on panels all the time with these guys who are saving the world,” says Neves. “I say, “Listen, guys, all I’m doing is shipping stilettos from Capri to Shanghai, so if you don’t want me here than just kick me out because it’s going to be the most frivolous conversation ever.”
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