As online spending increases, luxury fashion marketplace Farfetch is planing to go public with an IPO. Farfetch says they are seeking to capitalize on consumers’ increasing demand for instant gratification.
Farfetch filed an IPO on the New York Stock Exchange in which their listing could value the e-commerce platform for as much as $5 billion. Within the proposed offering, Goldman Sachs, JPMorgan, Allen & Company and UBS Securities are listed as joint lead book-running managers. Farfetch is seeking the ticker symbol FTCH. Current investors include Condé Nast parent Advance Publications and China’s e-commerce giant JD.com.
The popularity of online shopping in the luxury market reflects the diminishing importance of physical stores to make purchases. For example, consumers who made a purchase through Farfetch within the last year rose 44 percent from 2016 to nearly 935,800 at the end of 2017. Since 2015, the number has more than doubled from 416,000. The entire value of products sold from the site rose to $910 million last year, an increase of 55 percent. Farfetch said in its IPO filing that the industry-wide online shares of the personal luxury goods market are predicted to rise 25 percent by 2025 and the entire market will see a 45 percent increase to $446 billion over the same period of time.
Another factor within the IPO was the importance of millennial consumers. In fact, the company mentioned “millennial” 13 times throughout their filing while defining the generation as “a person born in the years 1980 to 1994.” Farfetch said the online spending power of millennial and Generation Z consumers together represented about 85% of the growth in luxury fashion sales from just last year.
The two generations will represent 45 percent of total luxury spending by 2025. Currently those who were born between 1965 to 1979, known as Generation Xe, are the biggest luxury buyers, but with millennials and Generation Z, the Gen Xers will be down 5 percent within expected purchases.
In the filing, Farfetch mentioned partnerships with about 375 brands and 614 luxury retailers. The company also has boutiques in cities from Memphis to Atlanta. On Farfetch’s site, consumers can shop for a variety of legacy luxury brands including Tiffany, Burberry and Fendi alongside “new brands to know.”
“We are a technology company at our core,” Farfetch said. “We operate at the intersection of luxury fashion, online commerce and technology.” The company has “real-time inventory data, global behavioral and transactional data and pricing data for over 335,000 SKUs from more than 3,200 different brands” on its marketplace at the end of June.
One major demand from consumers is the desire for fast delivery. Farfetch promises to deliver select Gucci items in 90 minutes to customers within 10 global cities.