Specialist
Former C-level executive at Yoox Net-A-Porter Group SpA
Agenda
- Long-term sustainability of Farfetch’s (NYSE: FTCH) business model, highlighting pricing strategy as a GMV driver
- Strength of brand relationships and trends in customer acquisition costs
- Farfetch’s path to profitability, including growth of services revenue
Questions
1.
What are your thoughts on the sustainability of the current model that Farfetch operates? Why do you think it could be challenged in the medium term?
2.
What is the current split for retailers vs brands for Farfetch in relation to GMV?
3.
How is the split for retailers vs brands likely to change in the medium term as Farfetch focuses more on its brands proposition?
4.
Why is Farfetch struggling to be profitable with a 20-25% take rate?
5.
Why can Farfetch not charge brands a 30% take rate, given the volume through its site and the pricing power it provides brands?
6.
Do you think brands are willing to pay a 30%-plus take rate if they can retain pricing? In the wholesale model the pricing would shift to the responsibility of the wholesaler.
7.
Recent results indicated an increase in demand generation expense and platform order contribution margin has declined. How will Farfetch reach profitability? What timeline should we expect and what challenges face the business?
8.
What is a sustainable demand generation expense level as a percentage of digital platform services revenue?
9.
Farfetch has been clear that it will not rely on discounting as it has historically. What is the value proposition of this business if it is less aggressive in pricing?
10.
You mentioned the threat of brands with a wide breadth of offering. To what extent do you think 24 Sèvres or Lyst poses a threat in the medium term to Farfetch?
11.
Given that Farfetch is moving away from discounting, and you believe the breadth of offering might not attract a customer, where will the growth come from?
12.
To what extent do you think the NGG [New Guards Group] acquisition and the growth in the services component of the business can drive profitability for the broader Farfetch group?
13.
Do you think the NGG acquisition is a sign that Farfetch has accepted it is unlikely that the third-party brands’ marketplace model will drive profitability? Therefore it has to seek additional channels?
14.
Do you think brands would be willing to pay for services offered by NGG and Farfetch?
15.
How do brands view services like the Black & White offering?
16.
How could Farfetch leverage the customer base to grow the Black & White offering further?
17.
What are the challenges to onboarding a brand onto the Black & White offering?
18.
How competitive is the Black & White offering to similar products available to brands?
19.
Do you think long term, it’s unlikely, or it’s likely that brands would be willing to partner with the Black & White offering, or is it more likely that they’ll try to operate their own D2C platform given its relative ease?
20.
To what extent do you think partnerships such as the Harrods partnership starting next year could potentially create some benefit at the profit level?
21.
Do you think the partnerships model is scalable? Could Farfetch partner with additional luxury department stores globally?
22.
Do you have a view on the potential profit contribution that could be expected from the Harrods partnership or future partnerships?
23.
What are your views on the Farfetch-JD tie-up in China? Do you think it could be a success and why?
