Deliveroo has been a major disruptor in the food delivery market and a similar model has started shaking up the online fashion marketplace. Much like Deliveroo and UberEATS, what makes these platforms unique is the lack of a centralised fulfilment centre, letting the brands manage their own inventory, whilst using the site's interface as a marketplace. Farfetch is the start-up that has dominated the spotlight in recent years. It acts as a liaison officer between brands and their customers, holding no stock but managing the orders and returns. Farfetch may not yet be profitable, but it has had significant investment and has recently partnered with JD.com, China’s second largest e-commerce company after Alibaba, who have put $397million into the brand.
Zalando has also just launched a new platform, Zalando Build, which will host start-ups that offer “personalisation and inspiration, focusing on content, sizing and styling”.
These platforms can seem like a win-win situation for the host and the brand, but is it as good as it sounds for brand?
- On the plus side, brands can utilise the reach of these platforms and retain control of their stock, rather than having to send it to the platform, for them to redistribute. It also gives brands a platform to trial the success of new products without committing to a full campaign
- However, does it affect a brands boutique and independent image if they are seen partnering with large companies? Are smaller brands able to build their own brand story via a platform? Could commission charged by the platforms outprice smaller boutiques start-ups?
Whilst Zalando and Farfetch are well-known names in this market, there are many other companies utilising a similar model. One is Lyst which has generated technology that creates a personal shopping experience for each user, while another is Spring which recently partnered with eBay.
We are likely to see more consolidation in this market as larger players snap up and partner with innovative brands, rather than attempt to compete in the traditional sense. However, the real test will be consumers' reaction to this consolidation, and the extent to which they wish to continue buying from the smaller boutiques which have chosen to partner with the larger corporates.