• by Sarah Mahoney  @mahoney_sarah, February 15, 2024

While the ink is barely dry on Coupang's acquisition of online luxury retailer Farfetch, significant changes are already in motion.

Farfetch’s founder and CEO, José Neves, is out, as are other key executives. Bom Kim, the CEO of Coupang, will oversee Farfetch for the interim, with Neves continuing as a consultant to the company.

Coupang, the Korean ecommerce giant, finalized its rescue purchase of Farfetch last month, providing $500 million in capital so the London-based Farfetch can continue operations.

 “As we assessed key priorities and resources across the business, we made the difficult but necessary decision to reduce global headcount and redundant roles,” a Farfetch spokesperson tells Marketing Daily via email. “This decision secures the future of the business, and as a result, Farfetch can now operate from a position of strength and focus on what we do best: deliver exceptional experiences for brands, boutiques and customers.”

Women’s Wear Daily reports that more job cuts are expected over the next few days.

The nature of Farfetch’s business continues to change as luxury brands look for more profitable ways to sell their products online.

And Neiman Marcus, which first said it would team up with Farfetch in 2022, announced its Bergdorf Goodman banner will no longer use the Farfetch platform.

Kering also recently ended its contract with Farfetch. That means none of its brands, including Gucci, Saint Laurent, Bottega Veneta, and Balenciaga, can be sold on orders directly from the brands' warehouses. Richemont, which owns brands like Cartier and Van Cleef & Arpels, has also ended its contract with Farfetch.

While Farfetch’s woes are extreme, it hasn't been an easy time for other luxury platforms, including the RealReal, which sells used premium items. While the company is showing good progress on its turnaround plan and beating expectations, observers are skeptical about its long-term path to profitability.

Baird recently downgraded the company to neutral. And Sean Dunlop, an analyst who follows the RealReal for Morningstar, has reservations, especially as the company revamped its fee structure to focus more on consignment.

“We view the moves as an appropriate strategy but something of a pyrrhic victory,” he wrote in his note on the company’s most recent results. Spending cuts in marketing, research and development are “shoring up near-term results but likely positioning the firm poorly to carve out a durable competitive advantage in a quickly growing luxury resale space.”