A Wren Says

If you are into luxury online shopping, you are likely aware of Farfetch. If that is not your jam, just know that it is an online retail platform that has been struggling a lot lately. And it only continues to get worse. With a history of recent financial struggles and lack of profit, it purchased by Coupang. A quick fix to the cash flow problem. However, is has created new problems, namely that it has led to other lucrative partnerships to fall through. Previously Richemont backed out of a deal to have Farfetch innovate their e-commerce platforms, and Neiman Marcus has followed suit. And now Kering, parent brand of luxury houses such as Gucci and Balenciaga, has pulled their brands from the site. So many problems.

Now, you may be completely uninterested, I mean after all, why should you care? I mean you don’t really need to, but this is an interesting case study. Part of what has prompted these fallouts was that the Coupang buyout would take Farfetch private and completely off the stock exchanges. That move meant that the previous deals, which hinged on providing shares in Farfetch in return, couldn’t move forward as planned. My pondering now is on what this means for strategy.

I wonder in agreeing to the terms of the deal with Coupang, if they were forthright with their partners that this was the direction they would be going, or more importantly, how they might update their deals to move forward. I wonder if they weighed the possibility of losing out on these deals, and even more, as a result of the buyout.  Granted this bail out from Coupang provided much needed cash. But was this short sighted? Did taking a quick $500 million keep them from even greater returns over the longer term of the deals that could have been?

Again, this is not something you should necessarily care about, but it is making me more mindful of how the things that can seem so useful so lucrative in the moment could be working against longer term success.