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Don’t waste another dime on bloated channel reporting and vanity metrics.
Don’t waste another dime on bloated channel reporting and vanity metrics.
Platforms are offering services to brands to bolster digital, and add to offerings. Recent partnerships from Farfetch and thredUP show how.
(Illustration by The Current)
For all of the attention paid to direct-to-consumer businesses in recent years, it’s worth remembering that marketplaces are experts in ecommerce. As they build destinations for online shopping, their teams have honed customer experience and conversion tactics in the particular consumer categories where they work.
As brands seek to continue to evolve their offerings with technology advances and shifting consumer preferences, platforms are extending that ecommerce expertise by working directly with the brands to build and improve their digital offerings, rather than simply serving as a place for them to connect with consumers and sell goods. The marketplace is their product. They’re also providing services.
This week’s news brings a pair of examples of this move in the form of partnerships:
A partnership announced on Thursday brings together a fashion brand and ecommerce platform that are both reaching the luxury market.
Italian shoemaker Salvatore Ferragamo is deepening its work with Farfetch through the commercial agreement.
The agreement’s provisions include strengthening Salvatore Ferragamo’s presence on Farfetch’s marketplace. In turn, Ferragamo will tap Farfetch’s technology for its website and omnichannel offerings, as well as work with Farfetch’s media arm to create digital experiences.
The partnership helps to build a digital presence for Salvatore Ferragamo, which in recent months announced plans to double revenue over the next 4-5 years in part through more investment in marketing and communication and recently-hired creative director Maximilian Davis. The partnership with Farfetch is about more than adding ecommerce and digital marketing capabilities. It will also help Salvatore Ferragamo build experiences that reach an audience that is younger and more global, leaders said.
Ferragamo CEO Marco Gobbetti called Farfetch “the ideal partner to further boost Ferragamo’s omnichannel innovation, fuelling our plans to reach new, younger audiences and accelerate our growth.”
“Ferragamo has a wonderful heritage of creativity and craftsmanship and I am hugely excited about the opportunity to take it to a unique new audience globally,” said José Neves, Farfetch CEO, in a statement. “Ferragamo’s outstanding product and creativity, coupled with our marketing capabilities and innovative digital experiences will captivate that audience while our media and technology platform capabilities power Ferragamo’s digital ecosystem.”
The partnership underscores the opportunity in front of luxury brands. Luxury spending has remained stable despite inflation, with the latest data from the Saks Luxury Pulse showing that 76% of respondents planned to purchase the same amount of luxury items or more in the next three months.
At the same time, many luxury brands have been slower to adopt ecommerce, and they are also cool to collaboration. However, the pandemic ecommerce boom changed their thinking, leading to more partnerships between brands and platforms in particular. Farfetch offers tools to not only provide labels with a place to reach shoppers, but also to add ecommerce capabilities through their own channels. The Ferragamo deal isn’t the only one of its kind. Earlier this year, Farftech announced a $200 million investment in Neiman Marcus Group that will see the company’s technology, called Farfetch Platform Solutions, used by Neiman Marcus and Bergdorf Goodman.
Luxury shoppers are known to have high standards when it comes to products, but they also have distinct views on the shopping experience. At the same time, consumers’ expectations have changed with the rise of digital capabilities. Farfetch, which brings expertise that is distinctly of the luxury category, is aiming to help brands like Ferragamo meet them.
Tommy Hilfiger is adding resale. (Courtesy photo)
Sustainability is another area where consumer expectations are rising. A resale platform is helping a well-known apparel brand set up a program to add a new environmentally-friendly service.
PVH Corp.-owned Tommy Hilfiger is partnering with thredUP to introduce a resale program.
Through this initiative, customers will be able to access a prepaid shipping label through tommy.thredup.com, and send secondhand clothing to thredUP. The program will accept women’s and kid’s items from any brand, and men’s products from Tommy Hilfiger. If thredUP selects any of the women’s and kid’s items for resale on its platform or deems the men’s items eligible, customers can receive Tommy Hilfiger shopping credit that can be used both online and in-store.
“We’re excited to launch this program with thredUP, which helps us create more value out of our existing product and connect with our consumers in a new way,” said Esther Verburg, EVP of sustainable business and innovation for Tommy Hilfiger Global and PVH Europe, in a statement. “The U.S. market is packed with circular potential, and together with thredUP, we’re hoping to make a long-lasting difference.”
Through this partnership Tommy Hilfiger can bolster efforts to become a “fully circular” brand by 2030. thredUP brings the expertise in one area of circularity, which is extending the life of clothing by selling it again through the market. Through its “resale-as-a-service” program, thredUP is essentially whitelabeling its offering. Brands can offer their own experience to engage with customers, as well as credit to help them continue shopping with the brand.
It also extends circular programming beyond marketplaces, adding a way that brands can set up their own channels and allow shoppers to discover these options wherever they may be browsing.
Brands are seeking to sell on platforms, as well as through direct channels. These services allow the teams behind the marketplaces to be in both places. As Amazon has shown with logistics, advertising and its recently announced Buy with Prime, offering services can uncover new and perhaps unexpected ways to for platforms to expand their businesses, as well.
Microservices architecture allows the company to give retailers ownership over omnichannel software.
With the growth of digital commerce, providing consumer choice is at the center of all of a retailer’s operations.
In recent years, that became especially evident in the area of fulfillment.
Ecommerce made the process of moving an order into place for delivery a crucial function, as the ability to source products close to demand quickly was an imperative.
“Retailers are looking to own more of their fulfillment destiny because consumer expectations have increased,” Chap Achen, VP of product strategy and operations at Nextuple, told The Current on the floor of the NRF Big Show 2023. “Fulfillment is now a competitive weapon.”
As digital operations increasingly blend with the physical store, a host of new fulfillment options are coming online. They can have an item delivered from the store on the same day, or they pick it up. Even a wider offering such as in-store pickup has a host of different choices inside of it. Consumers can pick up an item at a counter, or a locker. They can stop by anytime, or schedule a pickup on Saturday.
While this optionality helps retailers meet customers where they are, it also adds complexity to the systems that run them, and requires operational adjustments to put them in place.
It means the software that powers fulfillment operations must also meet retailers where they are, Achen said. Many retailers have specific setups and processes. They may have a store located in a mall with a nearby distribution center, or a series of small storefronts. At the same time, retailers need to have flexibility with the software that they use so they can provide options to consumers.
For Nextuple, the vehicle to provide this is microservices, which describes a software architecture in which the parts of an application work independently, but are also built to work together. The company harnesses microservices to offer an ownership-centered approach to deploying its software through a product called Nextuple Fulfillment Studio.
“Today, there are only two ways to buy software: [software as a service] or custom building,” Achen said. “You can do it yourself or with a partner. We are a third option. We will help you accelerate your time to market because we've already developed 80% of your requirements, and then we'll give you that as source code.”
The software is composable. Retailers own the source code, and they can iterate. Along the way, they have the ability to swap out components of the software for pieces that enable them to better respond to the needs of customers, if they choose.
It shows how composable commerce is spreading throughout retail operations. A first wave of development applied the approach to the “front-end” of commerce, such as operating an ecommerce store and marketing. With fulfillment software such as Nextuple coming online, there are signs it is being applied to backend operations, as well.
In all, Nextuple offers 14 microservices as part of the Studio, including engines for same-day delivery, storage, inventory management and sourcing.
At the NRF Big Show, Nextuple announced that it is live with five national omnichannel retailers. Together, they have $50 billion in annual revenue and 7000 store locations.
The company is aiming to serve a group of retailers that are widely known, but still looking to hone operations for omnichannel retail. When it comes to fulfillment technology, the retail landscape has distinct tiers.
The largest players have built their own fulfillment tech to power logistics networks that reach across the country.
Name brand retailers with a national presence also want to offer competitive fulfillment, but haven’t made the move to acquire platforms or developed their own software in-house. Typically, they would seek out a software provider that offers a set platform on a subscription model. But the particular needs of commerce require software that powers physical operations with digital tools. That requires a different type of solution, Nextuple believes.
“We want to level the playing field,” Achen said. “We're helping the mid-tier [retailer] compete with Target, Amazon and Walmart.”