In this episode of Left Brain Thinking, host Chuck Jaffe interviews Janice Quek, senior analyst at Left Brain Investment Research, about Farfetch Limited (ticker FTCH), a luxury‑goods e‑commerce marketplace valued at roughly $19.3 billion. The conversation outlines why a luxury platform can be a high‑growth investment despite the sector’s reputation for maturity. Janice explains Farfetch’s tech‑first, digitally native marketplace model, its massive scale (1,300+ luxury sellers, 2.7 million active consumers), and the e‑concessions approach that lets brands retain control while minimizing Farfetch’s inventory risk. She highlights the broader luxury e‑commerce tailwinds—global e‑commerce growth >15 % annually, a $300 billion luxury market growing ~4 %—and the accelerating shift toward online sales, especially in China. The strategic $1.15 billion investment from Alibaba and Richemont to build Farfetch China is presented as a catalyst for brand onboarding and market penetration. Janice also details additional differentiators: a portfolio of emerging “New Guard” brands, brick‑and‑mortar stores enhanced with technology, and Solutions Services that drive digital transformation for luxury retailers. The analyst frames Farfetch as a long‑term play that aligns with Left Brain’s growth criteria (potential to double in 2‑3 years) while offering network‑effect‑driven competitive moats. The episode concludes with standard disclosures and promotional information for Left Brain Thinking.
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Welcome to Left Brain Thinking, where creative investment ideas meet logical analysis. That's the hallmark of Left Brain Investment Research, where the analysts are looking for growth companies with the potential to double in 2 to 3 years and high-yield bonds with the potential for dramatic price appreciation. Today we're talking with Janice Quek, senior analyst based in Singapore for Left Brain Investment Research, and we're doing it about a stock that has benefited from the coronavirus pandemic. Now, of course, everybody's been looking for the stocks that are poised to come out of the pandemic ahead of the game. But doing that while meeting Left Brain's rigorous growth criteria requires looking beyond the normal places. Janice Quek, welcome back to Left Brain Thinking.
Good morning, Chuck. It's great to be back on the show.
Good to have you back. And the story throughout the pandemic has been some of the explosive growth stories like a Zoom Technologies and getting to where you're going to have those companies that maybe their business cycle has gone faster. But what you've got for us today is a company that, well, it's benefiting, but it's not really benefiting in the places where everybody else has been looking, right?
Yes, Chuck. The name of the company that we're talking about today is Farfetch Limited. The ticker symbol is FTCH, and this is a company with a market cap of about $19.3 billion. Farfetch is an e-commerce marketplace platform for luxury goods. The company has customers from about 190 different countries, so it's very global. And as a marketplace platform, you know, brands and retailers can list their products on farfetch.com, the website, and it provides various platform solutions and tech services to these sellers, as well as customized platform build-outs for brick-and-mortar retailers. Farfetch also has other newer emerging business segments, luxury brands that it owns that it hopes will become well-known and popular brands in the future.
And this is not the standard coronavirus story because a platform for luxury goods, it seems like people have been simplifying and maybe going away from anything other than the occasional luxury. So why the luxury industry at this point?
That's a very good question. You know, when people think of the luxury industry, they generally do not think of high growth. And for left-brain investment research, we like high growth stocks. And a lot of those stocks we've been talking about this year has been technology stocks that are in the high growth sector. The luxury industry is a mature market that has been around for a while. It is, however, a very massive market. There was a study conducted by management consulting firm Bain and Company and the Italian Luxury Brands Committee, the Autogolf Foundation, which estimated that the luxury goods market was valued about €281 billion or about $300 billion, and it was growing about 4%. So when we, when we talk luxury industry, we don't usually think of high growth. But what makes investing in Farfetch different from investing in other businesses in the luxury industry is its business model. It's actually a tech company. We all know where retail is headed. It is going online. And while we're not saying that physical retail is no longer relevant, it still is actually, especially for the luxury sector. But e-commerce is definitely a growth area. And if we look at the numbers, e-commerce sales globally are projected to expand at rates of more than 15% each year until 2023. Farfetch business is well positioned to be part of that growth as an e-commerce platform. It is digitally native, which means that it started as an internet company, so it does not have the same sort of transition and adjustment issues as your traditional luxury brand retailers trying to pivot online. And as a marketplace platform, it does not limit itself to only selling specific brands and products. It can carry any brand as long as it deems that it fits its target consumer base and is on trend. And so this allows Farfetch to have a very broad and deep selection of products that is unparalleled by any single luxury retailer or platform today. And then it has been a major beneficiary of this growing demand in online shopping, and we believe this will continue for Farfetch and allow it to be able to capture that tremendously large market opportunity I was talking about earlier.
As you said there, luxury is still kind of a new place when it comes to online retailers. Anytime you've got anything new in the online world, well, you tend to get big proliferation of players in, and then you tend to get winnowing out. So is this take the ride and maybe see if it winds up being the winner or the company that gets taken out? Or is this more of a longer-term play? Because even though you guys are typically looking for fairly fast growth over a couple of years, there's so much long-term potential. In luxury online.
For Farfetch as a technology platform, it's really just at the early innings of the industry. The luxury sector has generally been slow to building their e-commerce capabilities, and part of that is because physical stores are still important in the retail experience. But we're seeing luxury brands stepping up their digital brand positioning strategies. And for a company like Farfetch, which has already established itself as a leading shopping destination for luxury goods. We believe that we'll see retailers and brands increase their use of the Farfetch platform to reach their customers as they try to sell online more. So to answer your question, we believe this is a long-term play and we're just getting started. There was this recent announcement that Alibaba and Richemont Group, another luxury brand company, will be investing $1.15 billion in Farfetch and helping the company to build up Farfetch China on the Alibaba platform, and that we think is likely going to accelerate brands joining the platform as they try to enter the Chinese market through Farfetch. The Chinese market is a growth market. There's the 1.2 billion people in China and their spending power is increasing very rapidly. Asia is the next phase of growth for the luxury industry, and we're going to see Farfetch benefit from this investment. So it is a long-term play.
The investment that you just talked about, the money coming from Alibaba for Farfetch China, that clearly would be something that makes Farfetch different from a lot of the other players trying to get into this space. Is there anything else that particularly makes Farfetch stand out as an opportunity among all the companies trying to get into this space?
I think that's an important question to answer, especially as we compare businesses and their outlooks beyond the pandemic, right? We'll see individual brands, they're also building out their own e-commerce capabilities. So what makes Farfetch really stand out from the competition? The company is competing with other luxury e-commerce platforms like Net-a-Porter and the online stores of these individual brands as they build those out. But we think that Farfetch has a number of competitive strengths that we believe will enable it to win market share in this landscape. For example, its scale, for one, is a competitive strength. Farfetch is the largest online platform for in-season luxury goods based on the number of brands it has on the platform and gross merchandise value of goods available. It has more than 1,300 luxury sellers today on its marketplace. There is no other store or platform that has been able to match that, and this large selection has attracted more than 2.7 million active consumers, and it is set up as a marketplace marketplace. So shoppers are able to browse through a very broad selection of items and compare across brands to get the look and product that they want. And this makes it a very convenient destination to shop for luxury goods. And out of this convenience and habit, they are likely to keep returning to the same place to find the products that they want. And combining these factors, then you have a stream of returning customers, 2.7 million of them. This has a very powerful network effect of attracting more sellers and sellers adding more products to the platform, which then in turn expands the customer base. So Farfetch is an early mover in the space. It has a well-established and trusted reputation as a luxury platform, and it's gaining significant traction with luxury consumers. And in fact, actually very large brands recognize the strength of the Farfetch platform. And as they built out their own e-commerce stores, they are at the same time listing on Farfetch. So it's not mutually exclusive. They need Farfetch. All the brands from the Kering Group that carry brands like Gucci and multiple brands from LVMH that carry Louis Vuitton, they are on Farfetch. And going back to the Richemont Group and Alibaba investment announcement I mentioned earlier, Some of these smaller brands that want to enter the Chinese market now see a very attractive entry point through Farfetch China. So Farfetch has the luxury industry and is able to capture a lot of this market opportunity. Another strength is that the company operates an e-concessions model. And what this means is that instead of purchasing items from brands and retailers to sell on its platform, Farfetch lets brands control and manage their own products, pricing, and supply chain, and instead focuses on the platform infrastructure. This makes it a less capital-intensive operation with much less inventory risk, and brands like it. They prefer it. And the final point is that really there are growth opportunities unique to Farfetch that gives it differentiation. So beyond the marketplace platform model that I mentioned earlier, the company has also a portfolio of contemporary up-and-coming luxury brands that he plans to develop into highly sought-after brands called New Guards. And he also has a line of brick-and-mortar stores which uses technology to enhance the retail experience. The Farfetch platform also has Solutions Services, which is another segment of his business, which drives digital transformation for the luxury industry. So to bring it all together, we think that Farfetch is winning the e-commerce game in the luxury sector, and there are unique opportunities that it has carved out for itself over time to really drive the growth of the business ahead. We think that makes it stand out from the rest of the competition in the luxury brand industry.
It's Farfetch, ticker symbol FTCH. Janice, thanks so much for joining me to talk about it.
It's good to be on the show, Chuck.
Left Brain Thinking is a joint production of Left Brain Investment Research and Money Life with Chuck Jaffe. These conversations are not personalized investment recommendations but are designed to engage your brain. Please do your diligence before making any financial transaction. I'm your host, Chuck Jaffe, and you can find my weekday show on your favorite podcast app, or you can check it out online at moneylifeshow.com. Thanks to my guest, Janice Quek, senior analyst at Left Brain Investment Research. She's based in Singapore, and you can learn more about her, the firm, and its analysis at leftbrainir.com. They're on Twitter @leftbrainir. Left Brain Thinking is available every Wednesday. Plan to put your left brain thinking cap on with us again next week. Until then, stay safe, everybody.
