🤠Competitors

Futugo does not have any real competitors, because there is no such all-in-one solution.

We do not have competitors, because there aren’t created any multi-functional systems like the one that we are creating. Although, you may say that all our competitors are eshops, even Farfetch, the only service they offer is simple shopping. We offer a community, personal shoppers, stylists and we offer it in the Chinese language. Plus we offer art and cosmetics. Speaking about crypto projects we were unable to find any successful luxury fashion projects.

Competition in market.

It's thought the overall luxury e-commerce multi-brand business has struggled to turn a profit. Shipping and returns are costly, customer acquisition is notoriously high, and investments in IT is continual as expectations shift. Farfetch, founded in 2007, is still loss-making though it's targeting profitability by 2021; losses at Richemont’s online distributors, which include Yoox Net-a-Porter Group (YNAP) and Watchfinder, widened to €241 million in the year ended March 2020, its worst-performing division. Mytheresa is the outlier, profitable since it started. LVMH and Kering do not comment on profitability. Bernstein analyst Luca Solca says it’s reasonable to assume they are profitable.

Many e-commerce solutions, such as Yoox, 24s.com, My Theresa offer online shopping, but we cannot compare them to us because they use both - online and physical stores, which leads them into losing money. Buying the newest collections and physical store maintenance requires a lot of resources, which is why they are gaining less profit.

The one competitor that sells only online is Farfetch. Although their balance shows they are a loss-making project (it is because of the enormous investments that they gained), their average customer costs them ~$100 and spends there about ~$4K.² Despite such an enormous revenue, they are drifting away from their original goal, which we explain more in the Farfetch case chapter.

Futugo competitors analysis

The tie-up represents a major shakeup in China’s e-commerce ecosystem and an unlikely realignment in luxury alliances. Farfetch has long been linked to Alibaba’s chief e-commerce competitors, Tencent and JD.com (also one of the company’s largest shareholders). Meanwhile, Richemont owns Farfetch rival Yoox Net-a-Porter, which runs its China business via a joint venture between Richemont and Alibaba.

To be sure, big luxury groups and brands are starting to develop these tools on their own without Farfetch’s involvement: Kering has been touting the many virtues of its Luce app for sales associates, developed with help from Apple, while in December 2020, LVMH named a new “head of omnichannel” and said it wants to accelerate progress on developing and rolling out shared tech tools across the group.

A potential combination of Farfetch and Richemont’s YNAP is currently the hottest subject of speculation, since the Swiss group invested $500 million in Farfetch in November. YNAP’s Net-a-Porter site maintains loyal clients, brand awareness and a knack for creating stimulating content online — all areas where Farfetch has lagged behind. But off-price division Yoox.com is contending with a serious backlog of old inventories, and its white-label unit that operates e-commerce for luxury brands behind the scenes has lost key clients in recent years, including luxury outerwear maker Moncler and Kering’s Saint Laurent and Balenciaga brands. A strategic partnership between Farfetch, with its growing B2B division and more flexible back-end, and Net-a-Porter, with its strong brand identity, “would be an ideal way out for all parties concerned”.

Yoox Net-a-Porter, the largest of the wholesalers, was created in 2015 after a merger between Yoox and Net-a-Porter.

But since Alibaba's launch of Luxury Pavilion in August last year, 60 luxury brands have joined the platform, including Burberry, Versace, Marni, Tod’s, Giuseppe Zanotti, TAG Heuer, Guerlain, and Givenchy. JD.com’s Toplife, meanwhile, currently works with 30 luxury brands, including Alexander McQueen, Oscar De La Renta, Escada, Derek Lam, Tods, La Perla, Armani and newcomer Balenciaga, which joined the platform in 2018 July.

It’s also historically been dominated by two powerful players: Tmall-parent Alibaba and JD.com. Last year, the event netted Alibaba 268.4 billion yuan ($38.3 billion) in gross merchandise volume, or GMV, which measures the value of goods sold on the platform. Meanwhile, JD.com generated sales of 204.4 billion yuan ($29.2 billion). Smaller players like group-buying upstart Pinduoduo, social commerce darling Xiaohongshu, live streaming app Mogujie and speciality luxury e-commerce platform Secoo also jostle for a share of consumers spending with Singles’ Day promotions. But they don’t come close to matching Alibaba or JD.com for scale, and so far they haven’t gained much traction with international brands.

Chinese consumers were already accounting for 35 percent of consumption and the majority of growth in the luxury market in 2019, according to Bain, although much of that spending took place abroad. Thanks to reduced international travel, the repatriation of Chinese spending has accelerated. Farfetch estimates that China’s domestic luxury market alone is now a $70 billion opportunity.¹ It means, not even looking into our China market and even FF was not targeting China, on its own it was doing 35% alone.

“While Luxury Pavilion is an evolution of Tmall and is displayed as a category within the platform, Toplife has been built and conceived as a standalone luxury application, helping to build the image of a more premium and exclusive destination. To create a sense of exclusivity, Luxury Pavilion relies on a Tmall scoring system to invite users on the platform [but] the anchor with Tmall platform ensures brands to access a huge amount of traffic and data.”

In other words, Luxury Pavilion opened as an “app-within-an-app” accessible via Alibaba’s Taobao and Tmall apps (Alibaba’s China retail marketplaces reported 617 million monthly active mobile users for the quarter ending March 2018). Toplife, on the other hand, is a completely separate app from the mainstream JD.com platform (which had 292.5 million active customer accounts as of March).

While the biggest groups like LVMH and Kering have said they prefer to create in-house technologies, hundreds of brands in the fragmented sector remain outside their control. Digital has become their top priority, and few of them can do it on their own.

Yet going it alone is also increasingly untenable. LVMH Moët Hennessy Louis Vuitton, the largest luxury group in the world, has publicly rejected the idea of working with Amazon, but even its proprietary solution — the wholesale platform 24 Sèvres, created in 2017, with an exclusive arrangement with Dior and Céline — has not gotten meaningful traction with consumers, and it continues to lose money. (The group also made a multimillion-dollar investment in Lyst in 2018.)

In 2021 Louis Vuitton joins JD.com, and expands their online reach in China.

JD.com will begin to share its 471.9 million annual active customer accounts with Louis Vuitton from Thursday midnight Beijing time, by redirecting ‘LV’ search results on the JD.com app to Louis Vuitton’s official WeChat mini-program.

Considering that even such exclusive brands like LV are step by step expanding in China, makes us believe that other brands see the value of entering China market as well.

"The term ‘platform’ is intoxicating at first blush, but at second, it’s a license to spend tens of billions of dollars before you see any return,” Mr. Galloway, the New York University professor, said. This quote by the NY Times. It perfectly describes the project – even such brands alone cannot do more than the platform, which connects everyone. A lone soldier on the field is not a warrior.