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Farfetch CMO: “Personalization is driving business and is what consumers expect”

Stephanie Horton, Farfetch CMO, sits with Hot Topics to discuss the shape of the online fashion landscape and how it is set to have personalization at its core.

Personalization will play an increasingly significant role in the future of fashion e-commerce, according to Stephanie Horton, Chief Marketing Officer of Farfetch, because “it’s the thing that’s driving business and it’s really what consumers expect”.

Horton was speaking to Hot Topics about the shape of the online fashion landscape and how it is set to change as online retail becomes less focused on “budgets and channel marketing” and more focused on customer marketing.

“We’ve finally hit a place where technology, data and creative can truly start to tell customer narratives and market to a user in a meaningful way,” she says.

Horton has a resumé steeped in fashion and retail, having worked at style bible Vogue in the US and at Amazon-owned fashion retailer Shopbop.

Nearly four years’ ago she joined Farfetch, today an online marketplace for more than 500 boutiques and standalone brands with offices in Europe, North America, South America and Asia.

“Our proposition in the past two years has really changed,” Horton says. “When [founder] José [Neves] launched the business in 2008 it really was a marketplace for boutiques to help them have presence online and gain a global audience. This was a direct reflection of the 2007/08 landscape where there was a huge recession and footfall was declining.”

Diversified services

Today, Farfetch is not just an online marketplace. The development in both scale and complexity of its own business model has helped it diversify its offering and advise other companies on their own e-commerce models.

Accordingly, it has launched a B2B division called Black & White, which has worked with brands including DKNY to help them build and improve their own websites, “using our backend technology” to power anything from online marketing to payment systems.

“We’ve also been working on another business unit called Store of the Future,” Horton adds, “which is looking at the customer journey within the store and how that can be more efficient, more effective using data to drive that process.

“So we’re not only the marketplace for brands and boutiques but we’re also helping them really strive towards the future and become more relevant in the space.”

Continuing growth is clearly high on Farfetch’s corporate agenda. In 2015 it acquired luxury London-based retailer Browns, while in 2016 it secured a Series F round of investment of $110m (giving the firm a market value of more than $1bn), using the cash to fund international expansion and native language sites in German, Korean and Spanish. Plans are also afoot to enter other markets (and languages), such as Japan and Australia.

The global nature of Farfetch is matched by the globetrotting habits of its target audience, with its sights aimed predominantly at the higher reaches of consumer demographics.

“Our average user is 36,” Horton says. “It’s men and women who know about and understand fashion. They’re looking for a wide selection, they are very global in nature, and I think a lot of our customers like the fact you can have these boutiques and brands around the world that you’re curating assortments for.”

While the core audience is high net worth individuals, Horton is quick to highlight the democratizing effect online has had on the world of fashion.

“Our offering is a luxury offering and it will stay that way,” Horton says. “The customer base has grown organically and while we have the high net worth spender, we also have people who may not have as much money but might want that one thing.

“There’s no stopgap at the door to the internet. Anyone can enter your site and I think that’s really broadened the approach of a lot of retailers because you need to be able to appeal equally.”

#TheOne

Accordingly, Farfetch has this month launched a marketing campaign centered around the slogan of #TheOne, referring to the one “fashion piece you’ll need this season”.

Farfetch’s marketing is largely online, but also covers events and more traditional forms of media.

A recent campaign saw the creation of custom emojis for iPhone-owning consumers, and another Apple tie-up used iTunes to power a “Sounds of the shoot” function on Farfetch’s app, allowing songs used at its photo shoots to accompany customers’ shopping experiences.

“We’re looking at the lifestyles of our clients and really being in those places and creating something that’s unique and organic,” Horton says.

“We’re really not that brand to put the Farfetch logo on something, stop-and-repeat and step back. We really look for unique opportunities that speak to our clients.”

Data usage

As a digital retailer, Farfetch’s use of data is obviously key to its dealings with customers. Trends play a leading role — “what have they bought in the past, how often do they buy, who their favorite designers are” while more sophisticated, granular data can also help combat one of the banes of online retail.

“The more specific and the more information you can provide, that minimizes returns,” Horton says. “So the more we get sizing right with data, the more we’re serving people around their needs and wants, which will result in fewer returns.”

Avoiding information overload

But the accrual of massive swathes of data comes with its challenges, she acknowledges. “One of the biggest things in Store of the Future is collecting data that matters,” she says. “There is so much out there and everyone is over-served.

“There’s only a minimum amount of information that people can take in over a day and we’re serving 20 times that amount. There’s so much available now that the first instinct is to push a notification out about it.”

The answer, she adds, is to be “selective and discerning and make sure you don’t overload the audience”, and instead “really connect with them on the things that matter that will affect conversion”.

Meanwhile, the use of data must be tempered with intuition, instinct and gut feel.

“Especially in the fashion space, you can use as much data as possible but if it’s a bad collection, it’s a bad collection,” Horton says. “Since what we’re selling, the product requires lots of intuition and thought.”

Pimped up product

For Farfetch, online marketplace personalization informs “all aspects” of the business, from marketing and customer service to product design.

The latter has led to the addition to the site of a platform called MYSWEAR (a collaboration with London footwear brand Swear) where consumers can customize their shoes and a partnership with Opening Ceremony that allows shoppers to have their sweaters emblazoned with their initials.

Even so, Horton says that while mass market brands such as Nike have introduced sophisticated customization tools, “you haven’t seen a lot of it in luxury”.

“I think you’ll see that sweeping across a lot more product categories,” she adds. “I think it will become a little more about the ability for customers to make things their own and give that option to give a product a little more of themselves and not just the designer’s point of view.”

Personalized service

Online marketplace personalization will also continue to influence Farfetch’s customer service, where consumers are greeted by name and given product recommendations based on their preferences.

“I think we’ll see that really expanding and becoming a lot more targeted so that you’re opening up your own page instead of shopping amongst a crowd,” Horton says.

But she stresses the need for balance to ensure that online marketplace personalization does not eliminate shoppers’ sense of discovery.

“People want one thing but nine times out of 10 they discover four other things and end up getting those too, so we don’t want to take that away,” she says.

Omni-channel

For Horton and Farfetch, the future of fashion e-commerce marries the disciplines of online and offline, rather than setting them at odds.

“I think that in everyone’s case they should be looking at it like that because the way the customer is evolving means it’s not about pushing one over the other,” she says.

“It’s about giving the customer the option to do it how they want to do it and when they want to do it. In general, not just for Farfetch, it’s really important that it’s not a competition and that it’s looked at as just another door, another channel that your customers are coming through.

Shiny new tech

Meanwhile, Horton is excited about the part evolving technology has to play in the future of e-commerce and online marketplace personalization, even if she’s a little wary of some of it, describing virtual reality (VR) as “probably one of the most overhyped trends of 2017”.

“I think there are a lot of VR — quote, unquote — activations going on at the moment but I’m not sure how scalable it is to really market to people,” she says.

Instead, Horton’s imagination is sparked by the potential of augmented reality, mixed reality and artificial intelligence (AI).

“With AI, I think voice-activated apps are probably in the near future,” she says. “You already have Siri on your phone, so I don’t see it far off when you’ll be able to say, ‘red sweater’ and somebody goes and finds you the red sweater.”

As AI becomes more convincing in its ability to speak to consumers without sounding like an algorithmic entity, it will play a big part in actual conversations between shoppers and brands, not least because dealing with customers one-to-one is “impossible at scale”.

Horton is adamant that the truly personalized online customer experience has hitherto eluded e-commerce players.

“The thing that’s missing [in ecommerce] has been the experience you have when you walk into a store — the ‘Hello Stephanie, how are you? You bought that coat last time, here are some others’.

“That part of it is harder to do and until recently I don’t think we’ve had really the data, the technology or the creative to really target in the same vein as walking into the store.

“But I think now we really do. So I think that will be the way forward.”