The End of Style.com: Condé Nast Inks New Partnership with Farfetch
BoF has learned that Condé Nast will refocus its e-commerce strategy via a new partnership with Farfetch. Style.com will cease operations, effective immediately.
LONDON, United Kingdom — Less than a year after Condé Nast relaunched Style.com as a fashion e-commerce site, the company is closing the business and forging a new strategic partnership with Farfetch. Style.com will discontinue operations, effective immediately, and the site’s URL will redirect to Farfetch.com. Farfetch has acquired Style.com's trademark, intellectual property and customer database.
“As an early investor in Farfetch, this partnership is the next step in our evolving business relationship. It further unites two leaders in their respective sectors, combining best-in-class content with the world’s leading online luxury shopping destination,” said Jonathan Newhouse, chairman and chief executive of Condé Nast International, who is joining the board of Farfetch. “I would like to take this opportunity to thank the entire Style.com team for their dedication, energy and commitment.”
The terms of the deal were not disclosed and the fate of Style.com’s 75 employees — including the company’s president Franck Zayan and fashion director Yasmin Sewell — could not be learned, though it is expected that most of them will lose their jobs. Some will have the opportunity to interview for open positions at Farfetch.
''As an early investor in Farfetch, this partnership is the next step in our evolving business relationship.''
Condé Nast had planned to invest $100 million in the new Style.com over the first four years of the venture and today’s news reflects a major reversal for the media giant, which has been trying to create new revenue streams in response to declining print advertising sales. Style.com employed a marketplace model, providing a platform for brands and shoppers to connect, without taking on the risk and expense of buying inventory. But the company has faced serious challenges and industry observers have questioned both its underlying business model and execution, noting the number of major brands missing from the platform.
Condé Nast’s new e-commerce strategy seems to underscore the challenges legacy media players face in building technology companies from scratch. By partnering with Farfetch, a leader in e-commerce and technology, Condé Nast appears to be embracing a new approach by which the company is able to focus on its core competency in content, while selectively investing in and forging partnerships with e-commerce companies.
The publishing powerhouse was an early investor in Farfetch — as well as Moda Operandi, Rent The Runway and Vestiaire Collective — leading at $20 million in investment in Farfetch in 2013, and participating in subsequent funding rounds as Farfetch went on to raise more than $300 million. The new partnership with Farfetch, a platform which connects consumers with a curated network of boutiques and brands, is the first sign that the company’s strategic investments in tech companies are paying off.
Condé Nast says it continues to believe in Style.com’s fundamental vision to integrate content and commerce, harvesting the purchase intent generated by the publisher’s hundreds of style-focused media titles with a seamless path between inspiration and transaction. The partnership with Farfetch aims to seamlessly connect Condé Nast’s digital and social media content with products from boutiques and brands on the Farfetch platform.
''We have long felt that inspirational content is a natural part of any luxury shopping experience.''
“We have long felt that inspirational content is a natural part of any luxury shopping experience,” Jose Neves, founder and chief executive of Farfetch told BoF in an interview. “It’s a progression of the same strategy; a strategy that aims to connect the best content in the world with the best commerce in the world. We see ourselves as a platform company. We connect people. We have the curators and the creators of fashion. Now we’re connecting the creators of content. We’re not a magazine. We’re a technology platform and our aim is to connect the best people in this industry.”
Style.com aimed to target the entire global audience of Condé Nast’s media brands, a potential customer base of over 300 million people, with shoppable content. But operationalising this across the company’s entire editorial portfolio — which is fragmented by brand and geography and not collected together in one platform — has not been easy. This is precisely the kind of problem that Farfetch could help to solve.
Unlike the second coming of Style.com, which debuted in the UK after several delays and was never launched in the US, Condé Nast’s new partnership with Farfetch will begin Stateside with the American editions of Vogue and GQ. “I’ve always believed that what sets Condé Nast apart is our voice and our vision. Partnering with Farfetch only enhances that and brings a new dimension to all that we offer the world,” said Anna Wintour, editor of American Vogue and artistic director of Condé Nast.
Meanwhile, rumours continue to circulate that Farfetch is preparing for an IPO as soon as this year. According to a report by Sky News that appeared over the weekend, the fashion platform is currently in the process of appointing bankers to manage a listing that could value the company at up to $5 billion. Neves has acknowledged that a public offering is the logical next step for the company, but has been reticent to lay out a specific timetable. “We don’t have any timing,” he said. “But it is the next financial milestone for the business, that’s for sure. It’s the best way for a business to get liquidity for their investors because at the end of the day if you have investors you need to find the liquidity for them, and keep the fantastic team we have.”
Farfetch surpassed gross sales of $800 million in 2016, up 60 percent from 2015, with estimated annual revenues in the region of $150 million. (Farfetch takes between 20 and 25 percent commission from its brand and boutique partners). The company is still losing money, but its core marketplace product “delivered significant underlying profitability” in the fourth quarter of the 2016 fiscal year, according to Neves.
Updated 10:45am GMT on 13 June, 2017:
Jonathan Newhouse, chairman and chief executive of Condé Nast International, delivered the following internal statement to Style.com staff:
“Three and a half years ago Condé Nast started Style.com with the aim of creating a worldwide e-commerce business. Some of you have been here from the beginning, and some of you joined along the way. Everyone has worked very hard and produced an enterprise which is remarkable in many ways. Style.com has attracted some 300 brands while operating in a very tough, competitive marketplace. There is a great deal to be proud of.
It must be remembered, however, that Style.com was a new business in a new kind of industry which did not even exist 20 years ago. Sadly, the results of the business have fallen very far short of where we hoped they would be. Accordingly, we at Condé Nast have evaluated the future of Style.com and decided to make the strategic decision to cease all business operations and to sell certain assets of Style.com to one of the leading business players, Farfetch, with whom our parent company Advance already has an association. Among other things, Farfetch will purchase the Style.com trademark, the inventory of merchandise and customer database and absorb it into its ongoing business. Condé Nast will also have an ongoing business collaboration with Farfetch.
These decisions were taken only after all other alternatives were explored. It has been a painful decision to make, and I know it is painful for all of you. You worked with tremendous dedication, energy and commitment to make a great product. But in the end it was not enough to achieve the success we hoped to make."