The Marketplace Model

A recent Vogue business article discussed how luxury fashion retailers, brands and analysts weigh the consequences of an industry shift towards online concessions and consignments — the marketplace model. 

We are used to dealing with marketplaces such as Amazon, Uber, or AirBnB but the model is now moving more heavily into fashion. Over the past couple of years, there have been far fewer traditional wholesale opportunities for emerging and start up brands as more retailers only considered brands who would offer product on a consignment basis.  

As the pandemic has bitten the fashion industry and major retailers so hard, more of them are moving into the marketplace model similar to FarFetch or Wolf and Badger. This can be a great way for a newer brand to get discovered, as they would be unable to match the SEO that these larger platforms invest in – leaving smaller brands often wallowing on page 10 of a google search. However, there are greater costs and risk for the brand as they have to pay to be on the sites and also produce a quantity of stock to have available for sale.  

Some fashion brands are also moving into being a marketplace themselves, offering other brands the opportunity to sell on their platforms, which can again offer a chance of great brand alignment and access to a shared customer basis.  

The marketplace model has challenges, but every start up brand has to have it on their agenda.