In many walks of life, platform companies do very well. It is perfectly possible to create a digital space that connects large numbers of buyers and sellers, and make a decent cut out of each transaction. See Uber, which now has a market value of more than $126bn. Or Airbnb, worth about $87bn.
Compare and contrast such success stories with Farfetch. The platform once hoped to be the “Uber of luxury”. At one time it was worth $24bn. It fetched very little in the end. A $500mn deal at the end of the year, with Korean etailer Coupang and Greenoaks Capital Partner, wiped out the equity entirely.
Farfetch’s unravelling points to a fundamental problem in creating a platform for luxury goods. Unlike the fragmented universe of drivers, rental accommodation, beauty products or food delivery, there are not many luxury brands that really matter.