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Luxury E-Commerce: Crash or Correction?

In a little more than one year, luxury e-commerce stocks, from Farfetch to The RealReal, have plummeted from astronomical highs to trading at significant discounts to benchmark Amazon.
Farfetch.
In a little more than one year, luxury e-commerce stocks, from Farfetch to The RealReal, have plummeted from astronomical highs to trading at significant discounts to benchmark Amazon. (Shutterstock)
By
BoF PROFESSIONAL

Just a year ago, luxury dotcom valuations were flying high. Farfetch was trading on a forward sales multiple approaching 12.8x (a 266 percent premium to dotcom benchmark Amazon); venture capital money was flooding into the sector; and the demand for luxury dotcom IPOs remained unsatiated, as evidenced by the initial stock market performance of MyTheresa and The RealReal. But towards the end of 2021, the luxury dotcom pink cloud turned into a hail storm and now the sector’s key constituents are trading on average at a 50 percent discount to Amazon. What drove the boom and how to make sense of the current bust?

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Further Reading

Case Study | Inside Farfetch’s Bid to Dominate Luxury E-Commerce

During a blockbuster year for online sales, Farfetch surged ahead of rivals to position itself at the front of luxury’s e-commerce race. Can it spin the current momentum into sustainable — and profitable — growth and become the unrivalled platform for luxury fashion online?

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