Conde Nast announced their investment today in FarFetch and Jose Neves, Europe's Uber entrepreneur again deserves the plaudits.
As the first venture investor into the company this is a great time to revisit the origional investment thesis, and why I sponsored the deal through the Investment Committee at Advent.
And a core plank of that thesis was simply that ecommerce and media are converging (the rest of the thesis is here). That theory is coming home to roost in the shape of this investment from a content powerhouse Conde Nast.
Why do retailers need content?
1) Don't keep acquiring customers. Retain them. At the time of the investment ASOS had just announced it had the third highest circulating fashion magazine in the UK. Asos and all "non utility" etailer still produce masses of content. Hell, Fab.com is basically a daily magazine.
Why? Simply because photos, interviews, breaking fashion news keeps people coming back. In the world of ecommerce this is driving walk on traffic. And walk on traffic is not paid for traffic.
2) "Sit back" shopping experiences are happening more and more. It's not just because of tablets, but also just simply that folk are more comfortable with consuming online (big trends still matter for the mass market). These are the more enablers for Natalie Massanet to dream of reading a magazne and clicking on the dresses she wants to buy.
Why do publishers need ecommerce?
1) CPMs are turning into CPAs. As advertisers get more and more used to performance or targeted advertising, it follows that media companies need to give their advertisers proof. Getting closer and closer to the transaction is one such way. Online afilliates have been doing this for years, but curated market places such as FarFetch, Botticca , Curio Road , Fab.com offers a more beautiful and thoughtful environment for monetization. FarFetch gives a publisher visability of the transaction and allows them to truly value their pages of content.
2) The web allows you to be smart about ecommerce. And for media companies "smart" means not having to touch inventory, fulfillment, customer services etc. Curated marketplaces like FarFetch are the closest you can get to ecommerce without having to own a warehouse, employ pickers and packers and constantly neogiate suppliers payment terms. FarFetch gives a publisher as much exposure to ecommerce as most of them ever want.
So, when you have loyal customer bases coming back. When your customers use your photos and news to drive purchases with their heart ("I love that"), not their heads ("cheap and delivered quickly"). And when you have a platform that is enabling designers and shops to thrive in the face of pile em high sell em cheap etail. Then, you have something that looks like it can compete with the biggest .
In venture investing we like to think that every investment thesis has an internal logic and stacks up on all the fronts. Many fail, and sometimes that it is because the thesis is wrong; or right but wrong timing; or right but executed badly. What is looking frightening about FarFetch is that it's starting to come together...