Neiman Marcus Group on Wednesday announced it has abandoned plans to use Farfetch’s e-commerce software to revamp the luxury department store’s online storefront and app. The luxury department store chain will also not join Farfetch’s marketplace.

Neiman Marcus Group first entered an agreement with Farfetch in 2022, when the luxury e-tailer invested $200 million in the department store chain. As part of that deal, Neiman Marcus was supposed to updated it own e-commerce experience to use Farfetch’s software, Farfetch Platform Solutions, which provides online shopping tools for companies like Harrods, Chanel and Thom Browne.

Farfetch will remain a minority investor in Neiman Marcus Group, as the department store chain continues investing its original capital injection into building its own e-commerce technology, according to a person familiar with the matter.

Farfetch did not respond to a request for comment.

The news comes a week after South Korean e-commerce giant Coupang completed its acquisition of Farfetch’s assets, including FPS, amid backlash from a group of investors.

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South Korea’s Coupang Completes Farfetch Acquisition

The Korean e-commerce giant on Wednesday announced it finalised its deal to control all of the London-based luxury e-tailer’s assets, which include its online marketplace and software platform.

China’s Alibaba Group Holding on Wednesday missed analysts’ estimates for third-quarter revenue, hurt by a weak retail environment and faltering economic recovery in the world’s second-largest economy.

US-listed shares of Alibaba fell 4 percent in early trading after the company flagged an increase of $25 billion to its share repurchase program through the end of March 2027.

Alibaba is under pressure as consumers in China, have been cutting spending, boosting rival lower-cost domestic e-commerce players such as PDD Holdings.

The group announced the split of its business into six units last March in a transition overseen by co-founders CEO Eddie Wu and Chairman Joe Tsai. Wu, group CEO since September, will directly oversee the domestic e-commerce arm.

“Our top priority is to reignite the growth of our core businesses, e-commerce and cloud computing,” Wu said on Wednesday.

Alibaba’s net income attributable to ordinary shareholders was 14.4 billion yuan ($2 billion) and net income was 10.7 billion yuan ($1.51 billion), a decrease of 77 percent primarily due to valuation changes from equity investments and impairments related to hypermarket operator Sun Art and online video streaming service Youku.

Taobao and Tmall Group revenue grew only 2 percent for the quarter, which includes year-end sales events such as Singles Day that have traditionally provided a boost for the online shopping sites.

Executives on a post-earnings call said there was early evidence of a recovery in Taobao and Tmall Group’s gross merchandise volume or GMV.

“Our strategy is focused on increasing purchasing frequency, if we do that we will achieve better GMV growth,” Wu said.

Rival PDD, which owns Pinduoduo and overseas-focused platform Temu, overtook Alibaba on Dec. 1 to become the most valuable Chinese e-commerce company after Morgan Stanley downgraded Alibaba on concerns over a slower turnaround in its cloud business and customer management revenue.

Alibaba scrapped plans to spin off its cloud business last year, citing uncertainties over US curbs on exports to China of chips used in artificial intelligence applications, in a big blow to its market value at the time.

This quarter, executives also seemed cool about the near-term potential of public offering prospects for its Cainiao logistics and its grocery business Freshippo, saying that these IPOs had always been subject to market conditions and conditions currently were not in a state to reflect the intrinsic value of these businesses. Last week, sources told Reuters that Alibaba was looking to sell a number of consumer sector assets, including Freshippo, which has been locked in a price war with Walmart’s membership chain Sam’s Club, leading both sides to cut prices on popular items.

A Freshippo spokesperson has denied the reports of a potential sale.

On a call with analysts following earnings, Alibaba chairman Joe Tsai said it “makes sense” to exit some of the traditional physical retail businesses on its balance sheet, “but it will take time due to challenging market conditions”.

Alibaba’s International Digital Commerce segment, which operates various retail and wholesale marketplaces including AliExpress and Alibaba, performed strongly, with AliExpress orders rising 60 percent on the year.

“There is huge potential for AIDC [Alibaba International Digital Commerce] to increase penetration in many markets,” said AIDC’s chief executive Jiang Fan on the call with analysts.

By Harshita Varghese, Savyata Mishra and Casey Hall; Editing by Himani Sarkar, Sriraj Kalluvila, Emelia Sithole-Matarise, Louise Heavens, Elaine Hardcastle

Learn more:

Alibaba Names New Commerce Division Heads in Internal Shuffle

Alibaba Group Holding Ltd. has appointed a cohort of younger executives to lead its e-commerce unit, as the once-dominant giant seeks to reinvigorate growth in the face of fierce competition.

From analysis of the global fashion and beauty industries to career and personal advice, BoF’s founder and CEO, Imran Amed, will be answering your questions on Sunday, February 18, 2024 during London Fashion Week.

As space is very limited, we are hosting a draw to ensure all interested BoF Professional members have a fair chance to attend. Attendees will be chosen at random and notified after the draw closes on Friday, February 9, 2024 at 15:00.

Not yet a BoF Professional member? Join now before submitting your entry to attend.

To enter, please use the email address linked to your BoF Professional account and apply here. Attendees will be chosen at random and notified after the draw closes on Friday, February 9, 2024 at 15:00.

When and where is the event?

This special Ask Me Anything with Imran Amed event will be hosted on Sunday, February 18, 2024 from 12:30 - 14:30 The House of KOKO in London.

I am a BoF Professional member, am I guaranteed a ticket?

As space is very limited, we are hosting a draw to ensure all interested members have a fair chance to attend. To enter please use the email address linked to your BoF Professional account. Attendees will be chosen at random and notified after the draw closes on Friday, February 9, 2024 at 15:00.

We will be hosting regular community events throughout 2024. If you would wish to be notified if we come to a city near you, please ensure your personal details are up-to-date and that you’ve opted in to News, Offers and Invites in your email subscriptions.

I am not a BoF Professional member, how can I attend?

BoF Professional membership offers unlimited access to agenda-setting news, analysis and advice, in-depth case studies, on-demand masterclasses and member-only digital events. Join now with our 30 day risk-free trial offer.

Once you are a BoF Professional member, you’ll have the chance to enter the draw for the opportunity to attend BoF community events, such as the one being held during London Fashion Week.

Can I bring a guest?

Due to the limited capacity, we are unable to accommodate additional guests.

What is The House of KOKO?

The House of KOKO is a new private members club situated backstage at London’s KOKO sprawling over four floors and sixteen spaces.

If you have any additional questions, please email us on professional@businessoffashion.com.

Chanel has won its dispute against resale company What Goes Around Comes Around, bringing to a close a six-year legal battle that touched on everything from trademarks to counterfeit products.

A New York jury agreed with Chanel on all four of its claims against the reseller, which include trademark infringement, the sale of counterfeit products and false advertising. The suit was filed under New York’s Lanham Act, which protects the owner of a trademark against the use of similar symbols or imagery that may result in consumer confusion.

Chanel will be awarded $4 million in statutory damages. The judge who presided over the trial that began last month will determine additional damages after both sides submit additional briefs.

The verdict could have far reaching implications for resellers.

At the core of Chanel’s complaint was What Goes Around Comes Around’s use of the luxury brand’s products in its advertising, a common marketing tactic in the secondhand market. The jury agreed with Chanel’s assertion that the reseller was in effect tricking consumers into thinking it had a formal relationship with the brand.

Chanel’s lawsuit also took issue with how WGACA promoted its products by guaranteeing “authenticity,” arguing only a trademark owner can make that claim. The jury’s decision Tuesday validated that claim, though it’s not binding in future cases.

“Other resellers from now on must be careful and disclose their process of authentication without claiming something is unambiguously authentic,” said Susan Scafidi, founder of the Fashion Law Institute.

“The biggest implication of the verdict is that resale has suddenly become a more dangerous business,” she added, “because even the best-intentioned resellers and authenticators can make a mistake from time to time.”

Still, the findings won’t be a “death sentence” for the secondary market, according to Zachary Briers, partner at Munger, Tolles & Olson.

“You can invest more in authentication and internal compliance to make sure you’re not crossing the line when it comes to marketing materials,” Briers told BoF in January, prior to the verdict.

In a statement shared with BoF via email, What Goes Around Comes Around chief executive and co-founder Seth Weisser said the case is not over until the court hears post-verdict motions.

“WGACA has always had a rigorous authentication process and has never in the history of the company sold a non-genuine or counterfeit product,” he said in the statement. " We continue to stand by our 100% authenticity guarantee.”

By day, Ari Merkle has a job in medical sales. But much of her free time is spent on the peer-to-peer fashion rental platform Pickle, where she has about 100 items listed.

Merkle will spend hours on nights and weekends answering questions from potential customers about sizing and fit. Thursday nights are for packing outfits to be given to her doorman, who receives a steady stream of renters every Friday. If a trendsetting celebrity like Hailey Bieber wears a piece similar to one she owns, she makes sure to upload photos of that to her closet too.

The money she’s making from renting out her closet could cover her New York City rent – if she weren’t ploughing her earnings into buying trending pieces in different colours and sometimes even different sizes (Mirror Palais and Buci are in high demand with Valentine’s Day around the corner, and of course, so is anything that screams “mob wife,” she says).

“At first. it was just a really fun hobby for me,” Merkle said. “And then it just started getting busier and busier.”

Pickle, which launched its peer-to-peer fashion marketplace in 2022, is among the newest in a wave of apps that allow people to rent out clothing they own. Other start-ups offering their spin on the “infinite closet” include By Rotation, Tulerie and Rotate Your Closet.

These companies are hoping to side-step the inventory headaches and high costs that have plagued Rent the Runway, which kicked off the clothing rental boom but has struggled to contain losses and increase sales since its 2021 initial public offering.

While peer-to-peer rental services are growing fast, they haven’t solved all of the category’s problems – ordinary consumers now have a window into fashion’s tight margins and the grind of keeping up with fast-moving trends. To succeed long-term, they will need to prove to power users like Merkle that the work they put into the app will eventually pay off. But by giving users a financial incentive to participate in the rental economy, Pickle and its rivals are betting they can expand the concept beyond its current niche status.

“Our whole goal is really to help people monetise an asset that previously had no potential for return on investment,” said Pickle chief executive Brian McMahon, who met co-founder Julia O’Mara while both were working at the investment firm Blackstone.

A Splintered Market

Pickle allows users to rent and rent out clothes anywhere in the US. However, customers are mostly concentrated around New York (this is partly because locals can pick up rentals directly rather than waiting for them to be shipped). Los Angeles is the company’s next target market. Similarly, By Rotation expanded to New York last summer, four years after launching in the UK and Europe.

Despite being a relative newcomer, Pickle has quickly gained traction, thanks in part to TikTok, where #ShopOnPickle appears on nearly two million videos. The platform has also attracted influencers like Remi Bader, Lauren Wolfe and Kit Keenan, the daughter of designer Cynthia Rowley (the elder Rowley also listed items from her new ski collection in January).

Pickle declined to disclose its sales. The company takes a 20 percent cut on transactions, and says it has over 70,000 items listed. The company raised $8 million in October from investors including Stubhub founder Jeff Fluhr, valuing it at $30 million. Pickle’s first physical store opened in December in New York’s West Village, where it hosts hundreds of items from its top rental closets that people can browse in person and take home immediately.

The company sees its strong social aspect as an asset; users can discuss trends and compare notes on the best way to manage their closets.

“[The user community] keeps me loyal,” Merkle said. “If you’re … investing all this time in one app you might as well just keep investing in that same app, right?”

Closet Complexities

The average Pickle closet has around 10 items listed, although heavy users might have a few hundred items for rent. Most pieces cost around $400 to $450 at regular retail; while the rental price is ultimately determined by each owner, the platform guides users to set it around 10 to 15 percent of the original price.

Many users are renting out items they originally purchased to wear themselves. They might make a little money, and their only expense is their time. But to really do volume, closet owners inevitably have to take on more inventory, offer discounts and add sizes. They essentially become retailers, with all the complexities that accompany that (plus the responsibility for cleaning and repairs, though Pickle charges wearers if a rental comes back damaged).

While this will help Pickle avoid some of Rent the Runway’s logistical issues, it remains to be seen whether purchasing new pieces just to rent out can work for users at scale.

Karin Dillie, who has held senior positions at resale firms Recurate and The RealReal, said that while the peer-to-peer rental model has worked well in hospitality with AirBnB, it will be harder to pull off in fashion.

“The price points are so different. [With Airbnb], it’s usually at least $150 a night and people tend to say two or three nights,” she said. “But with clothes ... the margins are tight.”

Running a successful fashion closet on Pickle does take some trial and error, according to Evelyn Pang.

The 25-year-old, who has a full-time job in marketing for a bank, grew up buying and selling clothes on Poshmark and Depop, and has cultivated a niche renting out what she describes as an elevated date night look. Some of the best-performing pieces in her closet have rented out more than 50 times, though she said she won’t buy anything she wouldn’t herself wear herself, in case an item falls flat with renters. She sticks to her size, but will buy extra colours if something is renting well.

“The tried-and-true for me are those like Rat & Boa silk maxi dresses. Those kill it,” she said.

However, the dresses can go out of style; a dress that initially rents for $80 might go for $40 after a dozen rentals. Wear and tear is a problem: Rat & Boa’s long dresses are designed to drag on the floor behind the wearer, and regularly come back with holes at the bottom, and once with the hem ripped off entirely.

“You get so excited about an item and you want to rent it out back-to-back to back immediately to make your money,” Pang said. “Then a damage like that can take an alterations person weeks to repair. I have a really good relationship with my local dry cleaner.”

Pickle and other peer-to-peer services say they can reduce the burden on their users by providing more data and community. The company’s “Owners’ Club,” provides trends information to the platform’s biggest users, and facilitates online discussions and in-person meetups. McMahon adds that they are also developing a function within the app so that closet owners can enter in the retail price, rental price, and the price they actually purchased the item for so they can track their profit and loss entirely on the app.

For Pang, the proceeds from her Pickle closet helped her afford a nicer apartment in New York, if not quite enough to cover her $4,000 monthly rent.

She’s also cultivated a closer relationship with her building staff. At the end of last year, she baked the building doormen cookies and gave an extra generous tip as thanks for helping her manage the flow of the many Pickle packages.

“I doubled [the amount] because they probably do so much more physically than anyone else in my building,” she said.