Why has the average order value for luxury handbags on Farfetch dropped 15% this month compared to last quarter?

Introduction

The recent 15% drop in average order value (AOV) for luxury handbags on Farfetch is a concerning trend that requires immediate attention. This analysis will systematically investigate potential root causes, generate data-driven hypotheses, and propose actionable solutions to address the issue.

Step 1

Clarifying Questions (3 minutes)

• Looking at the timing, I'm thinking there might be a seasonal effect. Has this drop coincided with any particular shopping season or event?

Why it matters: Seasonal trends can significantly impact luxury purchases. Expected answer: No significant seasonal events during this period. Impact on approach: If seasonal, we'd focus on year-over-year comparisons instead of quarter-to-quarter.

• Considering the specificity of the drop, I'm wondering about recent changes. Have there been any major updates to the product listing or checkout process in the last quarter?

Why it matters: Recent changes could directly impact user behavior and AOV. Expected answer: A new product recommendation algorithm was implemented. Impact on approach: We'd prioritize analyzing the effectiveness of the new algorithm.

• Given the focus on luxury handbags, I'm curious about inventory changes. Has there been any significant shift in the mix of brands or price points available on the platform?

Why it matters: Changes in available inventory could directly affect AOV. Expected answer: No major changes in brand mix, but some new lower-priced items were added. Impact on approach: We'd investigate the impact of these new items on overall AOV.

• Considering the competitive landscape, I'm wondering about market dynamics. Have there been any notable changes in competitor pricing or promotions for luxury handbags?

Why it matters: Competitive pressures could be driving customers to lower-priced options. Expected answer: A major competitor launched an aggressive discount campaign. Impact on approach: We'd analyze our pricing strategy and value proposition relative to competitors.