Is it better for Farfetch to invest in faster shipping or offer more flexible return policies?

Introduction

The trade-off between investing in faster shipping or offering more flexible return policies is a critical decision for Farfetch's product strategy. Both options aim to enhance customer satisfaction and drive sales, but they have different implications for operations, costs, and user experience. I'll analyze this trade-off by examining the business context, user impact, technical feasibility, and potential outcomes to provide a strategic recommendation.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm thinking about Farfetch's current market position. Could you share our current market share and how it compares to our main competitors?

Why it matters: Helps understand the competitive landscape and urgency of improvements. Expected answer: Mid-tier market share with room for growth. Impact on approach: Would influence the aggressiveness of our strategy.

• Business Context: Based on our revenue model, I assume a significant portion comes from commission on sales. Is this correct, and what's our current return rate?

Why it matters: Helps balance the potential impact of faster shipping vs. flexible returns. Expected answer: Commission-based model with a moderate return rate. Impact on approach: Would help prioritize which option might have a larger revenue impact.

• User Impact: I'm thinking about our user segments. Can you tell me about our most valuable customer segment and their preferences?

Why it matters: Ensures we're focusing on the needs of our key users. Expected answer: High-value customers prioritize convenience and quality. Impact on approach: Would guide which option aligns better with key user needs.

• Technical: Considering our current infrastructure, how feasible would it be to implement faster shipping across all regions?

Why it matters: Assesses the technical challenges and potential timeline for implementation. Expected answer: Varied feasibility across regions due to logistics partnerships. Impact on approach: Would influence the scope and phasing of the faster shipping option.

• Resource: What's our current budget allocation for logistics improvements versus customer service enhancements?

Why it matters: Helps understand resource constraints and current priorities. Expected answer: Balanced allocation with slight preference towards logistics. Impact on approach: Would guide which option aligns better with current resource allocation.