Lessons on marketplace growth from Fartech | Melissa Marks, Co-Founder of Elfin

‍Narrator (00:00) Welcome to Well Delivered by Flowspace, the podcast unpacking real insight for building and scaling modern supply chains. Today, we're sitting down with the woman who helped build Farfetch from the ground up, and we're getting into the messy truth about marketplaces, brand power struggles, and how she built a retail brand without spending a dime on ads.

Ben Eachus (00:23) Good afternoon. My name is Ben Eachus. I'm the co-founder and CEO of Flowspace, and you are listening to Well Delivered. Joining us in the studio, we have the legendary Melissa Marks. Melissa started as an account manager at Farfetch, later grew to Head of Business Development at Farfetch, which was a massive luxury marketplace that ultimately went public. Melissa is now at Shein and is also the co-founder of a kids' brand and retailer called Elfin. So welcome to the studio, Mel.

Melissa Marks (00:56) Thanks, Ben. Thanks for having me.

Ben Eachus (00:58) All right. Well, Mel, I want to hear a little about your journey. How did you end up at Farfetch? What did you study in school? How'd you get there?

Melissa Marks (01:09) In college, I was a little lost. I wanted to be a psychologist — I didn't really know my path. I just started to have a genuine interest in fashion, and I knew that if I did anything in the fashion space, it would make me happy and fulfilled, and I didn't care about how much money I'd make or what I was doing. So straight out of college, I got a job in customer service working for a brand — I was a payment collector, basically, nothing exciting. I was there for about six years, then followed the founder of that company to a new brand. I got a lot of experience working for one company over a pretty long period of time.

I think I just outgrew it and was looking for something else. I was still in my mid-20s when I came across Farfetch, which at the time was not a well-known company at all — they didn't even have a presence in the US. Most people don't know they were a joint venture with Revolve, which is a massive retailer. I had two interviews, it was super casual, and they basically hired me on the spot. I'd never shopped at the site — I couldn't afford it at the time — I didn't even really know what it was, I'd never heard of any of the stores they worked with, and I didn't understand the business model. This was before "marketplace" was even a term. We didn't use that word.

I was there for about nine years, working my way up. I started as one of the really early employees, then moved from e-commerce into physical retail at Westfield, doing marketing and retailer strategy there in the midst of COVID — which was really difficult, working for a mall/brick-and-mortar business. From there I consulted for a little while, started my own business, and ended up at Shein. So I've always been in the fashion and retail space.

Ben Eachus (03:19) That's awesome. Take us back to the early version of Farfetch — it started as a Portuguese company too, maybe a lot of people know that. You were one of the first employees in the US. What was their business model? Tell the listeners what that's about.

Melissa Marks (03:37) The tagline — I'll just say the tagline, because again, "marketplace" wasn't a term yet — our value prop, our mission statement, was "shop the world's best boutiques." That's really the business model in a nutshell. We were taking physical retailers that, if you can think back that far, didn't have Shopify yet — a lot of these plug-and-play, easy e-commerce platforms didn't exist, so these stores had no way to develop any kind of global or e-commerce presence.

It launched in Europe right out of the recession, so all these stores were thinking, "I need to survive, I need my business to continue." Farfetch came along at the right time to help save these stores — we'll put your products online and give you a global audience. When I started in the US, we had maybe 20 stores we were working with. Very small stores.

Ben Eachus (04:40) One of the things that's struck me talking to you over the years is the technology element to it. At the time these stores had no way to advertise their products to a worldwide audience — how important was the tech in helping them?

Melissa Marks (04:58) The tech was all proprietary, because there were no existing platforms to build on. Where Farfetch really excelled — the loophole they found — was being early into Google advertising, SEO, and keyword search. A lot of the business, still today, is driven by Google and keyword search, not necessarily paid media. At the time it was all luxury, so no luxury brands sold online — little to no competition. There were a couple of department stores getting into it, and Net-a-Porter, which was kind of the first luxury e-commerce retailer. But Farfetch found the niche of working with these stores and making their products searchable and purchasable when no one else was doing it, or had even thought of it.

Ben Eachus (05:54) That's super interesting. Given your experience with an early marketplace, and now working for another one — what are some attributes of the brands or boutiques that succeed on these marketplaces?

Melissa Marks (06:09) For somewhere like Farfetch, which sells mostly luxury product, the majority of supply comes from Europe — and European supply has a real price advantage in luxury. Think about the price you'd pay here in the US at your local store for an item versus the price if you're traveling abroad, in Paris, London, Milan — significantly lower. That enabled these stores to sell to a US audience, because the US is the biggest customer base — that's been consistent across most marketplaces and companies I've worked at. We're just the largest consumer of goods in general. That was the advantage. And in Europe, a lot of these stores had a tremendous amount of inventory and volume to move through, so as their momentum built, they could invest more in inventory, and the momentum grew from there.

Ben Eachus (07:24) That's awesome. You're in the middle of hypergrowth here — this company barely has a US presence and it's growing tremendously toward an IPO a couple years later. What starts to break in a marketplace at that scale? Is it operations? The quality of the boutiques? Counterfeits?

Melissa Marks (07:50) In luxury, you're at the mercy of the brands — they control everything: distribution, pricing, image, styling. When you run a marketplace, the retailer, and especially the brand, can feel like they've lost control — of their image, or of us putting something on sale, which the brand might not like. Over time we really had to balance wanting to be competitive and wanting to be the biggest e-commerce player in luxury, while keeping brands happy — because a brand could tell one of our stores, "If you sell on Farfetch, we'll pull our distribution from you," and a store isn't going to risk that if it's 50% of their business. It was a fine balance working with brands, which started more as an educational tour — for a couple of years we were in Paris or New York meeting with brands every season, not as a buyer but as an educator on marketplaces: how can we work better together, can you give us samples so we can style them? We photographed all of our own product — no stock photography — and styled one boutique's products with another's so it felt unique and had this cross-brand effect.

We really had to play nice with brands once we got bigger and more vulnerable to their leverage — working with them on pricing, on markdown schedules, all of it. Once we hit that point, things got more difficult — we'd have a brand say, in a given month, "pull everything off or we'll never work with you." Eventually we started working directly with some brands, using them as their own drop-shippers — which, in turn, affects your relationship with the boutiques, because now your "shop the world's best boutiques" tagline is evolving into a different value proposition.

That was probably the bigger challenge. Operationally, there are always challenges shipping cross-border — duties, tariffs, customer service, returns — that was probably our largest team, though I wasn't as involved there. From the commercial side, it was mostly about managing relationships on the supply side.

Ben Eachus (10:38)Super interesting. I want to shift gears — you're working at a massive marketplace, with boutiques, and then you decide to start your own brand, Elfin, a kids' clothing brand. My kids have some of the products. One thing that struck me: you made the decision early on to go into physical retail, to have your own storefront. Why? Walk me through that, because that's a unique move when you're just starting out.

Melissa Marks (11:17) I know it's cliché, but retail is in my blood — it is. My dad owned a sporting goods store I worked at in high school. I saw the grind, the physical side of it, interacting with customers — my whole family worked there, it was one of the most fun experiences, we still talk about it today. I saw the benefit of supporting small businesses, and it fulfilled me. That's part of what drew me to Farfetch initially too — before I really knew much about the company, that tagline struck me, because I'd meet with store owners and see the business we gave them. We were 20-40% of their overall business — we were helping them keep their doors open. You'd have a natural disaster — I remember Hurricane Sandy, when New York stores were closed for weeks — and Farfetch kept their rent and overhead covered. That was fulfilling to me.

The decision to go into my own retail business was very organic. I was on maternity leave, had just had a kid — I'd always worked, always been busy, and for the first time I had a lot of time. A friend and I would go to the park together — we weren't even that close at the time — she was super creative, and I knew I could handle the business side: the backend, operations, helping build the website. My husband was involved, her husband was in real estate — it all kind of worked out. We never intended to go into physical retail. This was 2019 — e-commerce was starting to boom, and there wasn't much competition yet in the kids' space. We were positioned at a mid-tier price point — accessible, but on the higher end — and felt we had a good niche, especially in the area we live, where people spend on their kids' clothes, birthday parties, that kind of thing.

We landed a pop-up space just to do something around the holidays, planning to be there three months. Then COVID hit, and we got lucky — we were able to stay longer than intended. We were there six years, and we actually just sold it two months ago.

Ben Eachus (13:57) Congratulations.

Melissa Marks (13:58) It's under new ownership — I'm super excited for her. She's in a very similar place to where my partner and I were when we started: very excited, two young kids. My partner and I had personally outgrown it and wanted to move into other things — we'd gotten a little stagnant. But it's under great new ownership, she's continuing the same brand and store, extended the lease, kept the same website, all of it.

Ben Eachus (14:26) That's awesome. Mel, being early into e-commerce — you mentioned that when Farfetch started, there weren't a lot of off-the-shelf tools. But ten years later, starting your own company, Shopify existed, there are tons of tools built for DTC and fashion brands now. Was it much easier than you thought, in terms of the operational stack?

Melissa Marks (14:57)Yeah, much easier. I didn't have much Shopify experience before my own business — at Farfetch, some stores were starting to launch Shopify stores, but Farfetch had to do such an intense integration with them; it wasn't like today, where it's a two-minute integration with some middleware platform. I remember telling my husband, "I need you to enter the products in, I don't know how to do that" — he's a bit savvier on the e-commerce side. But then I actually started playing around in the backend myself and thought, "Oh, this is so easy, anyone can do this." It was a lot easier than I expected. And as it's evolved, there's more interesting stuff, too — Shopify Collective, their own marketplace feature — we dabbled in that, selling other brands through our site, so we became a bit of a marketplace ourselves too. There are a lot of great tools now that didn't exist when Farfetch began. At the same time, it's also harder to incorporate new tools into a workflow when you already have a proprietary platform built.

Ben Eachus (16:28) What was the hardest part about starting a brand from scratch? No recognition, a competitive category in apparel — how did you cut through the noise?

Melissa Marks (16:42) That's where I really learned the value of a physical store — marketing is so expensive, and at that point we didn't have a budget for online marketing. We mostly just had Instagram, and we were telling our friends about it. We started at the end of 2019 — in November, early December, we had all this inventory just sitting in bins, and thought, how do we get people to actually see this in person? Let's make an event out of it. So we threw a little holiday pop-up at, at the time, my guest house — invited friends and family, merchandised it cute, brought in fixtures, had drinks and charcuterie boards. People brought their kids, let them play in the yard. It was a hit — people posted about it on Instagram. Pop-ups were big with brands at that time, so we found an affordable space in a good area, intended as temporary, not a house this time — a real commercial space.

We were open weekends only, and we'd throw events every weekend because we knew that would drive people in — a kids' jewelry-making class, hair tinsel and braiding, or we'd have another brand with an existing following come in and host a trunk show. We tried to work with companies that had a bigger audience than us but no physical space — we'd let them leverage our space in exchange for them driving traffic in, rather than charging them. We really leaned on partnering with other brands to grow our audience together.

Ben Eachus (19:31) Super interesting — it almost cuts against the trend of just dumping money into paid search. It might actually be more cost-effective to run activations and in-person events like that. Super cool. Last question: you're plugged into both fashion and technology through your experience — what trends are you seeing right now with tech in fashion, and what are you excited about?

Melissa Marks (20:03) Obviously everyone's talking about AI, and specifically in fashion — how do you use it without it feeling generic, like a ChatGPT "what should I wear to a wedding this weekend" kind of answer? How do you make it feel elevated, almost luxury? I'm consulting for a company right now, still early stages, where we're leveraging what we call "quiet AI" features to really personalize the experience — we think that'll be a leg up on the Farfetches of the world and other traditional e-commerce/marketplace platforms, especially in luxury. I'm excited about it — it's going really well, and there's a lot we can build into it while still keeping the experience feeling organic, personalized, and curated for the customer. That's probably the biggest, most obvious trend.

I also think platforms like Shopify, or companies like Flowspace, that take the pain points out of things like shipping and logistics — which are such a headache for brands and retailers — are hugely valuable. Working with someone like Flowspace alleviates a lot of that. And Shopify makes setup so accessible that the average person can launch a store, which levels the playing field for everybody. But then the next question becomes: how do you cut through the noise once you have a website? How do you generate demand? That's always going to be the biggest challenge — there's a ton of supply in the market now, and I don't think any marketplace or retailer, even the biggest in the world, has fully figured out how to generate demand and gain market share. That's always going to be the challenge. But yeah, to go back to your original question — AI is the most obvious piece of technology everyone's trying to understand, figure out, and leverage right now.

Ben Eachus (22:24) Awesome, well said. Thank you for joining, Melissa — I know you're very busy, I appreciate you taking the time to join us here on the Well Delivered podcast, and congratulations on all your success.

Melissa Marks (22:37) Thanks so much, Ben. Good to see you.

Ben Eachus (22:40) All right, see you.

Ben Eachus (22:41) Thanks for listening to Well Delivered and the operators who keep fulfillment moving. Follow for more episodes like this, and we'll be back next time.

‍