Farfetch is an online luxury fashion retail platform based out of London that unites various independent fashion boutiques. Recently, the online fashion retailer announced a strategic partnership with Alibaba Group and Richemont to expand its footprint across China as well as accelerate the digitisation of the global luxury industry.
Luxury shopping on Alibaba’s platforms
As a part of the collaboration, Farfetch will launch it’s luxury shopping channels on Alibaba’s platforms, Tmall Luxury Pavilion and Luxury Soho, China’s premier luxury and luxury outlet destination within the Tmall marketplace, as well as Alibaba’s cross-border marketplace Tmall Global.
According to the London-based online platform, this will expand Farfetch’s reach to Alibaba’s 757 million consumers, offering luxury brands a multi-brand solution through a single integration with Farfetch.
For luxury consumers, this provides multiple ways to shop for their favorite brands — Farfetch integration or NET-A-PORTER integration on Tmall Luxury Pavilion.
Alibaba, Richemont, and Artemis invest in Farfetch
Besides partnership, both Alibaba and Richemont will invest $600 million (approx £456.2 million) combined in private convertible notes issued by Farfetch Limited.
Daniel Zhang, Chairman, and CEO of Alibaba Group said: “This highly complementary partnership brings together some of the world’s leading luxury retail and technology platforms, representing another milestone in Alibaba’s strategy to meet the rapidly growing demand for luxury products in China. The Chinese luxury market – which is expected to account for half of the global luxury sales by 2025 – consists of hundreds of millions of young, digitally-native consumers. By partnering with Farfetch and expanding our existing relationship with Richemont, we will accelerate the digitization of the global luxury retail industry and transform the luxury shopping experience for consumers.”
Further, Alibaba and Richemont will also invest $500 million (approx £380.3 million) combined in Farfetch China, taking a combined 25% stake in a new joint venture that will include Farfetch’d marketplace operations in the China region.
It’s worth mentioning that Alibaba and Richemont have options to purchase a further combined 24% of Farfetch China after the third year of the joint venture’s formation.
Johann Rupert, Chairman of Richemont, said: “Building on our successful joint venture with Alibaba, these developments represent a further meaningful acceleration of our journey towards Luxury New Retail. This initiative brings together a powerful combination of highly complementary strengths – notably with our Maisons’ luxury retail expertise and YOOX NET-A-PORTER’s deep brand partnerships, expert curation, and exceptional customer care – that will help us deliver a seamless omnichannel experience to our discerning clientele.
On the other hand, Artemis has also agreed to increase its existing investment in Farfetch with a $50 million (approx £38 million) purchase of Farfetch’s Class A ordinary shares.
François-Henri Pinault, Chairman, Artemis, said: “The growth potential of luxury e-commerce has never been so promising, and the importance of China for the luxury industry is only becoming more obvious every day. Thanks to the vision of José Neves, Farfetch played an important role in improving the omnichannel experience for luxury customers in recent years. The investment by Artemis demonstrates our belief in the future of Farfetch and I am personally looking forward to exploring the future of luxury retail with this group of visionaries and experts.”
The investments and establishment of the joint venture are expected to be completed during the first half of the calendar year 2021, subject to the satisfaction of closing conditions.
José Neves, Farfetch Founder, Chairman, and CEO said: “This announcement is a major step in our mission to connect the curators, creators, and consumers of the luxury fashion industry. The $1.15 billion investment in Farfetch from Alibaba Group, Richemont, and Artemis is a strong validation of our position as the global platform for luxury.
On digitising the global luxury industry
To digitalise the global luxury industry, Farfetch and Alibaba have launched Luxury New Retail (“LNR”) initiative. This will serve both mono-brand and multi-brand distribution strategies for luxury brands, including fully-connected e-commerce websites and apps, omnichannel retail technology, and access to the Farfetch and Tmall Luxury Pavilion marketplaces via a single integration.
Farfetch and Alibaba have also formed a steering group to further enhance the LNR initiative, which is aimed at leading the digitization of the global luxury retail industry. Richemont Chairman, Johann Rupert, and Artemis Chairman, François-Henri Pinault, will join Farfetch and Alibaba on the LNR steering group as founding members, bringing their combined decades of industry leadership and expertise.