Luxury platform Farfetch welcomes two strategically important shareholders: Alibaba and Richemont together invest 1.1 billion dollar in the company. It is a first step towards consolidation in the online luxury industry.
Competitors
Designer marketplace Farfetch, the number two in the e-commerce market for luxury goods, enters into a strategic partnership with both Richemont and Alibaba. Together they want to further digitalise and consolidate the luxury sector. To achieve this, Alibaba and Richemont are jointly investing 1.1 billion dollars in the platform.
In concrete terms, all eyes are on China: 600 million dollar will go to bonds issued by Farfetch Limited, but Alibaba and the fashion platform are also setting up a new joint venture, Farfetch China. Richemont is also investing in this: in total, Alibaba and Richemont will acquire 25% of the Chinese joint venture.
The cooperation is striking, because Chinese Alibaba rivals Tencent and JD have already been shareholders in Farfetch for some time. Moreover, the luxury market place is a direct competitor of both players: Richemont subsidiary Yoox Net-a-Porter is number one in online luxury sales, followed by Farfetch and then Alibaba itself.
Together top three
The top three are therefore now playing together under one roof, which, according to the German magazine Handelszeitung, is likely to lead to further consolidation. Especially now that the Chinese, the most important luxury customers in the world, cannot travel around the world, it is important to be present on the local market, both online and offline.
In practice, Farfetch will be integrated into Alibaba’s luxury shopping channels, in particular Tmall Luxury Pavilion, Luxury Soho and Tmall Global. This will give the platform access to more than 757 million Chinese consumers and also to new, mostly smaller, luxury brands that are already selling through Alibaba. Later, the Yoox Net-a-Porter webshop will also be added to the Tmall Luxury Pavilion.
