Alibaba Group & Richemont Confirm $1.1B Investment In Farfetch

Update published on November 6, 2020:

Chinese e-commerce giant Alibaba Group and luxury goods company Richemont have confirmed earlier rumors and announced an investment in online retailer Farfetch. This global strategic partnership sees the launch of an initiative entitled New Luxury Retail, that offers fashion brands enhanced access to the China market and accelerates the digitization of the global luxury industry.

Final figures were significantly larger than earlier estimates: Alibaba Group and Richemont will each invest $300 million in Farfetch; both will also invest $250 million in Farfetch China, taking a combined 25% stake in a new joint venture which will include Farfetch’s marketplace operations in the China region. Additionally, fund management firm Artemis will increase its existing backing in Farfetch by a further $50 million.

The deal means Farfetch can now launch luxury shopping channels on Tmall Luxury Pavilion, Luxury Soho and cross-border marketplace Tmall Global.


Original article published on November 3, 2020:

What Happened: Online retailer Farfetch is reported to be in investment talks with Chinese e-commerce giant Alibaba. Though neither party has commented, the deal would team up the luxury digital marketplace for fashion and China’s largest e-tailer. Media outlet The Information floated a $300-million figure, and in the wake of this news, shares of the London-based company jumped by roughly 16 percent to $32.59. The two companies are also reported to be creating an undisclosed joint venture in China.

Reports also hinted that Richemont could invest in the platform as well. The luxury goods company has already teamed up with Alibaba in 2019, launching a joint venue on Tmall that featured 130 brands.

The Jing Take: Alibaba has more than 800 million monthly active users on its mobile retail platforms. Alibaba’s Tmall has raised its global luxury profile in recent years, particularly via its Tmall Luxury Pavillion platform. The pavilion is now three years old and has signed some of the industry’s most desirable houses by convincing them that e-commerce in China is safe. Meanwhile, Farfetch has fought to become one of the world’s most trusted sartorial marketplaces over the past 13 years. During COVID-19, its sales have soared, and the company’s rebrand tapped Chinese talents like photographer Leslie Zhang and actress Angelababy. The London-based platform has also elevated different fashion-world voices for its Chinese consumers through curated cultural events, including fashion investor Wendy Yu (similar events are also planned for Beijing, Chengdu, and Hong Kong).

Given Farfetch’s unique combination of fashion, culture, and innovative localization, this latest investment move by Alibaba Group is sure to further cement its and Tmall’s luxury credentials. Moreover, the move comes at a time when most Chinese consumers are stuck at home and are repatriating their spending. In addition, Alibaba regularly acquires platforms, systems, and initiatives in overseas markets meaning this latest deal is consistent with that approach. While this might ruffle some feathers at JD.com — Alibaba’s biggest rival that also owns shares in Farfetch — all in all, this is a win-win for all parties. And, the major takeaway remains the same: China plays a pivotal role for brands trying to stay afloat during COVID-19.

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

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