Farfetch, Alibaba Group and Richemont have formed a global partnership to promote luxury e-commerce with a focus on the lucrative China market.
Alibaba is launching Farfetch luxury shopping channels on Tmall Luxury Pavilion and Luxury Soho, and will invest in a new joint venture, Farfetch China, as well as in Farfetch Limited.
Richemont, the luxury maison whose brands include Cartier and Van Cleef & Arpels, Montblanc and the YOOX NET-A-PORTER GROUP, is also investing in both of these Farfetch ventures.
Farfetch is an e-commerce marketplace for luxury boutiques; it works with over 1,300 brands, boutiques and department stores in over 190 countries.
The new partnership extends Farfetch’s reach to 757 million Alibaba customers, offering luxury brands greater access to Chinese consumers and the chance to significantly increase their brand awareness.
It was announced as “leveraging each company’s respective expertise and extensive reach … (to) bring luxury retail to the next generation by seamlessly integrating the digital and physical realms”.
The arrangement will see Alibaba and Richemont each invest $300 million in Farfetch Limited and $250 million in Farfetch China, taking a combined 25% stake in a new joint venture that will include Farfetch’s marketplace operations in the China region.
Separately, Artemis, the controlling shareholder of the luxury Kering Group, has agreed to invest a further $50 million in Farfetch. The Kering stable includes Gucci, Saint Laurent and Alexander McQueen.
Farfetch and Alibaba Group have also agreed to form a new initiative called “Luxury New Retail”, using both companies’ technologies to better serve luxury businesses with solutions including apps and websites, online-offline retail technology and easy access to Farfetch and Tmall Luxury Pavilion.
A steering group has been established to guide the initiative as it promotes further digitization of the global luxury retail sector. Richemont Chairman Johann Rupert and Artemis Chairman François-Henri Pinault will join Farfetch and Alibaba on the steering group.
“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,” Pinault said in a statement.