London-based Farfetch, which unites various independent fashion boutiques, has announced a strategic partnership with China’s Alibaba Group and Swiss group Richemont to expand its footprint across China and accelerate the digitisation of the global luxury industry.
Farfetch raises about €929.9M in total
As part of the global partnership, Alibaba and Richemont will jointly invest $600M (approx €507.2M) – $300M each (approx €253.6M) – in private convertible notes issued by Farfetch Limited.
Furthermore, both Alibaba and Richemont will also invest $500M (approx €422.6M) in Farfetch China, owning a combined 25% stake in a new joint venture that will include Farfetch’s marketplace operations in the China region. Also, in the future, both the companies have an option to purchase a further combined 24% of Farfetch China after the third year of the joint venture’s formation.
The investments by Alibaba and Richemont in Farfetch China and the establishment of the joint venture are expected to be completed during the first half of the calendar year 2021.
Besides, Artemis has also agreed to increase its existing investment in Farfetch with a $50M (approx €42.2M) purchase of Farfetch’s Class A ordinary shares.
Artemis was founded in 1992 by French entrepreneur François Pinault. Artemis is the controlling shareholder of the global Luxury group Kering (Gucci, Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen, Brioni, Boucheron, Pomellato, Dodo, Qeelin, Ulysse Nardin, Girard-Perregaux, and Kering Eyewear).
Daniel Zhang, Chairman, and CEO of Alibaba Group says, “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 digitisation of the global luxury retail industry and transform the luxury shopping experience for consumers.”
Founded in 2007 by José Neves, and launched in 2008, Farfetch Limited is a platform for the luxury fashion industry. It began as an e-commerce marketplace for luxury boutiques around the world.
Currently, according to the company its marketplace connects customers in over 190 countries with items from more than 50 countries and over 1,300 brands, boutiques, and department stores, on its platform.
Additionally, Farfetch’s businesses include Farfetch Platform Solutions – which services enterprise clients with e-commerce and technology capabilities; Browns and Stadium Goods – which offer luxury products to consumers; and New Guards – a platform for the development of global fashion brands.
The company also invests in innovations such as its store of the future augmented retail solution as well as develops key technologies, business solutions, and services for the luxury fashion industry.
Farfetch to launch on Alibaba’s luxury platforms in China
The online fashion retailer will launch luxury shopping channels on Alibaba’s platforms, Tmall Luxury Pavilion and Luxury Soho, as well as Alibaba’s cross-border marketplace Tmall Global.
These new channels expand the reach of Farfetch’s global luxury platform 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 either through the Farfetch integration or through Net-a-Porter integration on Tmall Luxury Pavilion.
Acceleration of the digitisation in the luxury industry
With an aim to digitise the global luxury retail industry, Farfetch and Alibaba have launched a new initiative – Luxury New Retail (“LNR”). 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 industry leadership and expertise.
This solution 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.
Jose Neves, founder, Chairman, and CEO of Farfetch says, “This announcement is a major step in our mission to connect the curators, creators, and consumers of the luxury fashion industry. The $1.15B investment in Farfetch from Alibaba Group, Richemont, and Artemis is a strong validation of our position as the global platform for luxury.”
“The new initiatives with Alibaba Group and Richemont extend Farfetch’s strategy to power the digital transformation occurring across the luxury industry, which has been accelerated by the unprecedented challenges resulting from the COVID-19 pandemic. The Luxury New Retail initiative will explore ways we can help the wider industry move forward and thrive in the post-COVID world,” added Neves.
Goldman Sachs International acted as lead financial adviser and Allen & Company LLC acted as financial adviser to Farfetch.
Image credit: Farfetch