In a landmark union of luxury digital titans, Farfetch, Alibaba Group and Richemont have unveiled a global strategic partnership to provide luxury brands with “enhanced access to the China market,” and to accelerate the digitization of the global luxury industry, the three companies said Thursday.
Leveraging each company’s respective expertise and extensive reach, the partners said they will bring luxury retail “to the next generation by seamlessly integrating the digital and physical realms.”
As part of the new partnership, Farfetch will launch 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.
The 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.
This will provide luxury labels with a unique opportunity to elevate their brand awareness, according to the partners, while also significantly expanding their addressable market of luxury consumers through their participation on Farfetch’s global marketplace.
For luxury consumers, this provides multiple ways to shop, either through the Farfetch integration, or through the already launched Net-a-porter integration on Tmall Luxury Pavilion, the new partners said.
As part of the global partnership, Alibaba and Richemont will invest $600 million, or $300 million each, in private convertible notes issued by Farfetch Limited. Alibaba and Richemont will also invest $500 million, or $250 million each, in Farfetch China, taking a combined 25 percent stake in a new joint venture that will include Farfetch’s marketplace operations in the China region.
In addition, Alibaba and Richemont have an option to purchase a further combined 24 percent of Farfetch China after the third year of the joint venture’s formation. Alibaba and Richemont will also explore additional opportunities to work closely with Farfetch to provide services to luxury brands.
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 calendar year 2021, subject to the satisfaction of closing conditions.
Separately, Artemis, an investment vehicle owned by the Pinault family that also owns Kering, has also agreed to increase its existing investment in Farfetch with a $50 million purchase of Farfetch’s Class A ordinary shares.