Luxury fashion retailer Farfetch has entered into a strategic partnership with multinational technology company Alibaba Group and luxury goods holding company Richemont.
As part of this partnership, Alibaba and Richemont will invest $300m each in Farfetch through private convertible notes.
Go deeper with GlobalData
Additionally, the two companies will invest $250m each to acquire a 25% stake in the joint venture, which involves Farfetch’s China marketplace operations.
Alibaba Group chairman and CEO Daniel Zhang said: “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 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.”
Following the deal, Farfetch will be selling its products to Alibaba’s 757 million consumers.
Meanwhile, Alibaba is also planning to launch Farfetch shopping channels on its e-commerce sites Tmall Luxury Pavilion and Luxury Soho.
The investments, as well as the establishment of the joint venture, are subject to the satisfaction of closing conditions and should conclude in the first half of next year.
In a separate development, Artemis acquires Farfetch’s Class A ordinary shares for $50m to increase its existing investment.
Last month, Alibaba Group acquired a controlling stake in Chinese supermarket and hypermarket operator Sun Art Retail Group.
