Several weeks after Amazon’s first foray into the luxury market, Chinese e-commerce giant Alibaba is reportedly considering a strategic alliance with online retailer Farfetch. Founded in 2007, Farfetch has an extensive catalog of over 1,300 brands, making it a valuable asset for Alibaba. According to reports by The Information and Reuters, Alibaba is in discussions to invest $300 million in the Farfetch platform. Furthermore, talks are centered around the creation of a joint venture that could potentially involve Swiss luxury group Richemont, known for its online sales sites Net-a-Porter and Mr Porter, which already have partnerships with Alibaba. The existing agreements, including a $125 million fundraising round led by Chinese tech giant Tencent, are not expected to pose any obstacles to the potential alliance.
Coincidentally, investment company Eurazeo recently announced the sale of its Farfetch shares, which it had invested $20 million in back in 2016. The shares were sold for a total of €90.4 million, but the buyer has not been disclosed at this time.
If the partnership between Alibaba and Farfetch comes to fruition, it could have a significant impact on the luxury market. With the increasing reliance on digital tools due to social distancing measures, and projections of a 20% to 30% growth in the Chinese luxury market by the end of the year, this alliance could further accelerate the trend and reshape the luxury retail ecosystem. Alibaba already boasts an impressive 874 million active users each month across its platforms, making it a formidable force in the e-commerce landscape.
Links:
– The Information
– Reuters
