London-based Farfetch and China’s second largest eCommerce business JD.com announced a new partnership in order to boost luxury product sales in China and Asia. As part of the deal, JD.com will invest $397 million in Farfetch, become one of the largest shareholders in the company and JD.com’s founder Richard Liu will join the Farfetch Board of Directors.
According to a release, the strategic partnership “will create the premier platform for luxury e-commerce across China, opening a gateway to an $80 billion market,” as the two companies “will partner on marketing, logistics and technology solutions to build the brand in China, while Farfetch will continue to be the customer-facing brand.”
This instagram post from Farfetch’s non-executive co-chairman Dame Natalie Sara Massenet, DBE proves the importance of the announcement. Dame Natalie Sara Massenet, DBE is a fashion entrepreneur and former journalist, who founded the designer fashion portal Net-a-Porter. Since 2013, she has been chairman of the British Fashion Council.
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this is a big one! Farfetch has just agreed a brilliant strategic partnership with China's largest retailer JD.com. In addition to becoming one of our largest shareholders JD will partner on marketing, logistics and technology solutions to allow us to better serve the Chinese consumer and build our brand, while expanding the reach and success of the 700 brands and boutiques that are part of the Farfetch community. It's an other example of the inspiring collaborative ethos that drives Farfetch. #partnersinstyle #FarfetchForFashion #DeliveringluxurytoChina
The new partnership, will benefit all 700 brands and boutiques that are part of the Farfetch community by “enabling them to take advantage of the vast resources of this new gateway to China’s luxury market.”
China currently accounts for only 10 percent of Farfetch’s revenue, according to Cowen & Co, a financial services firm.
Farfetch will benefit from BlackDragon, that is JD.com’s programmatic marketing platforms and from JD’s various payment and financial channels such as JD Pay and Baitiao.
It is also expected that Farfetch will benefit from JD’s.com partnership with WeChat, the leading app in China, whose owner (Tencent) is also the leading shareholder in JD.com.
In 2016, Farfetch — a platform which connects consumers with a curated network of boutiques and brands — cleared $800 million in sales, generating an estimated $150 million in revenue. The company is not yet profitable.
In June 2017, Farfetch forged a partnership with Condé Nast, following the demise of the publisher’s e-commerce venture Style.com.
Farfetch has raised more than $350 million in venture funding. According to a recent report by Sky News, Farfetch is in the process of appointing bankers to manage a public listing in New York that could value the company at up to $5 billion.