Farfetch links with JD.com, gets massive investment from Chinese giant

By

Sandra Halliday

Published
Jun 22, 2017

It seems that Farfetch is rarely out of the news these days. Fresh from last week’s coup that saw it linking with Condé Nast, came news on Thursday that Chinese e-commerce mega-giant JD.com has made a major investment in the firm. JD is also partnering with the London-based luxury e-tailer in a strategic tie-up that aims to “create the premier platform for luxury e-commerce across China, opening a gateway to an $80bn market.”

This really is a big deal with China seen as the future big hope for luxury sector growth and JD being one of the biggest names in that market.

The partnership leverages JD's logistics, internet finance and technology capabilities and social media resources, including its WeChat partnership, with Farfetch's powerful position in global luxury, the aim being “to create a frictionless and seamless brand experience.”

Not that Farfetch is unknown in China at present. It already has well-established operations there. But the companies said that JD will “help drive further brand awareness, traffic and sales for” it in the country.

THE DETAILS

As part of this deal, JD will become one of Farfetch’s biggest shareholders, investing $397 million, and Richard Liu, JD’s founder and CEO, will join the Farfetch board, entering an increasingly crowded boardroom that also opened the door to Condé Nast’s Jonathan Newhouse last week.

JD and Farfetch will partner on marketing, logistics and technology solutions to build the brand in China, while Farfetch will continue to be the customer-facing brand.

So what benefits does JD bring apart from a cash infusion and its Chinese expertise? It said that “leveraging JD Luxury Express, [its] recently launched white glove service, Farfetch will be able to offer customers a premium level of service.”

And for Chinese consumers, the blend of the London firm’s luxury expertise, and JD's “blazing same-day delivery speeds and highly professional service, will provide an unparalleled luxury proposition.”

The Farfetch partner brands that have a local retail presence “will also have access to world-class omnichannel capabilities, including click & collect and in-store returns, connecting the brands' physical retail stores in China to consumers.”

A key feature Chinese shoppers will be able to use is JD Finance, including JD Pay and Baitiao, its consumer microcredit channel.

Marketing and data-mining get a look-in too. The link-up will include leveraging BlackDragon, a digital marketing technology platform that will enable Farfetch to “activate the vast resources of JD's treasure trove of big data and help it market and build automated marketing pipelines to spur Farfetch's name recognition and market position in China.”

JD FASHION GROWTH

JD said this latest move comes as it places a greater focus on “high-end luxury and fashion to match the huge demand” being seen among increasingly affluent Chinese shoppers. The Chinese giant has increasingly looked at international growth as its next step and sees fashion, particularly luxury fashion, as a market ripe for exploitation.

Over the last two years, it has hosted fashion shows in New York, Milan, and London, as well as Beijing and Shanghai, and this year it named Winston Cheng as president of international to lead its non-Chinese business development with global partners and overseas investments. It also separated JD Fashion into a new unit under the e-commerce business with Xia Ding as the president, “giving the vertical greater priority.”

And during this year, JD Fashion has made a major push in the luxury and fashion areas, launching several key international brands on the site, including Armani, Swarovski and Zenith.

Chairman and CEO Richard Liu said: ”We have always believed that the long-term trend of Chinese e-commerce is toward quality over price and this partnership with Farfetch further extends our lead in the battle for the future of China's upwardly mobile consumers."

Farfetch chief José Neves added: ”China is the world's second largest luxury market, and we are delighted to have such a respected partner, known for its strict protection of IP, with whom to address Chinese luxury consumers. This partnership addresses the market's challenges by combining the Farfetch brand and curation with the scale and influence of the foremost Chinese e-commerce giant.”