Luxury retailer Farfetch is trialling an online flagship store on Alibaba’s Tmall, following the shutdown of its store on JD.com on December 31, Chinese media outlet Dianshang Zaixian reported on Wednesday. The move is part of a deal the company signed in November with Alibaba and Richemont, the owner of the Maisons brand.
Both companies agreed to invest USD 300 million each in convertible notes issued by Farfetch, and also to inject USD 250 million each in Farfetch China, taking a combined 25% stake in a new joint venture that will include Farfetch’s marketplace operations in the country.
In return, Farfetch committed to launch shopping channels on Alibaba’s Tmall Luxury Pavilion, Luxury Soho, as well as Tmall Global, hoping to “expand the reach of Farfetch’s global luxury platform to Alibaba’s 757 million consumers,” according to the company’s press release.
The Chinese luxury goods market is expected to grow 48% in 2020, reaching nearly RMB 346 billion (USD 53.6 billion), consulting firm Bain & Company said in a report it released together with Tmall in December. A drop in global travel caused by COVID-19-related lockdowns prompted Chinese consumers to turn to domestic channels for luxury purchases.
Farfetch claims to be the No. 1 global online luxury fashion platform with more than 1,200 sellers and 2.5 million active consumers at the end of June 2020. Its gross merchandise value reached USD 2.1 billion in 2019.
Farfetch was building its China business with the help of JD.com. The e-commerce giant invested USD 397 million in 2017, and Farfetch launched its first external store on JD.com.
JD will remain a shareholder in Farfetch, even though the partnership was terminated, according to a Reuters report.
Farfetch also counts Tencent among its backers, which agreed to purchase USD 125 million of the company’s convertible notes in January last year.