Clockwise from Top. Farfetch Links Up With Alibaba The big fashion world news this week was from China: leading luxury consignment website Farfetch is entering into a joint venture with Alibaba, China’s leading e-commerce site frequently billed as the “Amazon of China.” As part of the arrangement, Farfetch’s global inventory will be made available on Alibaba’s luxury TMall platform. This will give Farfetch better access to the world’s fastest growing luxury market, and significantly increase Alibaba’s luxury inventory available for sale in China. If this wasn’t already big news, there is more: as part of this arrangement, Richemont (owner of luxury brands like Cartier and Van Cleef & Arpels) and Kering (owner of luxury brands Gucci, Saint Laurent and Balenciaga, among others) will invest a combined $550M into Farfetch. This new arrangement raises a lot of questions. What is to come of Net-A-Porter (NAP), one of the world’s biggest luxury e-commerce sites and owned by Richemont? If I was on the NAP team, I would be pretty disappointed to see my ownership group investing so much money in a rival. It seems to show that Richemont is growing impatient with the losses piling up at NAP, and that it sees Farfetch (which as a consignee, owns little inventory) as the better luxury e-commerce bet going forward. Indeed, Farfetch has seen strong sales during COVID, while NAP has been losing money for years as it scaled. Secondly, Richemont and Kering are typically seen as rival luxury conglomerates, and yet they are both investing significant sums in Farfetch. Could this portend a combination in the future? Their businesses are quite complimentary (Richemont’s strength is in its “hard” luxury business in Cartier, while Kering’s strength is in ready-to-wear brands like Gucci and Saint Laurent). I would imagine Bernard Arnault, the head of rival luxury conglomerate LVMH, sees this as a shot across the bow. Above all, it certainly cements the idea that Europe’s luxury brands are focused on winning the battle for China and its growing affluence.
TT Vol. 27
TT Vol. 27
TT Vol. 27
Clockwise from Top. Farfetch Links Up With Alibaba The big fashion world news this week was from China: leading luxury consignment website Farfetch is entering into a joint venture with Alibaba, China’s leading e-commerce site frequently billed as the “Amazon of China.” As part of the arrangement, Farfetch’s global inventory will be made available on Alibaba’s luxury TMall platform. This will give Farfetch better access to the world’s fastest growing luxury market, and significantly increase Alibaba’s luxury inventory available for sale in China. If this wasn’t already big news, there is more: as part of this arrangement, Richemont (owner of luxury brands like Cartier and Van Cleef & Arpels) and Kering (owner of luxury brands Gucci, Saint Laurent and Balenciaga, among others) will invest a combined $550M into Farfetch. This new arrangement raises a lot of questions. What is to come of Net-A-Porter (NAP), one of the world’s biggest luxury e-commerce sites and owned by Richemont? If I was on the NAP team, I would be pretty disappointed to see my ownership group investing so much money in a rival. It seems to show that Richemont is growing impatient with the losses piling up at NAP, and that it sees Farfetch (which as a consignee, owns little inventory) as the better luxury e-commerce bet going forward. Indeed, Farfetch has seen strong sales during COVID, while NAP has been losing money for years as it scaled. Secondly, Richemont and Kering are typically seen as rival luxury conglomerates, and yet they are both investing significant sums in Farfetch. Could this portend a combination in the future? Their businesses are quite complimentary (Richemont’s strength is in its “hard” luxury business in Cartier, while Kering’s strength is in ready-to-wear brands like Gucci and Saint Laurent). I would imagine Bernard Arnault, the head of rival luxury conglomerate LVMH, sees this as a shot across the bow. Above all, it certainly cements the idea that Europe’s luxury brands are focused on winning the battle for China and its growing affluence.