JD.com has invested $397m in Farfetch and announced a strategic deal which will see the two businesses partner on marketing, logistics and technology solutions to build the Farfetch brand in China.
The deal is part of a major luxury push by JD.com, which is China’s second largest ecommerce site after Alibaba.
The partnership offers a significant boost to JD.com’s luxury fashion credentials and provides Farfetch with access to the world’s second-largest luxury market.
Farfetch consumers will be able to leverage JD.com’s recently launched premium delivery service, JD Luxury Express, as well as payment service JD Pay and microcredit channel Baitiao.
Consumers will also be able to use click & collect services and in-store returns as part of a strategy to merge the online and offline experiences of the brand.
The two companies will integrate their services using BlackDragon, a digital marketing technology platform, which will enable Farfetch to access JD’s consumer data to create automated marketing campaigns.
While Farfetch already has well-established operations in China, partnering with 200 luxury brands and more than 500 multi-brand retailers, it still has a significant challenge to grow brand awareness in the market.
The $397m investment makes JD.com one of Farfetch’s largest shareholders and will see JD.com founder and CEO Richard Liu take a seat on the Farfetch board alongside Net-A-Porter founder Natalie Massanet and Condé Nast International chairman and CEO Jonathan Newhouse.
Liu said in a statement, "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."
José Neves, founder, co-chairman and CEO of Farfetch, said, "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.”
“This strategic partnership will provide brands a seamless, immediate access to the luxury consumer and Chinese luxury shoppers with access to the greatest selection of luxury in the omni-channel way of life they have already fully embraced," said Neves.
The announcement comes one week after JD.com revealed it made a record-breaking $17.6bn in sales during its annual 6.18 shopping festival.