JD.com buys into Farfetch in $397 million bid to target China’s luxury shoppers

Just weeks after announcing it was going to do more to cater to China’s online luxury shoppers through premium delivery services, China’s number two e-commerce giant JD.com has formed a major alliance with the intent to boost traffic from affluent clients. JD.com has acquired a US$397 million stake in British luxury shopping site Farfetch in a partnership that leverages JD’s logistics and social media know-how alongside Farfetch’s global influence as a leading luxury e-tailer.

Farfetch already has a three-year running presence in China, connecting Chinese consumers with its network of more than 200 luxury brands and 500 multi-brand retailers. But China comprises only 10 percent of its global revenue despite China being the world’s second-largest luxury market, and the company has been busy raising funds for further expansion.

The new partnership puts JD.com’s CEO and founder Richard Liu in the seat of Farfetch’s board to provide assistance with marketing, logistics, and technology systems. These include a segue into JD.com’s partner Tencent’s WeChat platform, whose audience Farfetch already has some exposure to through WeChat fashion KOL Gogoboi’s We-boutique. In addition to this, Farfetch is expected to gain insight and access to JD.com’s Chinese online payment solutions, big data systems, and its positive reputation when it comes to fighting counterfeits.

Founder, Co-Chairman and CEO of Farfetch José Neves said in a press statement that he’s “delighted to have such a respected partner, known for its strict protection of IP, with whom to address Chinese luxury consumers.”

As the e-commerce company battles its number one rival in China, Alibaba, JD.com has been accelerating its efforts to cater to the demands of its affluent Chinese customers. Ensuring fake goods stay off its platform—a “cancerous” challenge Alibaba continues to face—is just one aspect of this. Earlier this year, JD.com created a separate business segment, JD Fashion, hosting international fashion shows and launching big-name brands like Armani, Swarovski, and Zenith on its platform as part of this initiative. More recently, JD introduced its “white glove” courier service to create a seamless offline experience that coincides with high-end online purchases.

Liu said in a press statement that the partnership with Farfetch is going to go far in aiding his company’s efforts to reach China’s upwardly mobile consumers. “We have always believed that the long-term trend of Chinese e-commerce is toward quality over price,” he said.