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Farfetch and Alibaba Open Up About Their Mega-Deal with Richemont

Speaking on the $1.15 billion mega-deal between Farfetch, Alibaba and Richemont for the first time at VOICES 2020, José Neves and J. Michael Evans laid out their vision for the year ahead.
Alibaba, Farfetch and Richemont.
Alibaba, Farfetch and Richemont. BoF.

When it comes to the landmark deal between Farfetch, Alibaba and Richemont and the resulting Chinese joint venture announced November 5, one major luxury player, LVMH, is notably absent.

But speaking with Imran Amed at BoF’s VOICES 2020 summit on Thursday, Alibaba Group president J. Michael Evans said that the deal wasn’t about domination or exclusion. Rather, it suggests that digitising the global luxury market is simply too big a task for even the biggest e-tail giants to shoulder alone.

“This is open to everyone,” said Farfetch founder and chief executive José Neves during the duo’s first public joint conversation. “LVMH, medium, small brands, retailers and department stores.”

Yet Farfetch China, the joint venture between the three firms, will inadvertently unite luxury rivals Richemont and Kering: the latter’s owners, the Pinault family, have also upped their stake in Farfetch through their investment vehicle Artémis.

The deal has significantly altered the luxury e-commerce landscape, with some seeing it as a coronation of Farfetch as the leading online luxury marketplace; Yoox Net-a-Porter Group (YNAP) has seen both owner Richemont and Chinese partner Alibaba betting on its biggest competitor.

This is open to everyone. LVMH, medium, small brands, retailers and department stores.

Though it is the world’s largest luxury market and one of the fastest recovering economies from the pandemic, some wonder whether China is big enough for all these players to co-exist in light of the complex new dynamics emerging between them. Bain estimates that the luxury market is worth $52.21 billion and, as Evans pointed out, more of that spend will be repatriated as outbound travel stalls and 140 to 150 billion would-be jet-setters stay in the mainland. The expectation is that a greater share of that business will continue to shift online. Alibaba, which owns Tmall and e-commerce sub-platform Luxury Pavilion, has reaped the rewards of this digital acceleration so far and now serves over 800 million users — a number expected to grow as uptake grows in lower-tier cities.

These shifts will continue post-pandemic, Evans believes, thanks in part to a growing middle class in the mainland which is the only region globally to end 2020 on a high note, with its luxury market growing at 45 percent according to Bain.

But heading into the new year, opportunistic investments and consolidation (across not only China’s fashion industry, but also sectors like technology) mean competition is on the rise, as predicted in BoF and McKinsey’s State of Fashion 2021 report.

Even for giants like Alibaba, which still holds the lion’s share of the e-commerce market, complacency isn’t an option: tech firms like Tencent and Bytedance have made moves into luxury and social e-commerce and arch-rival JD.com has also seen sales boosted by the pandemic. The cutthroat luxury fashion space, already crowded with local upstarts like Secoo and foreign players like YNAP, will only become increasingly so.

By joining forces, Neves and Evans plan to create new tech solutions, like those falling under Alibaba’s ‘new retail’ umbrella, to “enable” and “accelerate” growth for some 3,500 brands in the market, both digitally and physically.

“We just need to remove all these completely fabricated ideas around online, offline, multi-brand... that’s not how the consumer thinks,” said Evans, advocating for brands and retailers to think with a more sophisticated omnichannel mindset — one that retailers in China have pushed for years and Alibaba founder Jack Ma helped pioneer.

“This is not fantasy, this is not future-gazing,” said Neves. “This is ready.”

Related Articles:

What the Farfetch-Alibaba-Richemont Mega-Deal Means for Luxury E-Commerce

How the Farfetch-Alibaba-Richemont Alliance Could Change the Game in the World’s Largest Luxury Market

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