LONDON – Online luxury fashion retailer Farfetch has raised close to $400 million (£315.5 million) from one of China’s biggest e-commerce companies.
Farfetch announced on Thursday that online Chinese mall JD.com has invested $397 million (£313 million) in the company, making JD.com one of Farfetch’s largest shareholders. The pair have also signed a “strategic partnership” that will help Farfetch crack China.
London-headquartered Farfetch is an e-commerce platform that pulls together luxury boutiques from around the world, letting the global elite virtually shop at over 700 shops in locations such as London, New York, and Paris.
The company is already active in China but says in a release that the JD.com partnership will help “drive further brand awareness, traffic and sales for Farfetch in the market.” Farfetch highlights JD.com’s logistical expertise in China, where it offers same-day delivery, as a particularly powerful boost.
José Neves, founder and CEO of Farfetch, says in a statement: “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.”
The investment more than doubles Farfetch’s total equity capital. The company had raised just over $300 million across six funding rounds prior to this investment.
For JD.com, the deal helps it push further into the luxury market. The company is a little like Amazon in China but is better known for consumer electronics and mid-market clothing than luxury, something it is trying to change.
Richard Liu, chairman and CEO of JD.com, says in a statement: “As part of our major luxury push, we could not have found a stronger online partner than Farfetch. We have always believed that the long-term trend of Chinese e-commerce is towards quality over price and this partnership with Farfetch further extends our lead in the battle for the future of China’s upwardly mobile consumers.”
Liu is joining Farfetch’s board as part of the deal.
Founded in 2008, Farfetch’s most recent public accounts show it lost £28.6 million on revenues of £87.1 million in 2015. The company was valued at $1.5 billion (£1.1 billion) in a funding round last year, making it one of Britain’s few “unicorns” – private companies worth over $1 billion. Valuation is not disclosed in the JD.com deal.
JD.com, founded in 1998, had revenues of $11.6 billion (£9.1 billion) in the final quarter of 2016. The Beijing-headquartered company is listed on New York’s Nasdaq stock exchange, where it has a market capitalisation of $57.6 billion (£45.4 billion).