Alibaba invests in Farfetch to conquer the online luxury market

The luxury online retail market might represent a strategic asset for online shopping titans like Amazon and Alibaba. At the same time, however, luxury customers are unwilling to buy their high fashion brands on a platform like Amazon, which, despite the efforts, like the partnership with the CFDA and with big names of the industry, failed in the attempt of becoming a luxury shopping destination. Luxury customers want an exclusive retail experience even when buying online, and this poses a number of problems that many e-shopping giants have tried to solve in vain in recent years. The first that could succeed in deciphering the formula of online luxury retail is the Chinese titan Alibaba which, according to Jing Daily sources, is in talks with Farfetch for a joint venture on Chinese territory. 

Jack Ma, founder of Farfetch

José Neves, founder of Farfetch

The details of these negotiations have not been released yet, although rumours speak of $300 million in deals – rumours that have made Farfetch's shares grow by 16% in recent days. Richemont could also be part of the deal, given how it already partnered with Alibaba for a joint venture on shopping platform T-Mall last year. T-Mall itself seems to be the keystone of the operation, thanks to its Luxury Pavillion, which has proven to be a retail space highly appreciated by Chinese luxury consumers over the last three years thanks to the shows set up for Singles Day. And even Farfetch did not hold back when it came to winning over the Chinese audience: it recorded good sales during the first wave of the pandemic and it rebranded by exploiting the charisma of Chinese celebrities and curating site-specific cultural events.

Both Farfetch and Alibaba, in short, represent the cutting edge with regard to online shopping. If the London-based company has cultivated a holistic approach to the culture and lifestyle that surrounds fashion, also organizing specific releases and organizing localized events, Alibaba has managed to conquer the most important and strong luxury market in the world, the Chinese one precisely, and although the way forward could still be long, this new deal with Farfetch could represent a great step towards its final goal.