Farfetch Ltd. has acquired JD.com Inc.’s luxury Toplife business and will merge it into its existing China business, Farfetch China.
The deal, disclosed by Farfetch on Thursday, is reportedly valued at $50 million.
JD.com Inc., China’s largest retailer, is one of Farfetch’s largest shareholders, having invested nearly $400 million in the London-based company. The combination is an expansion of the two firms’ existing partnership that began in July 2017. Through the partnership, Farfetch has leveraged JD’s logistics capabilities in China and garnered JD’s insights into the behaviors of China’s luxury consumers. The two also said the combined platform will provide the “Premier Luxury Gateway to China” for luxury brands.
Under the terms of the arrangement, Farfetch will gain access via a “Level 1” entry point on the JD.com app. That would give JD’s 300 million customers access to more than 3,000 brands through Farfetch’s network of more than 1,000 luxury brand and boutique partners, the two firms said.
Both parties will benefit from the other’s separate strategies. Farfetch has an agreement to acquire CuriosityChina, a leading integrated marketing and social commerce firm to help strengthen its China business. And JD, in addition to its ongoing expansion of direct partnerships with luxury brands, also offers end-to-end luxury shopping through customer service enhancements that include its “white glove” delivery via JD Luxury Express.
José Neves, founder, co-chairman and chief executive officer of Farfetch, said the new platform will “bring to market an unrivaled solution for luxury brands to succeed in the Chinese market” and that the Level 1 access will be “transformational for the luxury industry’s digital landscape in China.”
Addressing the upcoming acquisition of CuriosityChina, Neves noted that, along with prior strategic investments in China, “[W]e now offer luxury brands a one-stop solution to develop their digital strategies in accessing the engaged and sophisticated audience this important market.”
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Jon Liao, chief strategy officer for JD, called the arrangement a “win-win collaboration.” As for what the new platform does and how it impacts JD’s luxury goals, Liao said: “We are combining the best of global and local market expertise in the luxury segment. This is an important step for JD.com in developing its global fashion and luxury ecosystem. In just over a year of operation, Toplife has worked with many of the world’s top brands, and has grown to become the platform of choice among China’s discerning luxury consumers and brands.”
The deal follows Alibaba’s announcement of a similar joint venture four months ago with Richemont to promote in China the Net-a-porter and Mr. Porter businesses. Richemont, which already owned a stake in the Yoox-Net-a-Porter Group, completed the acquisition of the YNAP business it didn’t already own in May 2018.
Separately, both JD and Farfetch disclosed fourth-quarter results on Thursday. JD posted a net loss of $700 million for the quarter ended Dec. 31, due mostly to infrastructure investments, although top line sales rose 22.4 percent to $219.6 billion. Farfetch, also for the quarter ended Dec. 31, posted a loss of $9.9 million on revenues that rose 54.6 percent to $195.5 million.