Alibaba expands into luxury with 100 million investment in Mei.com

Alibaba Group Holding Limited (NYSE:BABA) announced earlier this month its investment in Mei.com, China’s leading flash sales platform for luxury and fashion products.

As reported by leading Chinese media, Alibaba has agreed to invest over 100 million dollars in Mei.com. Alibaba will hold more than 50 percent of Mei.com upon completion of the deal, reported Chinese news site 163.com, citing an anonymous source familiar with the deal.

Founded in 2009 by former Chinese lead for China at Coach, Thibault Villet, the online luxury retail platform entered China in 2010.

Alibaba buys 50 percent of Mei.com for 100 million

As highlighted by both parties, this venture will enhance Mei.com’s supply chain services of the sales of limited time discounted quality products from well-known international luxury and fashion brands to consumers in China.

Meanwhile, Alibaba Group will see an easier integration of resources from its B2C platform Tmall.com, China’s largest third-party platform for brands and retailers, to form a specialised services team to support Mei.com’s development and assist them in growing their user base, brand cooperation base, logistic services and IT infrastructure services. Mei.com’s close cooperation with a wide selection of luxury brands will complement Tmall.com’s existing selection of affordable luxury goods for Chinese consumers, adds the company.

Commenting the deal, Daniel Zhang, CEO of Alibaba Group said, “Alibaba Group’s ecosystem and its multi-level cross-platform retail services will be further enhanced with our investment in Mei.com. We hope that Mei.com will exert its advantages to create synergy with Tmall in providing more premium luxury goods to consumers. At the same time, Alibaba will help Mei.com and other brand partners enter our ecosystem to allow more efficiency in helping them locate consumer groups, conduct brand marketing and establish an online supply chain system.”

Thibault Villet, founder and CEO of Mei.com is equally pleased, saying about the deal that “We are very pleased to receive this strategic investment from Alibaba Group. The two parties complement each other and together with Tmall, we will bring premium and trusted genuine brands to consumers. In the future, we see a significant opportunity to provide enhanced shopping experiences for Chinese customers in search of affordable fashion and luxury products.”

Mei.com operates an online flash sales business model with limited time on discounted luxury goods for its online shoppers. Sales events are launched every day at 9am to promote genuine goods that are offered at significantly reduced prices. Similar to Tmall.com, Mei.com cooperates directly with international brands or official designated brand distributors and has successfully cooperated with more than 2,400 brands across the world. Around 280 well-known international brands including Armani, Zegna, Michael Kors, Trussardi, Roger Vivier, Longchamp, Tumi, and Guerlain has partnered exclusively with Mei.com in China’s e-commerce market.

Over the past months, Alibaba has gone on a shopping spree, reaching out to banking, technology and media industries. It is worth of remembering that Alibaba’s 32 percent ownership is in the hands of Softbank and that Yahoo holds another 15 percent.

Mei.com’s rivals in the China’s online fashion marketplace include U.S.-listed VIPshop, recalls ‘Forbes’.

On a related note, Alibaba shares fell to a two-month low on July, 8 due to a broad sell-off of China shares on worries about economic and political fallout from a deflating stock bubble in the country’s domestic shares, reports the financial magazine.