London-based luxury marketplace Farfetch has received 397 million dollars in investment from JD.com to open the “ultimate gateway” in China to create a platform to bring luxury e-commerce to its 80 billion dollar market.

The deal with China’s largest retailer will see Farfetch leveraging JD's logistics, Internet finance and technology capabilities and social media resources, including its WeChat partnership, while giving JD.com a luxury boost and access to its leadership in global luxury.

Farfetch already does have well-established operations in China, it is the partner of choice for 200 luxury brands and more than 500 multi-brand retailers within China, however, the deal will see JD driving further brand awareness, traffic and sales for Farfetch in the market, said a press release from the two brands.

José Neves, founder, co-chairman and chief executive of Farfetch, said: "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. This strategic partnership will provide brands a seamless, immediate access to the luxury consumer and Chinese luxury shoppers with access to the greatest selection of luxury in the omnichannel way of life they have already fully embraced.”

Farfetch and JD.com partner to create “ultimate gateway” to China for luxury brands

As part of this partnership, JD.com will become one of the largest shareholders of Farfetch, investing 397 million dollars, and Richard Liu, JD.com's founder and chief executive, will join the Farfetch board, joining Dame Natalie Massenet and Jonathan Newhouse, chairman and chief executive of Condé Nast International.

In addition, the two companies will partner on marketing, logistics and technology solutions to build the brand in China, while Farfetch will continue to be the customer-facing brand.

"As part of our major luxury push, we could not have found a stronger online partner than Farfetch," added Richard Liu, chairman and chief executive of JD.com. "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. We look forward to deepening our relationships with Farfetch and luxury brands in the months and years ahead."

The deal will allow all 700 brands and boutiques that are part of the Farfetch marketplace to take advantage of the new resources as part of the new gateway to China’s luxury market, such as Farfetch brands offering customers a premium level of service through JD’s recently launched Luxury Express service.

Farfetch partner brands with a local retail presence, will also have access to world-class omnichannel capabilities, including click and collect and in-store returns, connecting the brands' physical retail stores in China to consumers. In addition, Farfetch users in China will also gain access to a variety of services from JD Finance, including JD Pay, which will be a preferred payments partner, and Baitiao, JD Finance's popular consumer microcredit channel.

The announcement comes as JD steps up its focus on high-end luxury and fashion to match the huge demand among its upwardly mobile customers. Over the last two years, JD has hosted fashion shows in New York, Milan, London, Beijing, and Shanghai, and added several key international brands on the site, including Armani, Swarovski and Zenith.

Image: courtesy of Farfetch / Jose Neves