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Alibaba’s Rumored $300M Investment Ignites Farfetch Shares

Adriana Lee
·3 min read

Reports that Alibaba is about to invest $300 million into online luxury purveyor Farfetch juiced the latter’s stock on Monday.

The report by the Information was based entirely on unnamed sources as no official announcements have come from either company. But that was enough to excite Wall Street. The news of Farfetch, a $10 billion company, courting the likes of a $830 billion e-commerce titan like Alibaba ignited Farfetch shares up to a peak of 20 percent on Monday — an all-time high — before settling in around some 13.8 percent up in the afternoon to close at $32. As for Alibaba, its stock edged up as well, though only slightly at just 1 percent.

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In response to a WWD inquiry, a Farfetch spokeswoman replied, “We don’t comment on market rumor or speculation.” Alibaba did not immediately return a request for comment.

A global company based in the U.K., Farfetch offers a tech-forward platform for luxury goods, in a growing operation covering both online and physical retail. It operates the Farfetch Marketplace, Farfetch Platform Solutions (or FPS) and Farfetch Store of the Future, as well as British fashion and luxury goods boutique Browns, athletic footwear and streetwear marketplace Stadium Goods and several brands under its NGG_New Guards Group — Off-White c/o Virgil Abloh, Marcelo Burlon County of Milan, Palm Angels, Ambush, Unravel Project, Heron Preston, Alanui, Kirin by Peggy Gou and Opening Ceremony.

The business serves customers in more than 190 countries, including China where Alibaba is based. The rumored relationship also points to some sort of venture with Alibaba that could extend Farfetch’s existing reach into the Chinese market.

Alibaba competitors JD.com invested $397 million in Farfetch in 2017 and Tencent put in $125 million earlier this year. For the latter deal, Farfetch was positioned as the primary “luxury gateway to China” that would help “Western luxury brands reach the Chinese consumer through Tencent’s WeChat platform,” according to the January announcement.

With Alibaba, parent company of massive e-tailer and luxury platform Tmall, Farfetch’s cadre of investors would now include China’s biggest company, a retail and tech heavyweight that projects more than a billion active customers by the end of 2024.

Beyond Chinese investment, Cartier parent Compagnie Financière Richemont SA is also considering a stake in Farfetch, the report’s sources said. That could cement a fascinating loop, as Richemont is already an Alibaba partner in China and also is parent to Farfetch competitor Yoox Net-a-porter Group.

The news broke as the luxury fashion sector ponders its digital reinvention, which has accelerated due to the global coronavirus pandemic. The stage seems to be set for a new Amazon of luxury to emerge.

In that vein, Farfetch could be better positioned to assume the role than even Amazon itself, which launched its own bid for luxury shoppers in the summer. The London-based company already swells with more than 1,200 luxury sellers and more than 2.1 million consumers, accounting for 5 percent of the world’s luxury fashion e-commerce.

Assuming Alibaba is indeed on board, the sector may be witnessing the birth of a new luxury retail juggernaut with a global ubiquity and serious innovation chops.

Read more:

EXCLUSIVE: Cartier Signs Up to Alibaba’s Tmall Luxury Pavilion in China

All About the Journey: Amazon Luxury Looks to Tmall for Inspiration

Farfetch, New Guards Group on Future, Technology