Inc, China's second-largest e-commerce player, said it will invest $397 million in London-based online fashion retailer Farfetch UK Ltd to further penetrate the luxury sector, amid fierce competition with Alibaba Group Holding Ltd.
JD will become a major shareholder in the United Kingdom firm following the transaction and its CEO Richard Liu will join Farfetch's board, it said in a statement.
JD.com says in a statement that China's online consumers are increasingly leaning toward "quality over price" and that the country's luxury fashion market is valued at around USD80 billion. "For Chinese consumers, this combination of Farfetch's luxury know-how, and JD's blazing same-day delivery speeds and highly professional service, will provide an unparalleled luxury proposition".
"As part of our major luxury push, we could not have found a stronger online partner than Farfetch", said JD CEO Liu Qiangdong. The company will also receive more brand awareness through JD's BlackDragon digital marketing technology as well as the company's strategic partnership with WeChat. These will include JD Pay, which will be the preferred payments partner, and Baitiao, JD Finance's consumer microcredit channel.
"We are deeply honored and excited to be announcing this partnership with Richard Liu and JD.com", he said.
Prior to the JD.com investment, the largest funding raised by Farfetch was its US$110-million Series F financing round in May previous year. "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", Neves said.
The announcement comes as JD is placing a greater emphasis on high-end luxury and fashion to match what the company describes as a "huge demand" among its "upwardly mobile" customers.
The UK e-commerce company, which has raised now $701.5m to date, will enter into a "strategic partnership" with the Chinese firm in an attempt to increase its market position in the Asian nation.
"China is the world's second largest luxury market..."
Since the beginning of the year, the company has hired Winston Cheng as president of worldwide to lead its global business development.