Farfetch to merge its Chinese operation with JD.com
Online fashion retailer Farfetch has announced that it will be merging its Chinese operation with JD.com, a major player in the country’s online retail market (and, incidentally, a holding in Dominion’s Global Trends Ecommerce Fund). The collaboration could be a big step forwards for both companies, as Farfetch’s powerful brand machine works with JD’s logistics genius.
Farfetch’s share pice has been on a roll so far in 2019, up 51% year to date!
Source: Yahoo Finance
Farfetch founder Jose Neves discussed the merger in a recent interview, saying: “Both parties came to the conclusion that it was better to merge into one single consumer-facing brand. There is a trend towards repatriation of luxury spending, which is a massive opportunity for the luxury industry. If even a fraction of overseas purchases are repatriated it’s a multibillion-dollar opportunity.”
Chinese consumers account for roughly one third of all luxury sales globally, and, in the country itself, online sales make up about 10% of all luxury purchases. While this merger will create a luxury sales platform that is larger than its rivals (its main rival being Alibaba’s Tmall Luxury Pavilion), many brands have expressed concerns over counterfeiting on these platforms. Addressing this concern, Mr Neves said:
“Of course, we will listen to the brands and we will consult them about their presence on this new channel. We will offer brands the option not to be on the platform, but our recommendation is to be on it.”
Dominion holds Farfetch in its Global Trends Luxury Fund, and JD.com in its Global Trends Ecommerce Fund.
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