China’s second largest e-commerce company, JD.com (JD US) announced that it is spending US$397 million for a stake in privately held Farfetch, the London-based online retailer of high-end fashion goods and compete with the likes of Yoox-Net-A-Porter (YNAP IM).

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JD.com buys Farfetch

The strategic goal is for the 2 companies to grow online sales in China as JD.com can refer its own web traffic to Farfetch and also assist with logistics in China (including JD Luxury Express, its premium courier service). Farfetch will also gain access to JD.com’s local payments and lending services. For JD.com, it gains access to a fast growing platform as it seeks new ways to grow its international and domestic business behind market leader, Alibaba (BABA US).

Farfetch was founded in 2008 and already partners with 200 brands and 500 multi-brand retailers. In May 2016, Farfetch raised US$110 million in another private round of financing and is considering a US$5 billion initial public offering. It recently partnered with Gucci to allow customers to buy and be delivered Gucci products within 90 minutes from Gucci stores in London, New York, Dubai, Los Angeles, Madrid, Miami, Milan, Paris, Sao Paulo and Tokyo.

 

Alibaba interest in Yoox-Net-A-Porter

In separate news this week, the share price in Yoox-Net-A-Porter jumped 8.7% on heavy trading volume with speculation that Alibaba was interested in buying an interest in Yoox-Net-A-Porter, potentially as a response to the JD.com and Farfetch co-operation agreement.

 

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About Kevin Hua

Kevin Hua is a Co-Founder of AtlasTrend, an online investment platform that makes it easy for anyone to learn and invest in trends transforming our world. Kevin has over 19 years experience in financial markets including as Senior Portfolio Manager at Atrium Investment Management and Stark Investments.

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