JD.com invests $397M into luxury marketplace Farfetch as part of a new strategic partnership

JD.com, China’s second-largest e-commerce company after Alibaba, is pumping $397 million into Farfetch, a marketplace for luxury brands, as part of a new strategic partnership. JD.com founder and CEO Richard Liu will take a seat on Farfetch’s board as part of the deal, which makes JD.com one of its largest shareholders.

Last year, Farfetch raised $110 million specifically to support its expansion in Asia. China, where Farfetch launched in 2014, had already become its second-largest market by the time that round was announced in May 2016. Farfetch currently partners with 200 brands and 500 multi-brand retailers there and its new alliance with JD.com will give it access to JD.com’s wide logistics network (including JD Luxury Express, its premium courier service), online payment and consumer microcredit tools, social media resources such as its partnership with WeChat, and big data.

The partnership also helps Farfetch stake its territory in China and fight against counterfeit products, a point that founder and CEO Jose Neves highlighted in his press statement.

“We are deeply honored and excited to be announcing this partnership with Richard Liu and JD.com,” he 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.”

In return, JD.com gets an important ally as it focuses on high-end retail to help it differentiate from Alibaba, which despite various anti-counterfeiting efforts is still saddled with a reputation as a haven for knockoffs. China’s luxury market continues to grow steadily despite economic uncertainty and the government’s anti-corruption campaign, which put a damper on high-end sales when it launched in 2012.

JD.com’s other efforts to attract affluent consumers include holding runway shows in fashion capitals like New York and Milan, hiring a new president of international to develop partnerships with global brands, and launching JD Fashion as its own business unit.