It is clear to me now that in hindsight the partnership between Farfetch and JD.com is beneficial to both parties for different reasons. As Farfetch is on the road to go public they will face increasing skepticism about their growth versus Yoox-Net-A-Porter. JD.com is increasingly to position itself as the premium destination for luxury brands in China. The problem for JD.com is that Alibaba is growing faster than them and that Alibaba is using their New Retail concept to provide access to Chinese larger customers.
Farfetch, announced that JD.com invested $397 million in the business and that JD.com CEO Richard Liu would be joining their board. Farfetch has been making strategic moves to ensure that they can go public with many opportunities and experience in their board and business. Farfetch will also leverage JD.com’s platform to create a Chinese path for customers to purchase fashion products.
By investing almost $400 million into Farfetch, JD.com gets a hedge against their own future. Battling Alibaba in China leads to investments into logistics and advertising to ensure that JD.com can grow against a giant marketplace.