Richemont, the Swiss luxury goods group, has formed a strategic partnership with Alibaba, the Chinese e-commerce giant, in a move that has the potential to shake up the global luxury industry.
The two companies announced in a joint statement at the end of last week that they have formed a joint venture to launch two mobile apps in China for the Net-a-Porter and Mr Porter brands, which are two online sites owned by Richemont.
In addition, Net-a-Porter and Mr Porter will launch on Alibaba’s Tmall Luxury Pavilion, an e-commerce site designed to deliver highly personalised experiences for luxury shoppers.
Under the terms of the deal, the Richemont brands will be able to tap into Alibaba’s formidable network of technology, logistics, payments and marketing expertise.
Meanwhile, Alibaba is expected to leverage the strong relationship that Yoox Net-a-Porter Group (YNAP) has with leading luxury brands, with 950 of them already distributed through its own operations in China. On top of covering Chinese consumers at home, the joint venture extends to those who shop abroad.
“This multi-faceted partnership will bring Chinese consumers unprecedented access to the world’s leading luxury brands,” said Daniel Zhang, CEO of Alibaba Group.
“Chinese consumers are expected to account for nearly half of the global luxury market by 2025, and through this partnership, Alibaba and YNAP will be even better positioned to capture this compelling market opportunity,” he added.
“Our digital offering in China is in its infancy and we believe that partnering with Alibaba will enable us to become a significant and sustainable online player in this market,” said Johann Rupert, chairman of Richemont.
“Alibaba has become the preferred online destination in China, with world-class teams in technology, logistics and marketing. Through this joint venture, we look forward to opening the important Chinese market to Net-a-Porter, Mr Porter and the luxury brands they offer their clientele,” he added.
Rupert went on to provide further details for the Financial Times, which described the new joint venture as “one of the strongest signs yet of how the combined forces of China and online retail are reshaping the global luxury goods industry”.
He effectively acknowledged that it was necessary to team up with Alibaba when entering a market as fast-growing as China because “we simply do not have the tools”.
“The speed of change here [in China] is more dramatic than in any other society that I have witnessed … everything is mobile,” he said. “Unless you have got mobile-friendly apps, you are just not going to reach the people.”
Rupert also sought to allay concerns about any risk of counterfeit luxury goods being sold on Chinese websites. “We have looked at their systems and what they have done to combat counterfeiting and I am satisfied that this is a very, very, very low scenario,” he said.
Sourced from Alibaba, Richemont, Financial Times; additional content by WARC staff