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Richemont and Alibaba in strategic deal

Takes online luxury to the vast Chinese market.

Just four months after acquiring full control of luxury etailer Yoox Net-a-Porter (YNAP), luxury goods company Richemont has struck up a strategic relationship with Chinese internet giant Alibaba.

In terms of the deal, announced on Friday, Richemont and Alibaba have established a joint venture that will launch two mobile apps for YNAP’s two brands Net-A-Porter and Mr Porter, for consumers in China. Alibaba will provide technology infrastructure, marketing, payments, logistics, and other technical support to the JV.

In addition, the JV will launch Net-A-Porter and Mr Porter online stores on Alibaba’s Tmall Luxury Pavilion (sic), a platform dedicated to the world’s leading luxury brands. Launched in 2017, this platform aims to create the same brand exclusivity and tailored shopping experience that customers shopping offline typically enjoy.

Richemont chairman Johann Rupert is keenly aware of the potential of the internet for the sale of luxury brands – online sales are one of the industry’s fastest growth drivers. He has placed YNAP at the centre of the company’s efforts to ramp up its e-commerce operations and attract younger shoppers. It operates sales platforms for 40 luxury labels as well as multi-brand online stores Net-a-Porter, Mr Porter, The Outnet and Yoox. In June, shortly after acquiring control of YNAP, Richemont announced its delisting from the Milan Stock Exchange.

This deal comes almost four years after Yoox merged with Net-a-Porter to create scale in the online luxury market. While traditionalists argue that there is no market online for luxury sales, competition has ramped up and brands are jostling to position their e-commerce operations for big luxury-consuming markets like China.

At one point it was speculated that Rupert was trying to scale up YNAP, through closer alliances with the likes of LMVH, to compete with the likes of Amazon and Alibaba. 

That is clearly no longer the case: “Chinese customers at home and abroad are an increasingly important customer base for Richemont and for the broader luxury industry,” said Rupert in the statement. “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.”

Chinese consumers are expected to account for nearly half of the global luxury market by 2025, says Daniel Zhang, CEO of Alibaba Group. “As Chinese consumers continue to upgrade their lifestyles, we want to meet the desires of Alibaba’s more than 600 million users. By integrating online and offline commerce through our New Retail technologies, we will be able to deliver a seamless experience to consumers as well as better enable these leading brands to engage their customers in new and innovative ways. We believe this announcement is just the beginning of a long-term partnership, and together we are committed to exploring many more opportunities to collaborate in the future.”

Richemont share trading history

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This could be a big mistake and might dilute the quality of the luxury brands….the whole essence of luxury is exclusivity. You can already buy Richmont luxury goods online through their own distribution. Joining up with a common or garden bulk distributor smacks of desperation rather than a natural progression for the business. In my opinion. Will be interesting to see what happens.

An established brand and a reputable online supplier are joining forces , which will enable both to reach new markets and supply new products to their clients .
If you purchase an expensive watch for eg , you would want to feel secure that it is not a rogue supplier , sending you a fake look
alike Rolex or Breitlinger .
So this Alibaba and Richemont venture makes business sense , in the modern world of purchasing expensive goods on line , and thus paying for the product without seeing the it .

End of comments.

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