Coupang to acquire online luxury firm Farfetch

It will provide $500m capital to support Farfetch’s operations.

South Korea-based global retailer Coupang will be acquiring the business and assets of online luxury company Farfetch Holdings, providing the company with $500m capital to run its business.

In a statement, Coupang said it is positioned to “unlock Farfetch’s tremendous value for the personal luxury goods segment in South Korea,” the market with the highest per-capita spending on personal luxury goods.

“Farfetch is a landmark of the luxury landscape and has been a transformative force in demonstrating that online luxury is the future of luxury retail,” said Bom Kim, Founder & CEO of Coupang. 

“Farfetch will rededicate itself to providing the most elevated experience for the world’s most exclusive brands whilst pursuing steady and thoughtful growth as a private company. We also see tremendous opportunities to redefine the customer experience for luxury clients everywhere,” the CEO added.

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Alice Price, Apparel Analyst at GlobalData, said Fartfetch has been affected by luxury brands' less reliance on wholesalers to have better control over their brand images and inventories, focusing on direct-to-consumer channels.

The slowdown of the wider luxury market is “the nail in the coffin” for Farfetch, Price said.

“Coupang’s exceptional online and technological expertise make it well placed to steer the troubled retailer back to growth, while the player’s strong presence in Asia lends Farfetch the opportunity to tap into the region’s booming luxury market,” Price said. 

“Asia’s strong economy and growing middle-class populations will enable the luxury online pureplay to turn its attention away from the struggling regions of the US and Europe and showcase its proposition to a more receptive consumer base,” she added.