Richemont and Alibaba have formed a joint venture to bring luxury goods from Yoox Net-a-Porter (YNAP) to Chinese consumers. The partnership will launch Net-a-Porter and Mr Porter online stores on Alibaba’s Tmall Luxury Pavilion platform, as well as create Chinese mobile apps for each brand.
Alibaba will provide technology infrastructure, marketing, payments, logistics and other technology support. The partnership also will leverage Richemont’s relationship with more than 950 luxury brands currently distributed in China.
Bringing YNAP to Tmall makes sense for Richemont, which launched a Luxury Pavilion in 2017. In the 12 months ending in June 2018, total luxury sales on Tmall grew 46%, while the total number of luxury shoppers grew by 36%., according to the Alibaba-operated news hub, Alizila.
“There’s not a luxury goods group in the world that can catch up with Alibaba in terms of its ecosystems,” said Johann Rupert, Chairman of Richemont in a conference call. “It is sad that all the luxury goods groups are finding themselves with a prisoners’ dilemma where everyone is fighting each other, when we are entering a market as vast as China we simply do not have the tools.”
Alibaba Group CEO Daniel Zhangcited research from McKinsey & Co., which stated in a 2017 report that Chinese consumersaccounted for 32% of global luxury sales in 2016, but would reach as high as 44% by 2025.
“Through this partnership, Alibaba and YNAP will be even better positioned to capture this compelling market opportunity,” Zhang said in a statement. “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.”
Richemont has built its own e-Commerce platforms by acquiring companies such Net-a-Porter and Yoox SpA, merging them to form the YNAP unit in October 2015. In total, the Switzerland-based luxury powerhouse owns 17 brands, including Cartier, Montblanc and Piaget. In the wake of department stores’ struggles since then, Richemont’s online marketplaces, which are open to other brands, have become especially important for smaller luxury goods makers to expand their reach.