Farfetch — the e-commerce startup that works with some 900 high end fashion boutiques and labels to present and sell clothes, shoes, accessories and jewellery online, and we and others have heard is gearing up for a $6 billion IPO — is making an acquisition to double down China, one of the fastest-growing markets for luxury goods.
It’s acquiring Curiosity China, a marketing firm that specialises in leveraging social media — specifically, WeChat — to target users and sell goods. It already works with some 80 brands that are also customers of Farfetch to help them use WeChat channels and accounts to reach would-be customers. It also offers CRM and a few other services.
The plan will be to incorporate Curiosity China into Farfetch’s “Black & White” white-label API, which essentially allows boutiques to integrate their stock into Farfetch’s purchasing and logistics platform, or use that engine to sell its goods on their own sites. This will now give them the option also to use the API to run campaigns in China.
Terms of the deal have not been disclosed. This is Farfetch’s third acquisition, the other two being UK boutique Browns and Style.com. Farfetch also said it is buying all of the company’s tech and all of its employees and founders are coming on board.
Judy Liu, a co-founder of CuriosityChina, will become Farfetch’s managing director for China; another co-founder, Alexis Bonhomme, is taking on the role of VP commercial, China; and the third co-founder, Arthur Shui, will become head of technology for the Chinese operation.
Farfetch’s acquisition of CuriosityChina underscores a few interesting trends currently underway in the market: the rise of the Chinese consumer, the ongoing challenges to target those consumers if you are from outside China, and the rise of social media as a popular marketing and sales channel.
The luxury market was worth €262 billion in 2017, according to analysis from Bain, with customers from China accounting for 32 percent of that amount (shopping both in China and abroad). It turns out that among those buyers, social media — and specifically WeChat — is one of the most important routes to reach customers and for those customers to subsequently buy things, including directly in those social channels.
Curiosity China will fill a gap for Farfetch as it works on ways of expanding its revenues by tapping those two trends. Today, the Asia Pacific region already accounts for about one-third of the company’s sales (it doesn’t break out China) — a decent bedrock on which to build.
But most of those sales today are coming by way of people shopping on Farfetch.com, and so the idea is to tap into the popular channel of the moment to grow those numbers in a complementary way.
“WeChat is the most important channel for commerce in China, so we want to see where it will go,” said Giorgio Belloli, Farfetch’s chief commercial and sustainability officer. “It’s where brands are focusing at the moment. They understand Chinese consumers are using dedicated channels on there for marketing and purchasing.”
On the part of retailers and brands — the other side of Farfetch’s marketplace — they have found it traditionally hard to reach Chinese consumers, and the idea is that this will also help them do that.
For now, there are no plans to expand Curiosity China’s model to other markets beyond its home country. Belloli said that although Farfetch has been keeping its eye on messaging everywhere, and despite the efforts of Facebook to replicate the same commercial experience, so far no other messaging app has managed to break through as a strong channel for fashion commerce as WeChat has. It will be interesting to see whether and how that evolves over time.