South Korean e-commerce retailer Coupang has announced it will acquire the business and assets of online luxury platform Farfetch, a move that positions Coupang — often referred to as the Amazon of South Korea — as a frontrunner in the personal luxury goods industry.
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Under the terms of the agreement, Farfetch will gain access to USD500 million in capital, an infusion of funds that empowers the company to settle its debts and continue to operate, following a tumultuous few weeks of industry speculation on Farfetch’s future. Once valued at as much as USD23 billion at its peak, Farfetch’s market valuation has dropped to around USD200 million as the company’s woes continued to resurface. Growing costs and debt have prompted its founder and CEO José Neves to seek new investment.
Coupang holds a unique advantage in unlocking Farfetch’s value, especially in South Korea, which boasts one of the highest per-capita spending on personal luxury goods worldwide.
“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 and CEO of Coupang, in a statement.
“Farfetch will rededicate itself to providing the most elevated experience for the world’s most exclusive brands, while pursuing steady and thoughtful growth as a private company. We also see tremendous opportunities to redefine the customer experience for luxury clients everywhere.”
“Coupang’s proven track record and deep experience in revolutionising commerce will enable us to deliver exceptional service for our brand and boutique partners, as well as for our millions of customers around the world,” said José Neves, Farfetch founder, CEO and chairman.
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“We are thrilled to be partnering with such a respected Fortune 200 company that is committed to investing in innovations that transform all aspects of the customer experience with Farfetch.”
Global investment firm Greenoaks facilitated the transaction, and serves as Coupang’s investment partner in the acquisition.