The YNAP headquarters in Milan.

LONDON — Richemont’s digital pulse is quickening as Johann Rupert strikes more e-commerce deals this year than ever — with the latest one, a venture with Alibaba, aimed at grabbing luxury market share in China.

Friday’s deal capped a landmark year for Compagnie Financière Richemont and its chairman Rupert who, like his peers, had long been skeptical about luxury’s place in the digital world and fearful that online sales would dull the products’ shimmer.

Rupert started the year with a surprise plan to buy 100 percent of Yoox Net-a-porter Group, followed that up with the purchase of Watchfinder, the online and off-line site for pre-owned luxury watches, and signed up as a corporate partner to Lafayette Plug and Play, the start-up accelerator program set up by Galeries Lafayette.

On Nov. 9, when Richemont reports its first-half results for fiscal 2018-19, online distributors YNAP and Watchfinder will have generated close to 20 percent of the group’s sales, according to investment bank Vontobel. With Alibaba now on side, it’s clear there is no stopping Rupert in his quest to keep up with his competitors.

The Richemont-Alibaba venture comes a little more than a year after pumped $397 million into online fashion platform Farfetch and as a flurry of Kering brands have been setting up shop on’s luxury channel Toplife. Meanwhile, a host of Italian brands, such as Ferragamo and Tod’s, have partnered with Secoo, the Chinese platform that’s quoted on the Nasdaq.

Richemont’s move follows rumors in June 2017 that Alibaba was interested in taking a stake in YNAP — rumors that may have spurred Richemont to buy the 51 percent of YNAP it didn’t already own.

The Alibaba move also follows the appointment of a new generation of men and women to the board of Richemont last year, including Rupert’s son Anton Rupert, a Millennial, and the former Google executive Nikesh Arora.

The younger Rupert has been working at Richemont for more than a decade now, and at the time of his son’s appointment to the board, the chairman said he saw him as “the new Google Translate to tell us where the world is going.” Rupert said he was expecting his son to bring “further insight into changing consumer behavior in our target markets, in particular in the areas of digital marketing and web-based commerce.”

Rupert fils has certainly been delivering: During a conference call Friday, the elder Rupert talked about the “inevitable coalescence of online and off-line” in luxury goods, and the importance of exploring new shop experiences and formats.

He said the Alibaba deal would be advantageous for the Richemont maisons, as well as the brands carried by YNAP.

“Everybody is excited about China and Chinese travelers, and we thought this was the best way to go. We don’t have the tools for China, but Alibaba is a vast ecosystem and marketplace.” He added that Chinese customers at home and abroad are an increasingly important customer base for Richemont and for the broader luxury industry.

“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,” the chairman said.

Under the partnership, YNAP and Alibaba, which has 600 million users, will launch mobile apps for Net-a-porter and Mr Porter and online stores for those retailers on Alibaba’s Tmall Luxury Pavilion. The Pavilion was unveiled last year and aims to re-create the curated, upscale shopping experience of an off-line store.

Rupert added that Richemont would work with Alibaba to ensure that Net-a-porter and Mr Porter would continue to expand as “neutral, open and sophisticated platforms.” Some 950 fashion and luxury brands are distributed through YNAP in China.


Johann Rupert, Federico Marchetti

Johann Rupert, Federico Marchetti and Anton Rupert.  Courtesy Photo

Alibaba will provide the technology infrastructure, marketing, payments, logistics and other tech support to the JV. Looking ahead, YNAP and Alibaba will be looking to integrate merchandising, marketing, payments and last-mile delivery. The JV will focus on serving consumers in China and also extend to Chinese consumers traveling abroad.

Michael Evans, board member and president of Alibaba, said with the new apps, China’s 131 million foreign travelers will be able to access YNAP wherever they happen to be in the world.

The financials of the deal were not disclosed, and in terms of the launch of the apps and online stores, Rupert said it will take time to get the systems up, running and fully operational.

Federico Marchetti, chief executive officer of Yoox Net-a-porter Group, said the venture “will offer our brand partners the same quality and reliability for the Chinese online market.” He said the brands will be able to access a powerful platform to maximize China’s “immense potential.”

Daniel Zhang, ceo of Alibaba Group, said the deal was a boon for Chinese consumers, “who are expected to account for nearly half of the global luxury market by 2025. As Chinese consumers continue to upgrade their lifestyles, we want to meet” their desires.

He said the JV “is just the beginning of a long-term partnership, and together we are committed to exploring many more opportunities to collaborate in the future.”

Teaming with Richemont, parent of YNAP but also of brands including Cartier, Van Cleef & Arpels and Dunhill, was a coup for Alibaba: Although it’s a powerhouse that rivals, the platform had long been plagued by sales of fake and counterfeit products and has endeavored over the past few years to clean up its act.

Analysts were positive, with Rogerio Fujimori of RBC calling the new JV “strategically sound” because it combines YNAP’s strong relationships with the luxury brands with Alibaba’s technology, logistics and marketing capabilities as well as its e-commerce leadership.

“Chinese consumers already account for one-third of global luxury sales today and Alibaba expects them to reach nearly half of global luxury sales by 2025. In addition, Chinese luxury e-commerce is still in its infancy when compared to the U.S. and Europe,” Fujimori said.

He added that while the long-term sales potential of the JV “looks compelling to us, the e-commerce space has become increasingly competitive, requiring higher investment firepower.”

Vontobel said in a note that Richemont will gain “much more traction” in the Chinese online market as Alibaba is “the clear market leader.”

It pointed out that Richemont’s other companies, including Watchfinder, as well as Yoox and The Outnet, which both sell off-season fashion, could also benefit from the JV in the longer term. The bank added that Asia-Pacific is still small at YNAP, accounting for 17 percent of overall sales last year.

Asked during the call about forming a JV at a time when China has begun to wobble, with stagnating consumer growth, debt woes and a brewing trade war with the U.S., Rupert — who has a knack for predicting macro-trends — was undaunted.

“We would not have done this deal if we could not see potential in the medium and long-term, and I will not speculate on the immediate result of this venture,” he said, adding that the public would have to wait until Nov. 9, when Richemont publishes its interim results, to hear how the luxury giant itself has been performing in China.

Rupert also said this is a particular moment in the growth cycle of luxury groups, all of which are grappling with how to grow their online presence in China in a steady, secure, sophisticated way. “This is not a moment when we should be fighting each other,” but rather working together, he said of his competitors.

Asked whether he was fearful about counterfeiting, Rupert said Richemont would have never entered into the JV if he had any qualms about it. “We are satisfied that this is a very, very low-risk scenario, with the benefits outweighing any potential risk of counterfeiting. And we are looking at all the anticounterfeiting systems,” that Alibaba has in place, he said.

Although no one talked about the money being pumped into this deal, it’s clear that both sides have been careful about spending.

Asked whether he planned to spend Richemont’s 5.27 billion-euro cash pile on the JV, Rupert said the investment was far less than that. “We always like to have cash — and the security blanket of liquidity,” he said, adding that Alibaba was of a similar mind.

Alibaba’s Evans said the investment costs in creating the apps and stores were “relatively small” compared with the opportunities that YNAP will have in China once the fashion e-commerce player is fully integrated into the Chinese platform.

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