Farfetch Bought by Coupang for $500 Million

New York-listed e-commerce giant Coupang, headquartered in Seoul, South Korea, and Seattle in the U.S., has jumped in to save struggling UK-based luxury retailer Farfetch with $500 million in emergency funding, according to Vogue Business.

Farfetch, which facilitates online sales for luxury brands, has been having a hard time due to the slowdown in the industry. In turn, this has affected its profits and investments from tech companies, which has led to its credit rating being downgraded into “junk” territory.

According to Forbes, the acquisition announcement from Coupang “said that its ‘operational excellence and innovative logistics’ combined with Farfetch’s leading role in the luxury ecosystem will ‘drive exceptional experiences for customers, boutiques, and brands across the world.’”

“Coupang is also uniquely positioned to unlock Farfetch’s tremendous value for the vast personal luxury goods segment in South Korea, which has the world’s highest per-capita spending on personal luxury goods,” the company explained in its press release.

The luxury retailer runs an online marketplace selling high-end jewelry and fashion, and many boutiques and small brands, such as Diesel, Balmain, Lanvin, and Balenciaga, are dependent on this platform to run their businesses. Farfetch also runs the service of back-end technology for e-commerce for online and big department stores such as Harrods in the UK and Ferragamo, a luxury house based in Italy.

After Monday’s announcement, Farfetch saw a sharp decline in its shares by 38%. Since late November, when the company withheld earnings results following reports about founder Jose Neves considering taking the company private, shares plummeted by 68%.

Coupang, which is referred to by some as the “Amazon of Asia,” has a range of services — including video streaming, food delivery, and payment services — in Asian markets such as South Korea, Taiwan, Singapore, China, and India. The company made this deal with an investor group that held over 80% of Farfetch’s outstanding $600 million term loans, according to Reuters.

The e-commerce giant plans to blend its expertise in logistics with Farfetch’s experience selling high-end brands to grow in South Korea, which is rapidly expanding in the luxury market space.

Coupang has revealed that it has invested billions into end-to-end fulfillment and logistics infrastructure, which includes AI and custom robotics. In 2022, Coupang had 1,362 patents on tech innovations across its markets, ranging from South Korea to the U.S.

This partnership looks to be a great combination of logistics and luxury. Coupang has been listed on the New York Stock Exchange since March 2021, and although it operates on a large scale in Asia, its U.S. business remains small. Investing in Farfetch, which is also listed on the New York Stock Exchange and serves a huge U.S. consumer base, would allow Coupang to strengthen its U.S. presence. No further details of the deal have been shared as of yet.

In the press release, Neves said, “Coupang’s proven track record and deep experience in revolutionizing 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.”