Coupang is making a significant entry into the 500-trillion-won luxury market by acquiring Farfetch, the world’s largest luxury platform. Farfetch boasts a collection of 1,400 luxury brands, including Chanel and Hermes, catering to global consumers in 190 countries such as the United States and the United Kingdom.
On Dece. 18, Coupang Inc. announced the establishment of a joint venture company named “Athena Topco” with Greenoaks Capital with the purpose of acquiring all business and assets of Farfetch. Athena has entered into a loan agreement, or bridge loan, with Farfetch for a nominal acquisition amount and plans to pay US$500 million (653.5 billion won). The ownership of Athena is set to be divided, with Coupang Inc. holding 80.1 percent and Greenoaks Fund holding 19.9 percent.
The acquisition of a global company by Coupang is the first since its founding. Coupang has expressed a favorable view of Farfetch, citing the company’s remarkable transformation into a global enterprise last year. Farfetch has successfully established a worldwide e-commerce network just one year and two months since entering the Taiwanese market. Coupang sees the acquisition of Farfetch as a foundation for domestic K-fashion companies to significantly increase global exports.
Founded by Jose Neves in the U.K. in 2007, Farfetch is the world’s largest luxury e-commerce company. It has gained recognition for its explosive growth, expanding to 190 countries worldwide, including the United States, Japan, China, and India, and changing the global luxury market landscape. With an extensive lineup, including 1,400 global luxury brands such as Hermes, Louis Vuitton, and Chanel, the top three luxury brands, Farfetch has established a presence in boutiques and department stores worldwide. The company achieved a revenue of US$2.32 billion last year alone, marking about a 16-fold growth compared to its 2015 revenue of US$142.31 million. Farfetch, which went public on the New York Stock Exchange in 2018, will become a private, unlisted company after Coupang’s acquisition.
Coupang’s move to acquire Farfetch is driven by the clear growth trajectory in the online fashion and luxury markets. According to Bain & Company, the global personal luxury goods market is estimated to reach around US$400 billion this year, and the online share, or penetration rate, is projected to grow from approximately 20 percent last year to 30 percent by 2030.
The acquisition of Farfetch, a key e-commerce platform for “K-fashion exports,” suggests an expansion of overseas exports for related products. Farfetch hosts 10 Korean brands, including WOOYOUNGMI by renowned designer Woo Young-mi, SONGZIO by Song Ji-o, Low Classic by Lee Myung-shin, and Studio Tomboy by Shinsegae International.
The acquisition is also expected to create the synergies with Coupang’s extensive logistics network that the company has built through substantial investments. Farfetch has been providing “90-minute delivery” or “same-day delivery” in the areas near brand boutiques in cities like New York, Paris, and Milan. However, regular international deliveries, including to countries like South Korea, can take up to a maximum of five days. By combining logistics expertise, including services like Rocket Delivery, Coupang has the potential to significantly reduce these delivery times.