Alibaba Ties Up With Asian Luxury Flash Sale Website Mei.com

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Chinese e-commerce titan Alibaba is trying to beef up sales of luxury products, with an announcement that it will invest in luxury flash sale website Mei.com. The company said on Wednesday that it will invest an undisclosed amount in Mei.com, which peddles items like discounted Armani clothes, Tiffany jewelry and Shiseido cosmetics for a limited time to Asian consumers. Chinese media reports say Alibaba has agreed to put more than $100 million in Mei.com.

Founded in 2009 by former Coach COH -3.69% China head Thibault Villet in Japan, the business entered China in 2010. Alibaba will hold more than 50% of Mei.com upon completion of the deal, reported Chinese news site 163.com, citing an anonymous source familiar with the deal.

Alibaba will form a specialized service team to help Mei.com grow its user base and logistical services. The company is also seeking to complement its luxury product offerings on Tmall by cooperating with Mei.com, which works with more than 2,400 brands worldwide and counts brands such as Armani, Zegna, Michael Kors and Guerlain as partners.

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The deal comes as Alibaba faces accusations of having knowingly allowed the sales of counterfeit luxury items on its platforms. Kering SA, the parent company of Gucci and Yves Saint Laurent, in May filed a lawsuit in New York, accusing Alibaba of being a conduit of counterfeit items. The company has said that the complaint has no basis and it will fight it vigorously.

“We hope that Mei.com will exert its advantages to create synergy with Tmall in providing more premium luxury goods to consumers,” Alibaba Chief Executive Daniel Zhang said in a statement. “At the same time, Alibaba will help Mei.com and other brand partners enter our ecosystem to allow more efficiency in helping them locate consumer groups, conduct brand marketing and establish an online supply chain system.”

Mei.com, which had $82 million in revenue in 2013, last year received a $65 million investment from Hong Kong-based jewelry brand Chow Tai Fook and Investec Bank. Luxury retailer Neiman Marcus in 2012 invested $28 million in the company, but sold its stake in 2014.

By Yue Wang Courtesy Forbes

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