Dubai businessman Mohamed Alabbar has signed a joint venture deal with international online luxury fashion retailer Yoox Net-A-Porter (YNAP), it was announced on Monday.
The deal has been signed between YNAP and Alabbar’s Symphony Investments to set up an online luxury retail business in the Middle East.
The JV – worth a combined 130m euros ($138.5m), will be owned 60 per cent by YNAP and 40 per cent by Symphony, Alabbar confirmed to reporters.
It will manage all of the group’s existing multi-brand online stores in the region including Net-A-Porter, Mr Porter, Yoox and The Outnet – as well as, in agreement with the brands, certain existing and future online stores that have significant business potential in the Middle East.
Yoox and the Outnet will launch in 2018 while Net-A-Porter and Mr.Porter will begin operations in 2019.
The new company will initially operate in the GCC, but hopes to expand to other countries in the Middle East and North Africa, Alabbar said.
It will set up a local office in Dubai to handle sales and marketing, customer care and PR while a new distribution centre will also be opened in the emirate to allow for same-day delivery. Both are expected to be opened by the end of 2017.
The company will also develop Arabic-language customer care and content and local currency and payment methods.
It will be supported by Aramex for logistics, Americana and Alabbar’s newly launched Noon.com, a $1bn online e-commerce platform.
The JV deal comes after Alabbar bought a 4 per cent stake in YNAP for 100m euros in April.
“The Middle East is a sizeable market for e-commerce and specifically for online luxury fashion retail,” said Alabbar.
The region accounted for 3 per cent of global luxury consumption in 2015 and is slated to outpace global growth in the sector over the next five years, according to a recent report by Bain.
While the luxury market has slumped in recent months due to slackening economic conditions, Alabbar said he was not worried.
“The market goes through cycles and we have good years and bad years. For now, the market is ok, maybe not as rosy as the previous years, but we are looking at a long-term investment of 10 to 15 years. We believe that digital is the path ahead.
“E-commerce is still in its baby stages here and we think that scale and velocity is needed in the market. We need to be a regional player,” he added.