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Online Retailer Vipshop to Invest $34 Million in French Firm

| Oct 22, 2015 07:23 AM EDT

Rising e-commerce firm Vipshop eyes to diversify its products and expand customer base.

Vipshop Holdings Ltd., an online retailer, will invest $34 million in the French flash-sales site Showroomprive.com as it beefs up its effort to advance its overseas expansion.

The Guangzhou-based Chinese firm said that its latest investment is vital in its "going global" initiative, adding that it looks forward to enter more ventures with the French retailer.

For independent analyst Lu Zhenwang of the Shanghai Wangqing Consultancy, the move is advantageous for Vipshop as it will have the opportunity to add more high-end products to its portfolio. The investment, he added, could subsequently expand the firm's customer base.

The latest effort of the local firm to go global is good news as "Vipshop's growth momentum is stalling due to the slowing Chinese economy and saturation of online shoppers," he shared.

Currently, most of the brands catered by the online retail platform are homegrown and locally produced.

"By adding luxury goods to its online platform, Vipshop can not only gain new customers, but also encourage existing customers to spend more," Lu noted.

Recent data shows that Vipshop has seen a decline in revenue growth during this year's second quarter, decreasing from last year's 136.1 percent to 77.6 percent.

Meanwhile, Showroomprive said it is seeking as much as 373 million euros in a bid to expand its operations.

Co-Chief Executive Officer Thierry Petit said, "There's a lot of room to grow, and we want to have the weapons for it."

"The world's strongest fashion brands are in France, in Italy. There's no doubt about the attractiveness of Europe in our industry," he added.

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