The challenges of e-retail for high-end brands
The online designer store leading the way in turning lust for luxury into e-retail sales is net-a-porter.com with the 44-year-old owner Natalie Massenet recently selling her share for a reported 50 million pounds to Swiss group Richemond.
The former fashion editor saw the opportunity when many were turning their backs on e-commerce after the Internet bubble burst. Having cried her way through the first year in business, she has created the ultimate dream e-retail platform with an average online purchase of 500 pounds and annual sales of 120 million from the 3 million monthly visitors.
The key for the future in luxury online has to be, first and foremost, user experience. This is one of the greatest challenges for the up-market brands seeking to replicate the bricks and mortar atmosphere of exclusivity and quality on the web. This is what has made net-a-porter successful. They have managed to replicate the experience of reading a gloss magazine but doing it online. More than 3 million members receive their weekly online magazine with the option to shop the editorial fashion shoots right there and then with the click of a button. The photos, interviews, videos and the whole shopping experience – not to mention the beautiful packaging in which the purchase arrives at your door – makes for a luxury shopping experience.
The sky is the limit for the future of online luxury, with enviable margins and budgets to inspire the lust for such highly covetable products and services such as travel, fashion, leisure and lifestyle and indeed the wealth of opportunities that are available to the luxury consumer online.
It is a well-known fact that the luxury industry in general had little regard for the Internet during the nineties, believing that luxury brands had little in common with the characteristics of the web. How wrong was that! Many luxury brands have been playing catch-up since.
The question now being asked is not if luxury should be online, but how luxury brands should utilise the World Wide Web to take full advantage of the many possibilities of the technological advancement in the past decade, the increasing user growth rates and the amount of time dedicated to surfing the web, rather than time spent using other media channels.
Some of the more progressive brands are now focusing on how to engage with their client base, since the dawn of Web 2.0 and the massive penetration of social media. Many brands did not take Facebook seriously and were grappling to jump on the bandwagon that was growing at incredible rates.
Not wanting to get caught out again, luxury brands from travel companies to exclusive department stores are now embracing the fastest-growing web phenomenon ever, Pinterest -which is an image-based social network that allows users to create pin boards with images they find on the web that they would like to share with their virtual friends – and using it in a number of creative ways as a means of influencing buyer behavior.
Innovative examples of how luxury brands are using the latest technology include Sotheby’s International Realty in the USA, which developed an iPad application using geolocation technology to allow potential buyers to get a current listing in their immediate area as well as information about local amenities, maps, images and relevant information on the area of interest.
Gucci has launched an advertising video optimised for mobile devices such as iPhone and iPad where the products featured can be purchased with a clicking of a ‘buy it now’ button.
With the vastness of the information now easily accessible to the masses on the Internet and the power to influence and be influenced through the use of social media, we can expect that luxury brands with their deep pockets will find effective means to communicate with us by fully utilising the advances in technology in the near future.
Those who sell luxury (or indeed any other product) and still believe that the Internet and social media are not relevant for them may find themselves extinct before they get a second chance.
The major challenges that luxury brands have to overcome are:
1. To take advantage of the opportunities available, luxury companies need to become more flexible and open. This means acknowledging the importance of the Internet in their business practices, communications, customer services, and Internet marketing, branding, sales and customer relationship management.
2. The Internet needs to be viewed as offering multiple channels for luxury business with opportunities not only in advertising and sales but also operations, supply chain management and distribution.
3. Luxury brands, and indeed any business today, need to figure out how to engage with their target market online. The virtual world is an important factor in the lives of many (13% of the world population use Facebook) and therefore connecting and interacting with these potential customers cannot be ignored.
4. Many companies struggle with representing their brand online. Getting the right look and feel that visitors immediately recognise the brand attributes is one of the most difficult challenges to overcome.
5. The users of social media have the power to influence and change behaviour and attitudes for or against a brand very quickly.
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