More Web 2.0

A November 5 article in The New York Times on luxury brands moving to the internet makes an interesting point: that luxury brands are no longer holding on to the notion that selling online means a loss of face to their exclusive tags.

According to the article:

"We've begun to see that the e-commerce shopper is indeed someone who has really quite a level of sophistication, and is older than was once imagined," said Robert Triefus, an executive vice president with Armani Group. "For fashion, that type of consumer is very fundamental."

...

Among other things, Mr. Triefus said, the site opens the brand to consumers who are not near the company's stores. "In a market like America where we've historically only had 10 freestanding stores, this suddenly makes accessible one of our most important collections in a very broad way," he said. "One imagines the virtual store will progressively rise up the charts."

More interestingly, it's the more expensive articles that fly off shelves more quickly.

Basic garments sell comparatively slowly, Mr. Hoffman (Brendan Hoffman, president of Neiman Marcus Direct, the company's catalog and online division) said, but items like $7,900 Valentino gowns, $5,500 Carolina Herrera jackets and other items "with more camera appeal" sell quickly.

"We've yet to see any limits to what they're willing to pay," he said. Two factors are behind the recent growth, Mr. Hoffman said.

First, many more customers have high-speed Internet connections, allowing them to click more freely through multiple pictures of an item and zoom in on shots of fabrics and colors. Mr. Hoffman noted that until 18 months ago, most of his business came during working hours on weekdays. Now much of it comes "on weekends and after 8 p.m., once the kids are in bed," he said.

However, The Business of Fashion has an interesting take on the online trend. Says Imran Amed:

The article goes on to trot out the same old case studies and growth figures of Net-a-Porter and Yoox, and highlights how so many major brands are now moving online, but it fails to really dive into the issue of where do luxury ecommerce retailers go next. Apart from a cursory mention of new features on the Saks.com site, it glosses over the most interesting question of all: where could all of this take luxury in the years to come?

One thing is for sure. We have already seen luxury companies engage in a great land grab for the best retail spaces in the world's international cities over the past decade. Now that most luxury companies are moving online, the next race will be to to make the experience of shopping online the most satisfying, most special, most interactive, and most personalised -- while still respecting the simplicity and ease-of-use (beware the trap of Boo.com!) that makes online shopping convenient.

I'd say he's completely bang on.

Image courtesy: NYT

Armani online

Seven years is a long time to be thinking about selling luxury and fashion online, but it seems the reputed business genius Giorgio Armani has finally seen the light. In a quote to WWD in early August, he said about Emporio Armani's e-commerce launch in the USA:

"In the last seven years, I have seen mounting enthusiasm for online fashion shopping in the United States through the growing success we have had with our A|X Armani Exchange site," Armani said. "Over this same period I have also observed the increasing sophistication of fashion consumers shopping online, which has encouraged me to develop this new site for my Emporio Armani lifestyle."

"There are many attributes of an e-commerce store that I find especially appealing: the ease with which we can change the merchandise offerings; the instant information we receive on the way customers are shopping on the site, [and] the fact that the collection can now be available 24 hours a day, seven days a week, to so many people who have not had access to one of my stores in the past."

In the meantime, The Business of Fashion says Dior, Gucci and Coach have all discovered that an online store rapidly becomes one of the top (if not the top) store in a brand's network. Better late than never, the Emporio Armani site had a soft launch on August 14, and an official launch will follow in September. However, shopping on the site will be available to US residents only. Europeans and Asians will have to wait until next year.

Image courtesy: WWD
Link: The Business of Fashion

Luxury on rent

You've got the perfect Chanel dress and Christian Louboutin peep-toe pumps for that fancy evening out, but can't find the right handbag or jewellery to accessorise the ensemble with. If you're living in America, you can log on to Bagborroworsteal.com and rent it for a small fee. As simple as that!

The Seattle-based company stocks authentic luxury accessories from over 100 labels, including Louis Vuitton, Gucci, Prada, Chanel (you get the drift) providing a rather novel way for fashion-conscious women to access and enjoy luxury accessories when they want it and for as long as they want it.

Now, a French online portal called Feelchic.fr is following suit and it won't be long before luxury renting explodes into big business. I'm already working on my India business plan!

Luxury in real time

It seems luxury brands are finally warming up to the advantages of the internet. So far, most high end brands have stayed away from promoting/ selling their products online for fear that it diminishes the brand's exclusivity.

However, an article in the Wall Street Journal says luxury companies are now designing high-tech sites to enhance their upscale appeal.

"Until a couple of years ago, brands were very cautious online," says James Gardner, CEO of createthe group, an interactive agency that is behind high fashion sites such as MiuMiu.com, Balenciaga.com, StellaMcCartney.com and MarcJacobs.com. "They hadn't really seen sites created that managed to remain elevated and appropriate for luxury brands. [But now, with the help of online video and interactive features] the product imagery can be very beautiful. Every component, every detail can be carefully crafted [on the Web], just as their products are."

A January 2007 survey by market research firm Luxury Institute found that 99% of those 21 years and older with a minimum household income of $150,000 had Internet access at home -- and 94% said they used broadband connections, which are amenable for video viewing. Similarly high numbers were reported for the use of the Internet in researching products and shopping. Naturally, as high-end consumers have gone on the Web, more luxury brands and high-end retailers have opened up online flagships (though they generally have lagged behind other industries' online offerings).

Prada.com's site, designed by celebrity architect Rem Koolhaas's OMA firm, showcases nearly 20 short films on the production process, including clips of artists sketching bags, the making of a Prada ballerina slipper and the hand-finishing of a perfume bottle. Showing the hands behind the luxury object only burnishes a brand's image, says Milton Pedraza, CEO of the Luxury Institute.

"[Luxury consumers] want to know that they are paying for craftsmanship," Mr. Pedraza says. "And it's a little more subtle but it's [also] important, they want to know that people who are making the product are treated well. [Rather] than shattering the imagery, it enhances the reasons why you willing to pay a premium."

"We're now experimenting with ways to make video a much bigger part of sites with products, [such as] showing videos of the products being worn or moving around," says Mr. Gardner. "[Designers] have seen that not only does [marketing online] not damage their brand, it's a critical success factor for going forward."

Image courtesy: Miu Miu.com

Secondhand luxury online

I'm a big champion for opening up the online space to luxury shopping, so I find this article in the Washinton Post extremely interesting. According to the paper, there's a growing demand for "certified, pre-owned" luxury goods in the online space. And so Portero.com, an auction site, has been offering luxury goods that are used but have been appraised and validated as authentic. The site aims to be the online equivalent of Sotheby's or Christie's, rather than an eBay style flea market.

In May, the Portero Web site boasted just the kind of fashion item that Sheldon believes exemplifies his concept: a used crocodile Birkin selling for $41,999 (a brand new specialty that Birkin can sell for as much as $85,000).

"Wouldn't you be more likely to purchase a $42,000 crocodile bag if you knew you could sell it after you got tired of it?" Sheldon asks. "Which one could I justify: Polo or Hermes? Which would I buy if one holds its value better?"

To make his experiment work, Sheldon has homed in on one of the nagging problems of high-end e-commerce: "People can't trust luxury online," he says.

He has found a way to break through that by taking a cue from luxury automakers such as Mercedes and BMW, which traffic in "certified pre-owned" vehicles - a fancy way of saying used cars that have been inspected and come with a warranty. He hires experts to inspect every item before it's put up for sale.

The items on the site come from individuals or dealers (where Portero makes an average 25 per cent commission on sales) or from the site itself. All items pass through Portero’s offices to be validated, professionally photographed and listed, and then gift-boxed before being sent to buyers.

With eBay hosting the vast majority of online auctions, a certified used goods auction site is an interesting experiment. It’s likely the site lacks the high volume of traffic that eBay gets, but I'd bet the traffic it does get is very high quality with plenty of users serious about making purchases. That Portero handles the auction and provides a guarantee with every purchase surely eases the minds of people who aren’t experienced with online auctions.

There's an aspirational market out there and Portero provides connoisseurs a space to find the exact items they want to appreciate; they might not see the same items anywhere else, and if they do (on eBay for example) they might have difficulty verifying them. With more wealthy people going online, Portero could be quite a success.

Image courtesy: Getty Images

Logging on to luxe

Even though it's something of a paradox as far as luxury retail is concerned, I think every luxury company must have a well-designed, user-friendly website that allows customers to buy straight off the vitual shelf. This is simply because a lot of potential (and discerning) customers are internet savvy and it's hard to beat the convenience of shopping from home vis-a-vis the 'luxury store experience' every single time.

To prove this point, a 2006 report from eMarketer.com says that jewellery and luxury goods made up 7.5 per cent of total online sales in 2005, a figure expected to double to 14.1 per cent by 2010. While that may not be a large figure, it does show that an increasing number of customers are getting comfortable shopping online.

"There are enough seasoned online buyers who have had good experiences purchasing basic items such as books and DVDs online," says Jeffrey Grau, senior analyst at eMarketer, "so they have the confidence to take it to the next level and [make] a more complex, more sophisticated, expensive purchase."

SimplySoles in Washington, DC, is one e-tailer finding success in the luxury market. The company, which sells the best in women's footwear through its catalog and website, brings in an average of $325 on each sale. Sales surpassed $1 million last year.

That's as good a success story as any, no?

Pic courtesy: Getty Images