Essays

Why is Luxury Fashionably Late to the E-Commerce Party?

It’s not headline news that the most venerable luxury brands across nearly every segment have been, to put it politely, fashionably late to the e-commerce party. The $1 trillion-plus global luxury sector has been slow to embrace online sales, and not without some good reasons.

The traditional signifiers of luxury – quality, heritage, novelty, scarcity, sustained premium pricing, flawless service – are difficult to communicate and execute online. It requires significant investment, new skills, and potentially a new organization structure to effectively move a luxury brand into a new channel of distribution with fundamentally different attributes than traditional luxury retail.

As a marketer, I understand the trepidation about losing control of a brand’s identity and pricing online. However, after a few trips to Silicon Valley, some online explorations, and several discussions with some of Silicon Valley’s tech elite, we here at Dandelion Chandelier are wondering: what’s taking luxury brands so long?

Any one of several studies conducted by the large global consulting firms confirm a few basic truths about the current behavior of luxury consumers worldwide (and by “luxury consumers,” we mean people with household income of $500,000 or more):

–Three-quarters of the purchases they make are influenced by something they saw, read or experienced online

–All of them have at least one mobile device and the vast majority of them have more than one

–Most of them are on social media at least once a month (a quarter of them are on it weekly).

True, last year under 10% of global luxury purchases were made online. But predictions are that in just a few years, one in five of all luxury goods purchases will be made online (including via mobile).

Digital browsing and e-commerce are now core to luxury consumer behavior. So if the consumers are so engaged in this channel, are the large global luxury brands right there with them?

Not so much.

The Dandelion Chandelier team assessed 120 luxury brand sites, 40 each in the fashion, beauty and watch & jewelry categories. Not only have many of these brands had a late start selling product on the web, they also lag on mobile, and they don’t always showcase their full product lines on their websites. Some of these brands are investing in programmatic advertising so that they can follow their target consumers around the web and serve ads to them. But in terms of actually selling product, they’re still remarkably cautious.

Our next blog will share details on our research results. The question to ask for today is this: in an increasingly mobile, always-on world, where the elites are as attached to their devices as anyone else – if not more — what are luxury brands so afraid of?

It’s fine to make people wait for you – Beyonce and Marc Jacobs have taught us that – but there’s fashionably late. And then there’s missing the boat.

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