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Thursday, June 30, 2011

Why are Luxury Retailers Building Up their Online Sales Models?

Discount online retailers are a dime and dozen in the web sphere, and the average consumer has been accustomed to searching for these cut rate sites and making numerous purchases from the day the lights were turned on in this virtual environment versus making a trip down to their local Sears or JC Penney’s.  However, only a few large luxury brand name companies have ventured into this e-commerce retail arena with fear of having to compete with the seemingly endless array of heavily bargain basement priced product companies (e.g., Amazon.com, Wal-Mart.com, Zappos.com, etc.) that are so prevalent when surfing the internet on laptops, tablets or other mobile devices.  But it seems as though the tide is beginning to really turn as witnessed by a few of these highly priced retail behemoths successfully building their online sales revenues and other curious (or maybe fearful of being left behind) retailers that are starting to follow their lead and take a leap of faith to the dark side digital world.

Due to the success of companies such as Net-a-Porter, an online e-tailer of luxury brand women’s wear based out of London (that had gross revenue of $400 Million ending in its most recent fiscal year in March of 2011, which was more than a 100% increase year over year), luxury brands such Burberry, Hermes, Neiman Marcus and Faberge have boosted up their web presence lately and others are sure to follow.  Those fabulously posh brands such as Chanel and Rolex may now start to re-think their strategy of sitting on the internet sidelines and not joining the fray of discounters like Target.com, because of fear of tarnishing their highly respected names.  But money talks and a big focus on customer service has really built up these virtual retail outlets to become big competitors in the war for new and repeat business, and a huge referral network to boot. 

Think about how a great customer experience from one of these ecommerce companies could catch on like wildfire and go viral in mere minutes with mention on one of the social media sites with a few tweets on Twitter, a bunch of likes on Facebook or a number of stumbles on Stumbleupon.  Although the reverse is true as well, so companies must be sure to create that positive retail buying experience, or else a negative one could spread throughout the digital space at light speed and cause a company to crash and burn rather quickly (ask Maytag about its negative customer experience with the globe’s most famous Mommy Blogger, Heather Armstrong, who literally built a blogging cottage industry by the viral success of her 10-day disastrous ordeal with her “new” Maytag washing machine).

With the advent of same day delivery (to feed our need to immediacy), money-back guarantees and 24/7 customer support, e-tailers are going the extra mile for their shoppers and that is especially important for the clientele that these luxury brands cater to.  As more and more companies take the plunge into this wired world, they will need to keep quality customer service at the forefront while at the same time offering the same top notch product lines that have made them oh so famous throughout the fashion runways of Paris, Milan and New York.  We may want the convenience of clickable shopping but we still want to walk down the street with that trendy new Louis Vuitton bag or Piaget watch on our arm…and of course purchased on that same day!  Sooo High School!!  
     

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