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Luxury and eCommerce

The subject of luxury brands embracing e-commerce sparked a lot of discussion this week. On The BeanCast itself, via Twitter and on the blog comments of the show notes there was vigorous debate about the ultimate effect of such a move.

While the guests on the show largely sided toward it being a good move, some listeners disagreed, feeling that ultimately a luxury brand demands personal touch and in-store experience to drive sales. There was also concern that e-commerce diminishes the brand value and distracts online searchers who are researching more than shopping.

My own thoughts tend to side more toward the opinions of my guests. Here's why.

Creating The Real Brand Experience
One of the points during the show was that these luxury brands are often at the mercy of the stores they are displayed in. Merchandising efforts aside, a snide salesperson can kill a brand experience. 

Until e-commerce there was very little a brand could do to create a buying experience that they would like the customer to have. The could affect image and value, but not that moment when money is exchanged. And that moment is a key thing that a consumer remembers.

Having an online store gives the brand that kind of opportunity. Even if the customers prefer to go into a store to purchase, having a presentation of what buying a product should be like helps a customer differentiate between the product brand and the store brand. So when the store clerk sneers down her nose, the customer is less likely to hold that against the brand. 

Never Hamper Intent to Buy
A key concern expressed this week was that since luxury brands demand more consideration, an e-commerce effort might be short-circuiting the true experience and lead to more dissatisfaction and returns. But I would suggest that online shoppers of luxury products are either discount searchers (looking for closeouts or last year's merchandise and don't want to be bothered by department store attitudes) or loyalists who know what they want from the brand and want it now. So in either case, not having a store hampers intent to buy. It's just silly not to have a digital storefront.

I would agree, however, that from a consideration standpoint the online store will most likely not move much product. Which is why a luxury brand initiating an e-commerce effort should be clear about their strategy. We can't assume that an online luxury brand store is only about purchase. So the research and content portion of the effort cannot be short-changed. 

Even though there is opportunity to buy immediately, the store should also be heavily moving customers in the direction of physical stores. This is not just to keep department store partners happy, but may also be an acknowledgment to customer preference.

Vision For The Future
The biggest road block for luxury e-commerce is, of course, department store partners. Going into competition with your partners is usually not a good idea. However, given what I said above, it's highly unlikely that an online luxury store will significantly reduce sales through physical stores. If done right, it may even grow sales with an online presentation that offers a focus on buying rather than just consideration.

But all that aside, e-commerce sometimes leads to even bigger and better things. Apple launched an e-commerce effort right about the time Steve Jobs returned and there was much consternation among partners. Entire catalog businesses and retail partnerships had been built and were now in jeopardy. 

Yet the move actually helped focus the brand experience and led to Apple realizing they needed the department store relationships less than they needed control of the customer. This led to elimination of most retail partnerships and opening of Apple stores. And no one could claim this was a bad move for them.

Such drastic moves may not be right for every high-end brand, but ignoring possibilities is the sure path to mediocrity.

So thanks to all the listeners that weighed in this week. I appreciate the debate.

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