Episode 111: Smell Like Duane

Comment by Lynx on July 19, 2010 at 2:07pm

I don't really agree on the high-end retailer discussion, E-commerce really isn't it for them, brand-wise. As a sales platform, it makes sense, you don't have retailers taking there margin after you wholesale it to them. As a brand however someone you're website really needs to be focused on driving people into stores to see your goods. With clothing, you need to see the product because of how sizing varies from brand to brand. Do you really want to order a $150 polo shirt from band of outsiders, only to find that you got a medium when you need a large? Why wouldn't you go to Barney's or Saks to find the size that you need or even order from Detour or Revolve who offer easy returns or free shipping and are willing to help you pick the size? Why ad a webstore when you're so focused on conveying your experience. As a high end brand, you need to focus on your in store presence, because that is where you can make your value proposition to your consumer. How do you know what makes a 200 dollar shirt worth it? BOO could tell you that they're shirts are made in the USA, that they fit really slim, that their minimalistic and for those who value quality on their website, or they could give you a taste of what they're about and get you into the store to see if the fit works on you. Honestly, I feel like the better approach to take is to go under the radar. High end brands thrive on being exclusive or aspirational. Brands can create exclusivity through not existing on the internet (RRL being an example of that) or they can create an appearance of exclusivity to lead to higher-margin and volume outlet sales (Gilt being an online example of that), neither of which necessarily require someone to have their own e-commerce site. Face it, when your spending $200 on a shirt or $300 on jeans, you should be willing to go out of the way to find a good fit or value, and being in a store where you can ensure the correct fit and experience for people looking for you, and give people who aren't looking for you a reason to seek you out in the future.

Comment by Bob Knorpp on July 19, 2010 at 2:29pm

What you're saying here is another layer to the discussion. The big argument against e-commerce for luxury brands is cannibalization of store sales. But what you're saying here is what actually happens. People prefer to buy luxury brands in stores. The trouble is, sometimes (especially with loyalists) they don't need to touch or sample anymore. They always buy an item and they want it conveniently now. Not providing this becomes a bad thing for the brand.

But all that aside, the vagaries of brand experience are still a big question for luxury makers and e-commerce is at least a step toward better control of their brands. By creating the store experience virtually, they help their customers to see more clearly the difference between how they are treated by the brand and how they are treated by the store from which they buy the brand. If the two don't match, it's easier for the customer to blame the store without tarnishing the brand in their mind.

Essentially, even if the e-commerce site doesn't sell a lot of product, I would say that such efforts are more important than ever. These brands can no longer rely on the consistency of department stores to carry their identity torch with co-op dollars. They need to create store experiences of their own.

Apple is, once again, a torch bearer on this. Until Job returned Apple was sold all over the place. Now they closely control and guard their own retail experience. And it all started with an e-commerce store that directly competed with their own catalog and retail vendors.

Thanks for the comments. Good food for thought.

Comment by Lynx on July 19, 2010 at 2:54pm

Once you understand the brand and know your size, the idea is that you return to the store because of either a relationship you have with the salesperson who can hold for you, get you access to sales etc. These large luxury brands(in fashion, shoes and accessories at least) really have 3 basic groups of customers however: Brand-whores, Fashion-enthusiast, and brand loyalists.

Brand-whores buy gucci because it's gucci. These people are more likely to buy through a Gilt,Bluefly or Yoox then a brand site. These people don't really care about the brand experience or what the brand means, they just care that the clothing is the brand. These people are often a target market however due to their willingness to buy a high margin product ( a alligator polo shirt or a "LV" covered handbag)

Fashion Enthusiast are buying a product because they love the look, feel, fit or something else about that piece specifically. These people buy full price at Saks/Barneys or a site with a good return policy and helpful sales staff. These people are seeking out new cool products, but aren't necessarily going to a brand site as much as a source like Styleforum.

Finally we have the brand loyalists. These people both love fashion and love a brand. They love the brand for a real reason. These people aren't necessarily going to buy every piece however. These people still need to look to find a piece that fits them and their aesthetic (Although that might align with the brand aesthetic)

I guess it might be not the idea but the execution that sets me off to these things. I feel like I'd rather have a site like Maison Martin Margiela that shows the brand and the pieces, and where else online I can buy them then a Ralph Lauren which is solely a storefront.

Comment by Bob Knorpp on July 19, 2010 at 3:14pm

Your last comment is particularly poignant and I would agree. A brand can't just become a storefront and it's important to have a clear objective and strategy and balance, so that either side of the equation isn't sacrificed.

Comment by Danny Starr on July 20, 2010 at 10:56am

Awesome show this week! I tend to listen to the show when taking the bus or biking around town doing my daily stuff and this week's show was so good, I almost couldn't get my order out of my mouth at the coffee shop.

The only real comment I have on luxury brands and e-commerce is that the more e-commerce becomes part of our daily buying habits and the more the platforms and the technology behind it becomes smoother, more integrated and user friendly, the more sense it makes for high-end brands to be there. However it is going to be a rough go for them as they are going to have to make sure they don't anger their traditional retail partners who have been investing in EXPENSIVE floorspace for their goods for years, if not decades.

I came in here to comment on the part of the discussion about Old Spice's pay per click discussion because although it was fairly brief, I think there is an important point to be made:

the power of PPC is the optimization you can do so seeing ads with 71 years in them and commenting without seeing conversions is pretty much useless. Ideally, whoever is running that PPC ad has that as part of a rotation in a testing set or it is the result of a previous experiment.

My own PPC experience was that you never know what is going to convert the best... and sometimes it is surprising what does....

So I don't think PPC can be discussed and analyzed like a TV ad can from a distance.

Comment by Bob Knorpp on July 20, 2010 at 1:36pm

Regarding the PPC for Old Spice, you are right in theory, but we weren't commenting on results. The point was that if brand perception is actively being changed by the ads, this PPC message serves only to undermine those efforts. In this case even if conversions are sacrificed in the short term, the smartest course of action would be to have the search efforts mirror the brand efforts.

Now I'm not saying that ultimately this is the best strategy. We can't predict that. But if you choose a strategy, you need to follow through with that strategy. Piece meal approaches just become confusing to the consumer.

Thanks for the comment. This one really got me thinking.

Bob

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