Can luxury brands play catch-up in an aggressive multichannel world?

Luxury brands have been reluctant to adopt digital commerce

For years, prestige goods companies have looked down on online sales channels, which they have perceived as inappropriate for an industry which is all about high-quality and exclusivity.

“We think for luxury it’s not right. It’s good in countries that don’t have the shop nearby.”

Many preferred keeping luxury in the rarefied world of high-end boutiques and department store glossy storefronts. They have mostly been using the online channel to showcase the brand, through institutional websites with limited product content and information.

Whilst many retailers have hesitated to adopt e-commerce for fear of store sales cannibalization, the reluctance of premium brands seems to have been mainly driven by a somewhat conservative view of the luxury shopping experience. This view has been largely supported by the stereotype of e-commerce as a discount channel on which it is difficult to perceive and experience the product quality.

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Amazon: the beast luxury beauty brands should tame rather than fight

Late 2013, Amazon decided to step out of the mass market and launched The Luxury Beauty Store, a beauty products sales site to attract prestige brands. This site competes directly with luxury cosmetics brands and leverages the marketplace’s muscle power (e.g. free shipping for orders above 35$ and free 48h-delivery for Prime customers).

Many premium brands initially refused to join Amazon’s new site, which they perceived as a grey market and low-price channel. They hoped to continue controlling their distribution and pricing, but had to rapidly review their strategy upon realizing their products were actually widely sold on the marketplace by third-party sellers. By officially listing on the Luxury Beauty Store, many of these brands managed to better control the distribution of their products on the platform.

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How User Experience matters in multichannel commerce – Part II

Last month we wrote about how User Experience design matters in helping satisfying customers growing multichannel expectations, through understanding the users, their context and the interfaces they are interacting with.

We mainly focused on the customer demands and we will now see how User Experience design participates in meeting business objectives.

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How User Experience matters in multichannel commerce – Part I

As customers are interacting with more and more channels and touchpoints, it becomes essential for brands to adapt to their context and deliver meaningful interactions in order to satisfy their growing expectations.

Following the relaunch of its ecommerce site at the end of 2013, Halfords online sales have risen 13.7% from the same time last year.

Whenever adding a new channel, improving an existing touchpoint or redesigning the entire omnichannel setup of a brand, User Experience expertise actively participates to increasing conversion rates, repeat purchase and ultimately market share.

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The Online Product Catalog, an invaluable asset to the store

Whilst retailers have an increasing choice of new technology (augmented reality, beacon, NFC…) and touchpoints (responsive website, wishlist, Tweeter “Buy Now” button…) to boost their multichannel value proposition, they should not forget the foundation of their success lies in the strength and presentation of their product catalog.

Yes, in the new omnichannel retail climate, all merchants should be marketing and technology driven, with most strategic decisions being fuelled by (big) data, consumer behavior and market trends. However, without a strong Online Product Catalog, reaching out to the (connected) consumers and convincing them of the value of your offering will become more and more difficult.

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The changing role of the store

Consumer adoption of digital commerce, a great opportunity for the store

In today’s new retail landscape, synergies between offline and online channels of a merchant are ubiquitous.

Click & Collect (pick-up in the shop of an order placed online) is now a must-have service for any brick & mortar’s e-commerce given its rapid adoption by shoppers and uplift effect on basket value. According to Forrester, a third of customers collecting orders in store make an additional impulse purchase.

Another evidence of the value of the store in digital commerce is Amazon’s recent announcement to launch its first physical outlet in New York City, a revolution for the global e-tailer.

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Alibaba: how marketplaces are changing the face of retail

On September 19th, the Chinese e-commerce giant Alibaba went public after months of hype. The IPO frenzy hit the New York Stock Exchange with a share price increasing by 38% on the first day of trading, making Alibaba the largest IPO ever with a historical $25b.

Why the hysteria? Simply put, Alibaba is the biggest, most successful e-commerce company ever, with bigger transaction volumes than both eBay and Amazon combined.

The Chinese success story, which covers different online formulas, accounts for 80% of all online commerce in China, bringing the term “dominance” to a whole new level. Just to compare: Amazon takes 16% of all online commerce in the US. Alibaba counts 279 million active customers (Amazon about 244 million), enjoys profit margins of 43% (Amazon struggles to break even) and, with China’s online population expected to grow to 800 million by next year, their number of customers will see tremendous growth.
Alibaba is a giant and everyone seems eager to take a bite of it.

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The quality of e-commerce in the UAE has yet to come

More an Offer than a Demand issue

The lack of credible digital commerce offering in the UAE remains an ever true fact with only 15% of its population shopping online. Given the country has an Internet penetration of 80% and one of the world’s highest smartphone penetration (78%), the paradox is striking.

Any analyst of mature online markets would regard this as nothing but pure heresy, since the more connected consumers a brand has, the more additional revenue it can draw from them. The reality is somewhat more complex and the relatively weak development of e-commerce in the UAE has reasons beyond lack of trust and payment security concerns, as often raised by vendors in their pitches.

UAE connected consumers are increasingly relying on web and mobile services to communicate and facilitate aspects of their day-to-day life. The development of e-services and mobile apps in the region, heavily pushed by the government, is increasingly generalizing electronic payments. Online payment has actually been a common practice in the Emirates for traveling purposes for some time. UAE consumers are now ready for more relevant and actionable online content and services, which local retailers are yet to provide them.

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Multichannel Strategies for Malls

By adopting multichannel strategies, malls can offer rewarding shopping experiences to the connected consumers. Digital technologies and customer oriented marketing provide mall operators with new means to increase footfall and become more relevant to their retailers.

Loyalty programs: creating returning mall traffic

A loyalty approach enables a mall to develop a valuable customer database and share marketing operation efforts among its brands. Mall operators such as Unibail worldwide and So Ouest or Qwartz in Paris created simple but very effective loyalty programs. Their objective is to bring more loyal traffic to their retail clients and mutualize digital efforts on the web and mobile.

In Europe, these loyalty programs mostly base their marketing promise on services and benefits such as free parking, private sales as well as coupons and discounts.

The objective is to create distinctive services and offers that make customers feel valued and incentivized to frequently engage with the mall and its brands. Even premium malls, such as Le Bon Marché, are introducing loyalty programs to enable personalized communication with their customers.

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Loyalty programs: recognizing customers before they even purchase

Loyalty programs are structured social marketing efforts that reward, and therefore encourage, loyal visiting and buying behaviour. This targeted and incentivized behaviour should be beneficial to both customers and companies.

In terms of loyalty, understanding pre-purchase moments is more important than the purchase itself: customers want to be recognized and perceive their interactions with a brand are valued more than just for the purchase they make.

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