LUXURY E-TAIL: WHO IS BUYING THIS STUFF?

Source: www.ecommercetimes.com
By Lesley Hensell
E-Commerce Times
11/18/03 4:02 AM PT

In terms of demographics, online customers who buy luxury brands are primarily women ages 25 to 42. A high percentage of luxury e-tail customers also graduated from college and have income of more than $60,000 per year, Ashford.com vice president Michael Dell'Arciprete told the E-Commerce Times.


A US$75 box of truffles. A $550 designer handbag. A $10,000 diamond ring. While these may not sound like the kinds of products consumers would rush to buy over the Internet, e-tailers are claiming growing success in selling to the wealthy -- or at least to those with expensive tastes.

"During the last big boom, from 1998 through about 2000, people bought more luxury items and got used to it," Ken Kellerhals, CEO of gourmet chocolatier Bissinger's, told the E-Commerce Times. "We've always thought that once a customer got used to our chocolate and saw how superior it was, it would be hard to go back. So we've been able to hold on to the customers we gained in the last boom. We really believe it's a push toward quality."


The Santa Boom
Like other e-tailers this year, Bissinger's is counting on hot holiday sales fueled by an improving economy. The forecast is bright: While most retail analysts predict overall holiday sales will increase by between 4 and 7 percent from last year's levels, they expect online sales to rise between 22 and 29 percent.
That is one reason why Bissinger's recently launched two new Web sites. Although the company's chocolate store has been online since 1999, last month it opened Bissinger's Marketplace, which sells gourmet foods. The firm also has begun offering corporate gift sales on its company Web site.
"We've tripled our presence on the Web this year and are very glad we did," Kellerhals said. "Sales have been growing at a pace of about 12 percent a year since we first launched online. And our Web site now represents 22 percent of total sales."
In the past, Bissinger's relied almost solely on catalog sales. The Web now helps the company reach younger customers, who often find the Bissinger's site via search engines, according to Kellerhals. Online sales also reap higher margins because the company does not have to mail expensive paper catalogs to e-shoppers.

Selling by the Numbers
In terms of demographics, online customers who buy luxury brands are primarily women ages 25 to 42. A high percentage of luxury e-tail customers also graduated from college and have income of more than $60,000 per year, Michael Dell'Arciprete, vice president of marketing for Diamond.com and Ashford.com, told the E-Commerce Times.
Sales at luxury e-tail sites have risen considerably in recent months, beating projected revenue in both September and October, Dell'Arciprete said, noting that he expects holiday sales to increase 30 to 40 percent year over year. Like Bissinger's, he considers his company's online sales to be somewhat recession-proof, since its upscale customer base is less sensitive to shifts in the economy.

Golden Rules
Dell'Arciprete cited three keys to selling luxury goods online. First and foremost, the e-tailer must sell authentic, branded items. "It seems basic, but there are a lot of people out there selling knock-offs," he said.
Also, at Ashford.com and Diamond.com, buyers can purchase the current year's styles rather than close-out merchandise and can take advantage of a 30-day, no-hassle money-back guarantee.
"If you spend $600 on a Gucci handbag, you'd like to know that your final decision on whether to keep it doesn't occur until after you've seen it and had it in your hands," Dell'Arciprete said.
Finally, the sites offer free shipping on orders of more than $150. With an average handbag price of more than $200, buyers do not want to be nickel-and-dimed with shipping charges, Dell'Arciprete noted. Plus, they can avoid sales tax by buying online, at least for now.

Information = Sales
In fact, Dell'Arciprete argued that buying a diamond online actually can be a safer and easier process than going to retail jewelry stores in person. Since all of his company's diamonds are GIA certified, the buying process is standardized, and consumers can easily compare prices between diamonds listed on various sites.
Scott Todaro, product marketing manager for commerce at ATG (Nasdaq: ARTG), agreed that large-ticket items can be more convenient to buy online. One of ATG's customers, Best Buy (NYSE: BBY), sells plasma television sets online for up to $10,000, Todaro told the E-Commerce Times.
"Best Buy estimates that 20 percent of all sales they make are influenced through the online channel," he said. "Over 50 percent of the people shopping in their stores are shopping them online as well."
This synergy enables consumers to educate themselves about large-ticket items online before making purchase decisions, he added.

Getting Personal
Another ATG customer, luxury retailer Neiman Marcus, has invested in online technology to try to create the same personalized shopping experience over the Internet as in its stores.
Last Christmas, Todaro said, Neiman Marcus targeted male shoppers, who tend to wait until the last minute to purchase gifts and are therefore less price-sensitive.
"They tried to create a sense of urgency for male customers," he noted. "And they had a tremendous success ratio getting these customers to act."
The personalized online shopping experience includes push e-mail based on past purchases and browsing activity, loyalty programs and ongoing communications.
"For a high-end item, customers want the greatest level of service possible and the greatest amount of information possible," Todaro said. "It's our goal to make this happen online, just as it does in the stores and catalogs."
If luxury e-tailers can succeed in expanding their customer base while maintaining their existing core of recession-proof shoppers, they could secure their position as one of the linchpins of e-commerce.

TOP LUXURY BRANDS FIND NEW MARKETS IN INDIA

CLOTHING COMPANIES CASH IN ON E-COMMERCE
13 February 2007 Source: just-style.com

Despite the limitations of selling fashion over the internet, online purchases appeared to buck the downward trend in festive retail sales. Rebecca Danton finds out why more and more retailers are turning to e-commerce, while new research suggests that online fashion sales could increase by GBP134m (US$264m) a year if websites address customer behaviour patterns and provide more product information.

The high profile collapse of Boo.com back in the late 1990s, despite an investment of millions of dollars and the incorporation of sophisticated technologies that allowed shoppers to see clothes at 360º angles, contributed to the slow uptake of online activity by clothing retailers.
But even so, the sluggishness of fashion’s entry onto the online stage has baffled many critics.

Marshal Cohen, analyst at the NPD Group, confirms that the fashion sector has been “one of the slowest to adapt to online retailing. Autos, homes, pharmaceuticals… all have been more online centric than fashion, which is supposed to be in the forefront.”

Some critics argue the many undeniable limitations and challenges of online retail are holding fashion companies back.

As industry experts point out, some shoppers are turned off the idea of shopping for clothes because they can’t try pieces on.

Not only does this take away part of the buzz for some consumers – especially those who cite clothes ‘shopping’ in its traditional form as a hobby – it can also be an added complication, with unpredictable sizing and clothes looking different in real life to the way they appear in an image.

Sales easy to lose

Jason Kemp, managing director of retail operations specialist Envision Retail, points out that on-line shoppers are also ruthless. “They will abandon a purchase at any stage in the process if they are irritated or can’t find what they want, demonstrating just how fragile a process it is and how easily a sale can be lost. “At the beginning of their search, around 75% of on-line shoppers will leave a site if a page does not download quickly or is not available. Once on a site, if a page takes longer than 7 seconds to download, 57% of shoppers will leave immediately, with just 14% willing to try again,” adds Kemp.

More standardised sizing could help with the fit issue, while a wide range of technology exists that claims to showcase clothing in a manner almost on a par with that of a bricks-and-mortar shop.

But, it could be argued, the more technology is employed the more can go wrong. Not only from a user’s point of view – as with Boo.com’s misjudgement of what sort of site its target audience wanted and could use – but in many other aspects from misplaced and overlooked orders to complex web pages freezing and causing people’s computers to crash.

One way companies can cut down on the risk of technical problems is to bring in an outside technology firm/online specialist. In fact retail giant Marks & Spencer went so far as to call in the services of leading internet retailer Amazon to develop its e-commerce operations.
While M&S has stayed responsible for managing its own site customer service operations, warehousing and distribution, Amazon has been working with the company to update its website after it struggled to cope with demand during a period of busy trading.

Fashion firm Lindex told just-style it too has employed the help of an outside technology firm as it sets up to sell online.
“We are trying to make the e-commerce website as integrated as possible to streamline the process,” says Ulrika Danielson, the company’s director of corporate communications, admitting that, nevertheless it was still faced with a number of “difficult issues” to solve.

Online tricks

Some of the tricks that could increase online fashion sales by more than GBP134m a year, according to a survey into Internet shopping behaviour by Envision Retail, include increasing the download speed of a page, and providing detailed information which actually slows down the purchasing process but helps the shopper bond with a product. The company, whose customers include Metro Group, Nike and Bon Marche, points out that fashion surfers need more imagination to assess a product’s suitability. “While shoppers’ brains screen out 99% of the visual stimuli they are presented with on the high street, it is only 45% when they shop on-line,” explains Jason Kemp. “So there is a huge opportunity to provide even more pictures of products, from various angles, in close up, to get customers hooked – but getting them to that stage means that any previous searching and downloading has to be fast.

Because they can’t touch the garment, fashion surfers need more imagination to assess a product’s suitability.

“They physically move towards the screen to try and get a closer look; they stop to think while they imagine wearing the item and then check out descriptive words to understand the texture,” explains Kemp.

He adds that a website design built to create this ‘Quick-Click-Slow’ shopping experience will help minimise the percentage of consumers who abandon a purchase mid-search.

Where a retailer suggests a complementary accessory – belt, bag or jewellery – shoppers stay on the site longer, 40% of shoppers will actually view the item and there is a 3% chance that they will buy.

Legal issues

Some internet retailers also have legal issues to contend with.
Online marketplace Ebay has found itself at the receiving end of a number of lawsuits for allegedly failing to stop the sale of fake goods on its site. Despite the company’s protests that it takes the issue seriously, some have likened the apparent wide availability of counterfeits on its sites to China’s infamous pirate hotspots.

Again, there are ways this can be tackled. Online brand monitoring and counterfeit detection firm Net Enforcers recently joined up with private investigator Gobi International to step up the fight against the sale of fakes online by detecting, tracking and uncovering illegal manufacturers, distributors and sellers.

But, as in high-street retailing, cracking down on counterfeits is never straightforward and there’ll always be some who slip through the net, however strong and wide that net is.
Turning to a different type of retailer, another source of contention could be that going online is yet another way for retail giants to monopolise the retail market.

Tesco, for example, recently told just-style of plans to trial clothing sales online – even though the company has already been subject to an inquiry into its increasing domination of the grocery sector and is now being slammed for taking over big chunks of a growing number of other, non-food markets.

However, a spokeswoman for Tesco told just-style the company queried the ‘non-food’ categorisation as a lot of competitors are larger in separate areas.
She also denied that Tesco was trying to take other companies in the online clothing market, adding: “Clothing is a relatively small business for us at the moment but it is growing quite quickly,” and said that “the customer would be the winner” from the expansion of clothing retail onto the internet.

Despite its pitfalls and the complications it brings, when it is done well online retail does have a great deal of advantages for retailers and consumers. And despite its slow entrance into the apparel sector there have been a few examples of the successes to be had – Bluefly, Asos and Net-a-Porter to name just a few.

Unlike high street shopping, online requires a minimum of effort; a sure bet for those in a hurry or people who struggle to get to the shops.