Luxury Brands are Turning to E-Commerce

Sellers of luxury goods such as Chanel and Louis Vuitton are ramping up their online services in the face of growing customer demand. Online purchases account for 6% of the total for luxury goods, which is three times the share held in 2009.

Luxury brands have been hesitant to move online due to technology gaps and concerns over security, besides the idea that selling online would diminish brand authority. These concerns have been usurped by the fact that consumers of luxury products now expect to find them online.

With an assortment of luxury brands now increasing their online offerings, e-commerce is projected to make up approximately a fifth of all sales of luxury goods in ten years time. This growth will involve the brands own sites and those of large department stores.

Most are latecomers to selling online and are therefore playing catchup, however this dictates a very different approach from the majority of online retailers. While those who serve the mass markets invest in building larger DC’s and faster shipping in order to keep pace with Amazon, luxury retailers are only dealing with small shipments. The amount of inventory they have is comparatively very low, and is spread across the world.

As for the security concerns of luxury brands, their fears are rooted in the idea that providing easy access to their products will assist the work of counterfeiters. Theft is also a risk associated with shipping high value goods.

In response to these concerns, a product by Sealed Air Corp, who make protective packaging, have developed a product called Korvuu, which works by securing goods in own retail packaging to the floor of delivery containers, making them much more difficult to access. Custom printing can be applied to the inners to add to the luxury feel, but it will remain necessarily bland and functional on the outside.

The adaption to e-commerce is especially tricky for those companies who usually spend heavily on building stores, which also serve as their showrooms.

In the end, luxury goods companies work in higher margins, meaning they can afford to experiment with how they deliver their products, whether this means providing ‘white glove’ delivery or customized options.

The level of expectation from consumers of luxury goods is unlikely to fall and will more likely increase, whether they are buying online or in person, and will always have to be met.

What other changes to logistics, packaging and delivery should luxury goods retailers make to ensure their products are delivered with the highest of standards? Share your thoughts by commenting on this post, or on our Facebook or twitter pages.