How E-Commerce Is Penetrating the Luxury Market
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The luxury goods market has been the longest holdout when it comes to adapting to online shopping. Despite e-commerce witnessing a rise for years, many luxury brands fear that they will lose their elite status by moving to the Internet. But e-commerce expert Raymond Scott Jr. and Gemma Fine Jewelry, CEO Ori Vechler, share how e-commerce is starting to penetrate the luxury market, and why this is only the beginning.
According to Vechler, there are two main reasons why luxury brands don’t like to sell their goods online. “First and foremost, luxury brands worry that by selling on a common platform, they become more pedestrian. They don’t want to risk losing their status as an elite market,” said Vechler. Secondly, he says, luxury brands have always focused on the in-person customer experience. Their brand strategy is about the experience of buying the product, not just the product itself.
According to Vechler, these two tenets have been pillars of the luxury goods market for a long time. But things are starting to change, and for a good reason.
As an expert in e-commerce, Scott believes it is only a matter of time before e-commerce takes over the trade completely. And here is why; “Online shopping is now a highly customizable process, which means that if luxury brands want to create an elaborate retail experience, they can do so,” said Scott. “It won’t be glasses of champagne or private fittings, but it can be unique nevertheless.” As a luxury-goods professional, Vechler says that if luxury brands commit to adapting their shopping experience, they can still find ways to make it special for customers. “Special delivery for fittings or one-on-one virtual consultations can still make for a lavish and elite experience,” said Vechler.
According to Scott, luxury brands will have to adapt to e-commerce standards, even if they are worried about losing their elite status. “In 2017, Nasdaq forecasted that 95 per cent of business would be conducted via e-commerce by the year 2040,” said Scott. “Luxury brands are starting to realize that if they do not adapt, they will lose revenue,” Scott says that this monumental change has been years in the making and is mostly due to the fact that millennials are entering their prime earning years. Millennials have grown up buying things on the Internet and typically get all of their information from the Internet. This makes them more dependent on the Web when it comes to shopping, luxury, or otherwise. And every generation after them will follow their lead. “E-commerce is more than just a trend,” said Scott. “It is a generational revolution.”Industries across the globe have latched onto e-commerce for its reach and convenience. The luxury goods market has consistently resisted this change. But according to Scott and Vechler, e-commerce is starting to penetrate the luxury goods market nevertheless. And it won’t be long before this tentative adaptation becomes more widespread.