Luxury Ecommerce: Is It Truly Relevant?

by , Dec 9, 2013, 9:10 AM
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At a recent luxury industry conference, I was taken aback at the matter-of-fact assertion, repeated by executives in sectors as diverse as luxury real estate and jewelry, that ecommerce isn’t a factor with big-ticket luxury items. Their thesis: such sales can only be conducted face-to-face, a necessary condition to getting high-end customers comfortable with such big numbers. 

However, a few months later, CNBC reported that a Middle Eastern customer booked a $500k private jet flight—via an iPhone app. You can also buy a $4.85 million Rockwell painting—on Amazon. Oh, and Mark Cuban bought a $40 million private jet online.

The (Luxury) Times, They Are A-Changin’

The global affluent will purchase even ultra-big-ticket items via ecommerce as long as certain matters of trust remain inviolate. Far from irrelevant, ecommerce can be a core profit center for luxury brands if managed properly, from clicks to bricks. But it is precisely at the intersection of trust, relationship, and loyalty that luxury brands can strategically differentiate themselves from both mass-market wannabes and their less-Web-savvy luxury competitors.

Aspirational lifestyles of the global affluent are deeply intertwined with Web connectivity; thus, luxury players looking to woo high-end clientele must integrate their services seamlessly within such lifestyles. 

However, those luxury executives still skeptical about the role of ecommerce are correct in the sense that the prevailing surveillance-driven ecommerce paradigm, though highly profitable for Silicon Valley, can be destructive to luxury brand equity in the long run. 

Commodification of Luxury

Indeed, these executives sense a seemingly inherent mercenary element in mainstream ecommerce. In a world where mass-market leaders such as Amazon and Google set the ecommerce bar, skepticism by luxury players is warranted. Here loyalty and long-term relationships are replaced with relentless surveillance, the life blood of Silicon Valley’s ad-driven profit model. 

The problem, of course, is that here the consumer is the product. Naturally, she responds to such cynicism with growing price sensitivity, expectations of sundry “deal” gimmicks, short attention span … and/or eroding brand loyalty.

But for luxury purveyors, such cynical treatment of the consumer is inapposite to the long-term vitality of their valuable brand equity. Meanwhile, Amazon, eBay, et al., are determined to disrupt all corners of the luxury sector.

Web Privacy is the New Luxury

Relationships, and thus loyalty, are built on trust. But the central problem for the luxury sector is that in real life the most coveted clientele expect the utmost in discretion and privacy, as key components of a true luxury experience. Yet Silicon Valley strips consumers of both, to maximize its own profits. As a result, Web privacy is the new luxury: valuable yet rare. 

In the real world, luxury purveyors set the bar in what to aspire to in a high-end buying experience. So why would they now passively follow the no-privacy, no-discretion path Silicon Valley has architected for mass-market ecommerce? 

Luxury = Privacy + Discretion

It is here—translating online the privacy and discretion of their real-world brand experience—that the luxury sector can seize leadership in high-end ecommerce away from Silicon Valley, as these are alien concepts in the prevailing surveillance-driven, ad-supported Web ecosystem.

But just what is luxury ecommerce, anyway? 

Silicon Valley can already deliver great service: same-day delivery, Mayday service, etc. Consumers can summon such amenities and get 1-click service even while lounging at the pool. And yes, Amazon, et al will continuously move upmarket with their merchandising.

So what makes your luxury brand’s e-commerce experience, well, distinctly luxurious, matching your real-world brand experience? 

The answer: privacy and discretion are indispensable elements of any high-end experience, whether offline or online—the very elements Silicon Valley must remove to maximize its own profits. However, savvy luxury brands can restore these essential elements of the luxury experience back to ecommerce. 

Luxury Leadership

This is the only defensible path by which luxury brands can seize leadership from Silicon Valley: by demonstrating best practices in luxury ecommerce, in the same way such brands set the service standard in the real economy. 

The luxury sector is ripe for leadership in challenging the commoditized, no-privacy regime that rules today’s ecommerce. The opportunity lies in replacing the Silicon Valley-led paradigm with one that comports fully with the aspirations of the global affluent.

5 comments on "Luxury Ecommerce: Is It Truly Relevant?".

  1. Avery Smith from DME Delivers
    commented on: December 9, 2013 at 10:22 a.m.
    Bravo! Well articulated Marvin. This is a much needed conversation about many intertwined subjects paramount to future economies.
  2. Heather Garcia from Resonate
    commented on: December 9, 2013 at 11:22 a.m.
    Resonate found that, compared to the adult online population, affluent online consumers are more likely to value self-esteem (29%) and peace of mind (47%) in their product purchases and less likely to value personal freedom (18%) and self-fulfillment (11%) Check out more of our insights! http://wp.me/p45clN-6O
  3. Marvin Goodwin from Primoux
    commented on: December 9, 2013 at 11:36 a.m.
    Thanks, Avery. I hope to spark conversation and fresh thinking about new ways to translate an authentic luxe experience online.
  4. Paula Lynn from Who Else Unlimited
    commented on: December 9, 2013 at 3:30 p.m.
    You think Mark Cuban didn't do his homework before he pushed the last buy click and still have recourse ?
  5. Lakshan Chandran from Freelance
    commented on: February 4, 2014 at 4:23 a.m.
    Interesting viewpoint. However, I read a post which seemed to believe the contrary. In fact, it put forth how the luxury retail industry can actually benefit from taking the business online. I have to agree. What luxury product customer doesn't check the internet for information/reviews? Read more in the post here http://bit.ly/19R1fYW

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