E-commerce platforms have obvious strengths and definitely offer advantages to luxury brands, starting with audience and traffic but also infrastructure, services and experiences offered. But at the same time, luxury brands are still concerned with association, not only with the platform but also with other brands on the platform that might not fit their brand positioning. Additionally, the business models offered by luxury and premium e-commerce platforms vary greatly, from consignment to full ownership, and potentially have a great impact on the room brands have in manoeuvring that platform. These platforms may hesitate when it comes to deciding how to promote the brand, its products, and how to integrate it in the platform marketing and communication plan.
The broad concept of New Retail is one of these trends, but it is not the only one. The platforms are the ones driving innovation and they are the ones that have shaped the habits and expectations of consumers without necessarily waiting on luxury brands to catch on and/or integrate the same principles. Today, we see e-commerce pure players not only driving innovation in terms of logistics, big data and AI, but also in more traditional areas such as offline retail experiences and CRM.
The consumer is China is already digitalised. Consumers don't visit a store without a phone in hand, scanning products or bar codes, taking pictures, and cross-checking product information and details across various platforms. While this creates a new host of concerns for traditional retailers, it also brings about significant opportunities. If retailers start building experiences that take into consideration the way these young consumers shop, a great deal of insights can be gleaned from the data collected through this exercise. Based on that, even more experiences can be built to suit their needs and preferences.
The usual mix consists of choice, convenience and price. But increasingly, the overall experience plays a stronger and stronger differentiating factor.
There is no "one size fits all" answer, as it all depends on the brand's objectives and its situation in China. While this topic is often reduced to considerations regarding traffic and audience, brands should also consider the platforms in regards to what they can offer in terms of logistics, experience, promotion or innovation.
Launching on an e-commerce platform neither creates demand nor builds brand equity. The right merchandise and activation does. Also, because most of the luxury brands are at an early stage of their development, they tend to think that a single partner is required to develop e-commerce. Offline distribution strategies are complex and often executed together with numerous partners, proper merchandising and well thought-out product tiering strategies – there is no reason for an e-commerce approach to be addressed any differently.
Learn more about e-commerce strategy at the Luxury Society Keynote 2018. Seats are going fast, so register for a spot here now! We can also be reached at [email protected] for all other enquiries.