Getting Luxury Goods Online

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MR Langridge / Chemistry / getty

F. Scott Fitzgerald famously observed that the very rich are different from you and me. Perhaps. But just like everyone else these days, they have been won over by the convenience of online shopping. Around 80% of high-net-worth consumers — in Western societies defined as those with annual gross income and assets of at least $500,000 — use the Internet daily, and they regularly buy products online. A great opportunity for luxury goods, right? One would think so, but only a third of the world's premium brands sell their goods online, according to a new study by consultants Forrester Research. And fully half of those eschewing web sales have no plans to change course. On the sidelines are some of the sector's biggest names, including Cartier, Versace and Rolex.

That reticence is a big mistake, Forrester says, because the growth in online sales shows no signs of easing. In Europe alone, total online sales should rocket 63% from an estimated $246 billion this year, to $401 billion in 2011, it predicts. In the U.S., total sales are expected to soar 93% from last year to $335 billion in 2012. Premium brand companies that are selling online expect their total sales to jump 111% within five years, by which point they will account for 22% of total sales. And selling on the web can help boost a company's brick-and-mortar sales, too. "It's our most powerful marketing tool and a significant driver of store traffic," says David Duplantis, the senior vice president who oversees web sales for Coach, the American leather goods manufacturer. receives 60 million visits a year, and 40% of Coach customers say they view products online before making in-store purchases.

Some luxury brands jumped on the e-commerce bandwagon during the dotcom boom in the late 1990s, only to bust with the bubble in the early part of the current decade. So they're reluctant to try again. There's also an older wariness dating back to the 1980s, when too many designer brands went on licensing sprees that cheapened their pedigree. "Since then, the mantra has all been about control of brand. And to some, the net looks like the Wild West," explains Guy Salter, deputy chairman of Walpole, the British luxury brands trade association that collaborated on the study. Chi-chi brands also worry the web is more hoi polloi than haute couture. "Some feel they might be perceived as an Amazon or an Ebay," says Victoria Bracewell-Lewis, a Forrester senior analyst. "But the opposite is true. A well-run digital channel can only enhance their image."

The emphasis, of course, being on well-run. Unfortunately, many luxury brand sites are too glitzy for their own good. Off-key efforts to replicate an in-store experience are usually overly reliant on Flash technology and needlessly saturated with music and videos. The result is sites that are slow, clunky, difficult to navigate — and potentially image-tarnishing. "Most online affluent shoppers don't want all that," Bracewell-Lewis says. Usually they're looking for a specific item or manufacturer and don't want to dig through layers of Flash images.

Still, they're not adverse to a bit of pampering. When they're paying big bucks, they expect topnotch, personalized service with every click. That's why British retailers Harrods and Fortnum & Mason have almost adopted a concierge service online, Bracewell-Lewis says. Salter expects savvy luxury brands will eventually adopt Web 2.0 technologies, including social networking. For example, fans of a specific brand could connect online with other like-minded, well-heeled folks to chat about their favorite products. Says Salter: "It could become like an exclusive club." Or an online community with a difference: it's gated.