Hey, guess what – e-commerce is becoming really important to the luxury sector but not enough luxury brands quite ‘get it’ yet.
OK, tell us something we don’t know. But cynicism aside, it’s always interesting when someone pulls that kind of information together and puts it into context. And that’s what L2’s latest Digital IQ Index for fashion has done.
I decided not to cover this story when it came out last week as the headline that Burberry’s doing so well in digital didn’t really throw up any surprises. But digging deeper, it stunned me how so many luxury brands are still not thinking truly digital.
Why does it matter? Well, as much as 83% of luxury growth last year came from online sales. A year earlier the figure was just 33%, up from a pretty pathetic 5% from 2010 to 2013 (I say pathetic, of course, because the mass-market had been happily getting online for years before that).
Why is luxury so slow?
Not that it’s such a surprise that luxury has been slow coming to the table. The sector’s $129bn in offline apparel sales are pretty impressive without the relatively tiny $210m in online sales. But with the latter figure set to double in five years and continue soaring after that, and with many consumers increasingly expecting a sophisticated approach to online, luxury can’t continue to bury its head in the sand.
Some brands are getting it right – very right. L2 said that the top 10 brands accounted for less than a quarter of that $129bn in offline sales. But online, they account for 65% of sales – yes, you read that right. On the downside, it also means that plenty of brands are getting it wrong – very wrong!
From genius to feeble – how brands fare
Anyway, the report looks at a large number of luxury brands and how they’ve performed online generally and in e-commerce, taking into account the many features designed to make the user journey easier/more pleasurable.
So, who’s doing well? Yes, Burberry’s out there in front (as it usually is, although it did drop back a little in last year’s list). It beats Kate Spade by one point with both given ‘genius’ status by L2. Burberry stands out for its well-rounded approach to both established platforms and emerging ‘cool kid’ platforms like Periscope and SnapChat, and for its upgraded mobile channel.
Burberry has invested heavily in improving the buying experience on mobile and its mobile penetration tripled after it updated its m-commerce channel.
Cole Haan was also singled out for praise in this area and for reducing mobile checkout from around 15 clicks to one thumbprint by using ApplePay.
Plenty of other brands are getting it right too. Digitally ‘gifted’ brands in L2’s list include Ralph Lauren, Louis Vuitton, Gucci, Michael Kors, Bottega Veneta, Hugo Boss, Jimmy Choo, Diane von Furstenberg and Dolce & Gabbana. Valentino also came into the gifted category, which is great given that it was so slow getting online in the first place. In fact the New York Times said that since arriving on Instagram, the brand has posted more than almost any other. Go Valentino!
But L2 is pretty scathing about some other luxury labels. Chanel, Paul Smith, Balenciaga, Prada, Alexander McQueen, Alexander Wang and Dior may be fashion influencers to you and I, but L2 said they’re digitally ‘average’. It also said Chloé and Pucci are ‘feeble’. And Céline, Jean Paul Gaultier, Givenchy, Kenzo, Miu Miu, Sergio Rossi and Vivienne Westwood are ‘challenged’. Ouch!
What’s the problem?
Some brands are doing lots of things wrong, it seems. That can include not bothering to find out any extra information about their customers online, apart from their gender and birthday. While face-to-face they’re falling over themselves to find out as much as they can about them in order to improve their in-store shopping experience, online, they just don’t seem to care. Bizarre.
And many aren’t global enough online, even though they are offline. They appear to think their brands are strong enough not to have to speak to potential customers globally in their own languages. Big mistake says L2.
Any more faux pas? Yes plenty. One of the most interesting is that they don’t get that search is key and a social media ad video strategy isn’t enough to make them visible. Paid search is being neglected, which is a major obstacle to growth in an increasingly crowded e-commerce space, L2 said.
There’s more, a whole lot more but I doubt many people would read that far if I reported it all. It does seem strange that such a report full of criticisms could come out as late as 2015. We live in a world in which online just shouldn’t be ignored by so many companies that are so far ahead of the pack in so many other areas.
Can’t wait for next year’s list to see whether the “must try harder” message has got through.