In The Media
Classy Examples - Luxury brands show how to sell high-ticket items online and build trust.
May 31, 2011 — Internet Retailer
For years, many luxury brand manufacturers sat on the sidelines and watched e-commerce develop, wary or unwilling to sell online. They often launched web sites that poured on the style and communicated the exclusivity of their products with gorgeous imagery, then directed consumers to the high-touch boutiques that sold their products.
Take Lilly Pulitzer. The iconic apparel brand known for its bright prints and colorful floral dresses launched a brand-focused site in 2000, but didn't start selling on it until 2008. Instead, the manufacturer sold its line through its own Lilly Pulitzer stores, high-end department stores like Bloomingdale's and through independently owned franchised boutiques that the company calls "signature stores," where Lilly Pulitzer products make up 90% of the inventory.
It was a handful of signature store owners who began selling Lilly Pulitzer products online that proved there was demand for an e-retail presence, says Rachael Crews, senior manager of e-commerce at Lilly Pulitzer. At first the company was content to let franchisees handle online sales, but the company changed its mind after getting a steady stream of e-mails and calls from consumers who wanted to buy directly from Lilly Pulitzer.
"Our customers were really looking to purchase from us," Crews says. "They were spending a lot of time on our site browsing our collections, and we were constantly getting calls to become a transactional site. At the time, that was the direction a lot of sites were going. We were probably a little late to the game." Now, Crews says, LillyPulitzer.com is the company's fastest-growing sales channel.
Consumers now expect even high-end brands will be online, and companies that don't offer their products on the web risk frustrating their loyal customers, says Ali Levy, senior manager and retail strategist at Kurt Salmon, a retail-focused consultancy. "It's something they must be doing to meet the evolving needs of their customers," she says. "They're also looking to benefit from the insane growth trajectory of online."
Indeed, the web now accounts for a growing, albeit still small, percentage of luxury goods sales: 2.5% of total luxury sales revenue in 2010, or $5.91 billion, up from 1.7% in 2008 and 2.3% in 2009, according the Global Luxury Goods Worldwide Market Study from consulting firm Bain & Co.
Most luxury brands are at least dipping their toes into e-commerce, even if some hesitate to fully take the plunge. Fashion house Chanel, for example, launched an e-retail site in 2010 that sells its fragrance and skincare items, but excludes apparel. Apparel and accessories manufacturer Alfred Dunhill sells accessories and some menswear, but excludes suits. Calvin Klein sells its ready-to-wear lines online but excludes its couture line.
As these luxury brands invest more in direct-to-consumer web selling they're showing retailers of all kinds of goods what it takes to convince online shoppers to buy high-ticket, high-margin items, even though the consumers can't actually touch the merchandise. They may be arriving unfashionably late to the e-commerce party, but luxury brands bring with them the years of sharply honed brand-building experience and customer service acumen that they're applying to some of the key challenges of online retailing.
Brand immersion
Information and image are two of the key weapons that high-end brands like Bugaboo Inc. wield to woo web shoppers. Bugaboo's premium baby strollers, priced from $600 to well north of $1,500, are sold at about 500 bricks-and-mortar locations and through a dozen online-only retailers. That includes Bugaboo.com, the manufacturer's U.S. e-retail site, launched in 2009 and operated by e-commerce service provider Niche Retail. Niche also operates BugabooStrollers.com as an authorized dealer, though Bugaboo has no ownership in that site.
About 50% of Bugaboo's total U.S. sales came through the web last year, says Kari Boiler, president of Bugaboo Americas. When it came to designing its own e-commerce site, with help from Niche Retail and creative agency 72andSunny, Bugaboo aimed to be the best information source for its target customers, soon-to-be moms intent on researching every last detail about products for their bundles of joy. "The whole point for us is to create a brand and retail ecosystem," Boiler says. "Consumers can explore the site, learn when and how they want to learn, and buy when they want to buy."
The site is organized in three main tracks: Learn, Buy and Connect. The Learn track includes interactive photos that explain the design techniques used in the strollers, tells the story of Bugaboo's origin and suggests daytrips parents can take with their kid strapped into a Bugaboo. The Learn track also includes a tool that lets consumers compare its stroller styles side by side. Another section displays limited-edition stroller products from fashion names like Marc Jacobs and Paul Frank. And another details the company's contributions to the Red campaign, a charity that raises funds to combat AIDS in Africa.
The Connect track links visitors to the brand's Twitter and Facebook pages and offers an "Ask an Owner" section that links prospective customers to existing Bugaboo owners who can answer questions about Bugaboo products. The Buy track aims to put consumers into transaction mode and presents all the relevant payment and shipping information up front.
Product detail pages also include videos that show consumers how to fold and unfold the stroller, strap kids in, adjust the seat as kids grow from babies to toddlers, and more. Boiler says the video in particular is meant to assist buyers, regardless of whether they buy the product online or in a store, in understanding how the product works. "You can create amazing assets online to do that," she says. "Our goal with the site isn't to be a direct-to-consumer-only service, but to also be a source that helps retailers sell our products in store."
Stellar service
Providing deep information and outstanding service is what sets luxury brand sites apart from the typical e-retail site that focuses on driving immediate sales, says Maryssa Miller, vice president of CreateThe Group, a digital marketing agency that designs web sites for luxury brands. "People got to a point with e-commerce in general where everything boiled down to a transaction," says Miller, former director of e-commerce at high-end apparel maker Lacoste. "For manufacturers, it is more about the full experience."
But assets like video, side-by-side comparison tools and social media are tools any e-retailer can employ, says Judy Foster, executive creative director of Grand River Inc., a web design and consulting firm. Foster, whose web design experience includes work for such premium brands as Coach, Neiman Marcus and chocolatier Godiva, says e-retailers of all kinds can avoid competing solely on price by creating trust.
"A lot of commodity sites can take the lead from luxury sites like Bugaboo because they still have a story to tell about their own e-retail brand and the products they sell," Foster says. "They can position themselves as experts." Even for a widely available item like a Blu-Ray player, she says, consumers are likely to prefer to buy from an e-retailer that demonstrates its expertise by offering videos describing the features of the player and how to install it.
Luxury brands, as part of their bricks-and-mortar heritage, usually excel in customer service. Leather goods manufacturer Coach, for example, will repair a zipper on one of its purses for free, no matter its age. Online, that approach often includes generous return policies and a highly visible toll-free number. Customers buying from high-end children's apparel manufacturer and e-retailer Hanna Andersson, for example, can return a product for any reason at any time and get a refund. "We pride ourselves on our liberal return process," says Alison Hiatt, vice president of marketing at Hanna Andersson. "What it does is help build confidence for people that may be shopping with us for the first time."
HannaAndersson.com features its toll-free number in the upper right corner of every page and also offers live chat. At Lilly Pulitzer, a toll-free number appears on every product page with a notice reading: "Need some assistance? We would love to hear from you!"
At Bugaboo.com, consumers can live chat with Niche Retail agents trained on Bugaboo's products, e-mail or call a toll-free number that appears at the top right of each page. Jeff Grice, president of Niche Retail, says about 20% of requests come through chat, 30% e-mail and 50% phone. 98% of calls are answered by a human within 30 seconds. "We have to make sure we are serving our customers," Boiler says. "With premium brands you get that service."
The glow of a brand, combined with an experience-immersive site, does impact sales, Grice says. Since Niche operates both the manufacturer site and the more transaction-oriented BugabooStroller.com that it owns, he can see the difference. "Bugaboo.com is running away in terms of sales when you compare it to Niche's retail store," he says, although he declined to disclose specific sales comparisons.
The real thing
One other lesson luxury retailers provide is in how to inspire trust in online shoppers. That's particularly important for luxury brands, as consumers know many web sites sell counterfeit items as the genuine article. In fact, the U.S. Justice Department last fall seized 82 domains known to sell fake goods falsely bearing luxury brand names like Louis Vuitton, Coach and Burberry. But inspiring trust is also an important task for lesser-known e-retailers competing against big-name retailers.
To reassure shoppers, handbag manufacturer Coach Inc. provides a section of Coach.com called "counterfeit education" that lists the three outside e-retailers authorized to sell Coach products online and warns consumers away from sites other than Coach.com that feature "Coach" in the web address.
Watch and jewelry e-retailer Ashford.com, which sells watches priced from less than $30 to more than $100,000 from brands like Breitling and Harry Winston and had more than $15 million in sales in 2009, stresses on its home page the "Ashford commitment" and its warranty and satisfaction guarantee.
Site visitors also get an invitation to chat with Ashford agents shortly after arrival, designed to open communication between customers and the company. And consumers looking at premium brand watches are invited to call a toll-free VIP phone number. "We have watch experts waiting to guide them through their shopping purchase," says Joel Katz, Ashford's chief operating officer. "Speaking to a highly educated salesperson who has been in the watch business for years and years helps you to get that trust." Ashford also emphasizes its return policy and displays customer testimonials on the site. Products sold above a particular price point are delivered by an armored security service.
Non-luxury retailers can incorporate elements of these trust-building tactics within their own e-retail stores, says Miller of the marketing agency CreateThe Group: Have a satisfaction guarantee, and don't hide it. Write a complete "About Us" page that emphasizes the company's strengths. "Give them the assurance that it is okay to buy from you," she says.
At TuesdaysChild.com, for example, the About Us page describes a company that's been in business for more than 35 years, offering European brand name apparel for boys and girls. The page lists several of the brands and notes that Tuesday's Child even offers custom-made Italian tuxedos for young swains.
"Although you can get some of these brands elsewhere, our buyers spend many hours at showrooms picking and choosing, mixing and matching, so that what you see at our stores is just that much more different and that much sharper," the text explains.
"We compete on personal service and the huge selection that we have. If a customer needs help, they can get that," says Jonathan J. Fischer, vice president of TuesdaysChild.com and a bricks-and-mortar children's boutique of the same brand name in New York. "This way it's less about having to compete on price, because as a small retailer, we can't compete on price. We're doing what we can to take price out of the equation."
And that's a lesson all e-retailers can take to the bank.
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