Banter Without Borders

Retailing Luxury-Online

E-tailing is no longer a luxury for the luxury industry - it's a necessity. So says an article entitled:”Ready for the next chapter in e-tailing” which appeared in the April 6, 2010 issue of the Financial Times. (http://www.ft.com/cms/s/0/b46c36e2-404a-11df-8d23-00144feabdc0.html).  The article confirmed that the luxury Swiss watch and jeweler group, Richemont had entered into an agreement to acquire online retailer Net-a-Porter, and in so doing, became the first leading luxury conglomerate to purchase a multi-brand online store. Richemont’s action reinforces a growing trend among luxury groups to embrace internet initiatives, and follows LVMH, the French luxury group, which relaunched its eLuxury site as nowness.com, redirecting it from a product focus to one focused on culture.

These moves by retailers of luxury items seem at odds with what had been accepted as industry wisdom. Stated by Natalie Massenet, Net-a-Porter's founder, “there was a belief in fashion that you had to create an amazing experience to convince someone to buy a luxury item, and you could not do that on the web." Ms Massenet had believed early on that time-pressed, successful women would be willing to spend serious money online in order to get the products they desired when they desired them. Interesting statistics outlined by Ms Massenet concerning the Net-a-Porter site include:
•    It has 3.3 million unique users a month, and is growing by approximately 10,000 new customers per month in 170 countries around the world.
•    Its shoppers buy on average £500 worth of products, though single orders have reached £20,000.
•    "As far as we can tell there is no ceiling to what people will spend online. There must be one, but we haven't found it."

According to Bain & Co, the online luxury market is worth about $4.9bn (£3.2bn) and grew by 20 per cent last year. And, with the recent introduction of the iPad and other “tablet” devices, one can only assume this market will accelerate at an even greater pace.