At Systech, the recent decision of extending the Aurum software to a new module enabling our customers to easily set-up and run an eCommerce business, has not been taken lightly.
A final “go” to the project was agreed only after non-obvious debates, well supported by research upon the latest industry trends and academic analysis available.
In this article, we share the main findings of our researches, hoping to support whoever shall stand a decision upon an eCommerce business in the next few years.
While in 2013 the jewelry and watches online sales were barely reaching a 2% of the overall market, the slice of the cake has dramatically increased during the last five years, accounting in 2017 for a bold 8%, growing at a steady rate. McKinsey & Company expects the luxury category’s share of online sales to reach a 12% by 2020, and achieve a meaningful 18% by 2025.
Still according to McKinsey, today’s online market of luxury goods is worth € 14 Billions, and projections to 2025 boost this value up to € 70 Billions by 2025, making “e-commerce the world’s third-largest luxury market, after China and the United States”.
So far, these values have only partially cannibalized the traditional sales channels, their largest component being absorbed by the jewelry and watches 3-4% steady annual market growth registered at global level during the past years.
The question is no longer if and when luxury brands should embrace the digital opportunity, but how they should go about doing it.
Whether the sales take place online or in stores, the purchasing attitude of luxury consumers is strongly conditioned by their brand perception, and this perception is more and more defined by what they see on their Instagram, Facebook, YouTube and finally the brand website. Taking as a target not only the “Rich Millennials” of China, but a wealthy consumer across countries and generations, we identified four tactics that work:
Researches demonstrate that luxury consumers are highly digital, mobile and social, and because of this have extremely high expectations for what they want in a shopping experience. more than anything, luxury shoppers want a seamless, digitally enabled, multi-channel experience across every touchpoint with the brand.
But how to serve them with what they want?
Among 20 different types of touchpoints commonly adopted by luxury brands, researchers have identified 5 must-havewhen dealing with band relevance. These touchpoints are:
Luxury consumers’ expectations towards a seamless experience across touchpoints inevitably stress the digital tools to be adopted. Our analysis concentrates into specific requirements any luxury brand digital investment shall take into account:
Finally, brands need to design the digital acceleration approach that will fit their culture. There is a natural tension between the luxury industry’s long-term focus and aim for perfection, on one hand, and the short-term trial, error and risk taking necessary for digital development. Designing the perfectly blended approach that combines the high standards of luxury with the agility of digital is the key to unlocking future success.
Our researches have highlighted a growing opportunity for jewelry and watches online sales, and at the same time have underlined how the eCommerce alone is far from being sufficient to impose a brand. Highly integrated digital systems, constantly gathering, driving and sharing information about products and customers are the key to satisfy the always higher expectations of wealthy consumers.
Since 1994, Systech serves the jewelry market with its Aurum ERP system specifically designed to respond to the luxury brand needs. With a complete and modular solution including production, as well as in-shop sales, external sales agents’ management, and eCommerce modules, Aurum has been adopted by more than 2’000 brands within his 20 years’ business experience.