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, and 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 jewellery 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 pass to a 12% by 2020, and achieve a meaningful 18% by 2025.
Still according to McKinsey, today’s online market of luxury good has a value of € 14 Billions, and projections to 2025 boost this value 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 jewellery 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 takes place online or in stores, the purchasing attitude of luxury consumers is strongly conditioned by their perception of the brand, 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”or 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 so than most, luxury shoppers want a seamless, digitally enabled, multi-channel experience across every touch point with the brand.
But how to serve them with what they want?
Among 20 different types of touch points commonly adopted by luxury brands, researchers have identified 5 must-have when dealing with band relevance. These touch points are:
Luxury consumers expectations towards a seamless experience across touch points inevitably put the stress over the digital tools to be adopted. Our analysis concentrates into specific requirements any luxury brand digital investment shall take into account:
Image consistency: In order to achieve product image consistency across sales channels, a luxury brand digital system shall be able to acquire every information about the product, including photos, videos, digital content and the more traditional information about carats, metals, prices, availability. The same system, an ERP or an advanced stock management system shall then be able to deploy targeted content towards sales and marketing channels, at once, ensuring immediate and uniform product visibility. In such a way, the website will be synchronous with the product availability in the shops, or with the agent’s digital catalogue in case of external retailers.
Customer recognition: avoid asking loyal customers who make a purchase in a store if they are registered in the brand’s loyalty program, make sure every touch point has access to customer’s information, including interests and purchasing history. CRM shall be integrated with ERPs, and ERPs to intelligent mid-layers systems allowing not only to use the most common information, but to make the most appropriate suggestion in order to facilitate the next purchase.
eCommerce facilitation: entering into an ecommerce world means to face high expectations established by large players such as Amazon or Alibaba: luxury customers expect personalized treatment and a 24 hrs delivery. A thorough automation of the sales and delivery process, including every warehouse operation is part of the strategy, only possibility to meet expectation and enable the necessary scalability.
Finally brands need to design the digital acceleration approach that will fit with 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 and 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 jewellery 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.