Key eCommerce learnings from working with Luxury clients
In Wunderman Thompson Commerce’s “Future Shopper 2019” survey, nearly one in three consumers (29.7%) told us they would never purchase luxury goods online. Although this is down from 32% in 2018, and the expectation is that it will continue to fall, it remains a surprisingly high percentage - particularly when you consider online luxury shopping grew 22% in 2018, to nearly €27 billion, and now represents 10% of all luxury sales.
So why might that be?
Below, I list just some of the insights, gained from working with Wunderman Thompson Commerce luxury clients, who are currently selling successfully to the 70.3%, and offer some advice to help you win over those that, as yet, remain unconvinced.
1. Brand is No.1 and Product is the Hero: Brand perception and CX are therefore key
Luxury brands are fiercely protective of their ‘brand image’ and ‘brand value’. Luxury branded products are therefore a reflection of these brand values. Brands have invested many years and huge revenues in developing a brand perception, and therefore when representing a luxury brand online, it is critical to ensure these ‘values’ are upheld through not only the product presentation and imagery, but through a thorough understanding of the end to end Customer Journey.
2. eCommerce Mentality: Many luxury brands can be commercially immature when it comes to digital
Often we have found a limited understanding from Luxury brands of how to ‘trade’ an eCommerce site and drive sales online.
Luxury has traditionally lagged other sectors in driving online sales, rejecting the more overt techniques of other ‘mainstream’ brands. There appears to be a sense from some luxury brands that the brand will sell itself, and an attitude to their online presence of ‘if we build it, they will come’.
The core commercial trading and merchandising principles remain equally as relevant to luxury brands, the execution can however reflect the luxury consumer experience.
3. Lack of ROI and KPI focus: It is not always clear what is the measure of success for luxury brands
We have seen digital development programmes for luxury brands with no set targets or measures of success identified, when investing in online features and functionality.
There have been examples where little empirical evidence has been provided in support of introducing new features, and similar features have been delivered differently, at increased cost, across a multi-brand estate.
Luxury brands too, need to understand what are their measure of success (visitation, revenue, conversion, footfall, eyeballs etc ) and then ask ‘How is this feature going to improve which KPI… and to what extent’
4. Not set for Business Change: Luxury brand manufactures are reluctant to change; ‘pureplay’ brands are not always organisationally structured for change
Our experience with luxury brand manufacturers is that they are much more set in traditional ways of working, and despite expressing a wish to embrace digital, can culturally demonstrate a reluctance to change. It is therefore as important to change mind-sets and attitudes as it is ‘ways of working’ and processes.
Equally, while pureplay brands, by their very nature, are much more open and accepting of digital change, they may not necessarily be structurally organised and disciplined to drive change through their business teams. In this case, it is important to consider organisational structures and team governance as it is attitudinal behaviours.
5. The struggle to embrace omnichannel: Lack of a ‘digital’ strategy
Some more traditional luxury brands have struggled to change from their heritage ways or working, culturally as much as operationally, and therefore have failed to fully embrace an omnichannel approach, preferring to believe that historical successes will continue to serve them well in the future.
A lack of a thoroughly considered ‘digital’ strategy has therefore left them struggling to compete as their customers’ expectations of luxury brands have moved on.
Again, truly understanding how luxury shoppers shop may challenge some of the long-held assumptions about what the right experiences are.
6. Creatively focused, not commercially driven
Often luxury brands can be obsessed with the ‘aesthetic’ of their brand (see point 1) and how that brand is presented online, therefore making decisions that are not commercially the best for their business, just because it appears ‘on brand’. This is often reflected in poor customer journeys, which can be commercially damaging to their brand, negatively affecting the customer experience and impacting conversion. Clearly there is a balance to be had between this point and point 1.
7. For Pureplay brands, Technology and Business Tooling are critical enablers
For pureplay luxury brands, the technology and digital features they employ are not only the main ‘selling tools’, but also the key assets in attracting, developing and maintaining relationships with their customers. Therefore the efficiency, flexibility, agility and ease of use of the ‘backend’ Business Tooling is critical to them being able to optimise those relationships, and drive sales.
It is therefore equally as important to spend as much time in understanding and developing your backend business tooling and UX, as it is for the front end.
Think, when developing new business tooling, firstly identify the customer need, and then develop a business solution to deliver it.
8. Imbalance between continuous project delivery and BAU optimisation
Often technology lead luxury brands can be blinkered into thinking they have to be constantly innovating and evolving - delivering the latest new features and technology to stay ahead of the pack. They can, therefore, get stuck into a constant state of project delivery, moving from one project to the next, without, assessing the value and success of what has been delivered.
But when it comes to digital commerce, there needs to be a balance between project delivery, measuring performance and continuous optimisation through BAU (business as usual). In other words, projects need to get delivered, be given time to bed in, and then improved once live. There needs to be a balance between project delivery, measuring performance and continuous optimisation through BAU.
Successful organisations that we have worked with, have clearly defined, complementary roles and responsibilities between project delivery and BAU. They have also addressed the need to introduce an ‘agent of change’, to help embed larger scale projects into Business Teams, to fully optimise the potential benefits.
Want to explore this further?
If you are a luxury brand and would like to discuss any of the themes raised in this article, or want help with your digital strategy or selling online, please contact us.