Why Are so Few Luxury Brands Sold Online?

With the new Apple Watch Edition, consumers can now purchase a $17,000 directly from the comforts of their homes. However, many luxury brands are very reluctant to take their business online, in this article we will look at some of the reasons why this is, and why some companies such as Chanel are finally making the move online.

According to a report released by McKinsey, luxury ecommerce sales are expected to reach $21 billion over the next five years, furthermore, the luxury ecommerce industry is seeing a much larger growth than many other areas of ecommerce. Lucie Greene, worldwide director of JWT Intelligence stated “E-commerce has been described as the ‘next China’ for luxury in terms of opportunity.”

Lack of exclusivity

One of the biggest reasons why luxury brands are reluctant to sell their products online is that many of the companies feel that some of the luxury treatment/feeling will be lost if customers just purchase their products online instead of going to the store to purchase the products, they feel the personal connection with the customers would be lacking if the products were to be sold online. In fact according to Bloomberg Business “About 40 percent of high-end brands don’t sell via the Web”.

Perhaps this is also why consumers around the world were shocked to hear than super-luxury brand Chanel has announced that they will be opening an ecommerce store later this year. Considering the fact that in 2013  Chanel’s global director of fashion Bruno Pavlovsky, when asked about the possibility of online sales said “fashion is about clothing, and clothing you need to see, to feel, to understand.”

One way to get around the loss of exclusivity would be to follow in the footsteps of Hermès, the luxury bag seller offers a limited number of their products on their online store, however the more expensive bags such as the Birkin and Kelly bags are all sold exclusively in their branded stores.

Trust in online shopping

According to Ryan Clark, founder of Luxury Branded, one of the biggest reasons why more luxury brands are moving their services online is the fact that “finally there is a level of trust for buying luxury goods online and that’s going to rapidly push the industry to new levels in the next five years.” In other words, as more and more consumers complete their shopping online, they become more and more comfortable with the thought of purchasing more expensive items online.

Global vs. Local market

Another opportunity for luxury brands is the fact that selling their products online allows them to reach a much larger market. Compared to brick-and-mortar stores where the company is confined to a location, selling online allows the company to potentially have customers anywhere around the globe.

Surely in the next few years we will see more and more luxury brands selling their products online, at the same time however, I am sure the personal connection customers feel when they enter a store to purchase the product will remain important.

Feature image curtsey of Paulius