9/04/13

High-end, high-tech

Long considered e-commerce laggards, luxury brands have stepped up their online marketing.

Thad Rueter , Senior Editor

For its latest product launch, luxury handbag and apparel brand Rebecca Minkoff in June did something it doesn't usually do. It began selling products from its new Denim Shop—designer jeans that generally cost between $108 and $128—exclusively on its e-commerce site, and not through such upscale retail chains as Saks Fifth Avenue and Nordstrom Inc. that normally sell the brand's line.

The retailer not only wanted to increase its direct-to-consumer business via the web, but also to give its shoppers, who are typically 18-to-30-year old women, another reason to visit RebeccaMinkoff.com. The site features blogs and videos with style news, along with fashion-mag-quality product images that all work to tie shoppers to the designer and her products. "Our site is really the only place where we can capture the spirit of the brand," says CEO and co-founder Uri Minkoff, Rebecca's brother.

The strategy of having some products available exclusively on RebeccaMinkoff.com has paid off in online sales, he says. Thanks in large part to launch marketing that included a celebrity-studded dinner in New York City, the promotional efforts of fashion bloggers, several hundred photos of the jeans scattered across Instagram and even the Twitter hashtag #rmdemin, the new line quickly become one of the brand's top five sellers—a spot it had yet to relinquish as the launch hype was dying down by early August. Free shipping and returns probably didn't hurt either, Minkoff adds. Other luxury brands, including shoe manufacturer and retailer Stuart Weitzman, also offer online exclusives.

Long-considered e-commerce laggards by retail experts—venerated Italian fashion brand Versace didn't start selling online until last year, for example—some luxury goods merchants are investing more heavily in online marketing these days, keeping pace with retailers of more everyday goods. They are employing original content, and social and mobile channels, to keep their brands appealing to a younger breed of shopper eager to own high-end, and often high-priced, items.

Earlier this year a review of 20 luxury brands' online programs by Forrester Research Inc. showed that 18 of them have e-commerce sites. The review also found that 11 of those 20 brands—or 55%—have web sites optimized for iPads or iPhones. A dozen brands have an iPad app and 11 have an iPhone app. By »
» comparison, 322 of the merchants in the Internet Retailer 2013 Top 500 Guide, or 64%, operate a mobile commerce site or app.

Such mobile features matter to luxury shoppers, research shows. Forrester, for instance, found that 51% of U.S. luxury shoppers expect retailers to have mobile sites, compared with 26% of all U.S. shoppers; the findings are based on a survey last year of 2,944 online adults who owned mobile phones. Another study that focused on the 2012 holiday shopping season, this one from customer satisfaction measurement firm ForeSee, found that 56% of luxury shoppers used their mobile devices to research products, compared with 40% who did so to shop with the top 100 U.S. e-retailers based on revenue.

Recognizing its shoppers' demands, Gucci in January launched mobile-optimized sites for iPhone, iPad and Android devices. After the launch, mobile traffic to Gucci.com increased 150%. Traffic to the mobile sites now account for 41% of all of Gucci's web traffic and 28% of the brand's online revenue, according to Huge Inc., the agency Gucci hired to develop the mobile sites.

"We decided to focus the design primarily on the products, which meant putting the spotlight on large, high-resolution images and letting the full description and price fall below the fold," a Huge spokeswoman says on Gucci's behalf. "Knowing that Gucci customers, and luxury shoppers in general, often purchase only one expensive item at a time, we expedited the checkout process and condensed it into just three steps."

Some e-retailers, including Gilt Groupe Inc., have launched exclusive deals for mobile shoppers. Gilt's "Summer Must-Haves" promotion offered deals on products including apparel and home goods just to mobile web users. The sales took place during the weekends, a peak time for mobile shopping. "We're always looking to create new and unique ways for our members to shop, and this summer we wanted to take advantage of the fact that people are out enjoying the weather, traveling and spending less time indoors," says Elizabeth Francis, the retailer's chief marketing officer. Mobile accounts for 40% of Gilt revenue, she says.

Other luxury retailers are using the mobile channel to keep in more direct contact with consumers. Stuart Weitzman, for instance, recently launched text message alerts that tell customers when online orders have shipped or when a product is back in stock at one of the company's more than 45 stores, says Salima Popatia, the brand's executive vice president of global e-commerce and omnichannel services.

Shopper demographics are helping urge luxury brands to boost their online game. The mean age of a U.S. luxury online shopper is 37, compared with 44 for other consumers on the web, according to Forrester. 53% of U.S. online luxury shoppers are between the ages of 18 and 34—and in China, the rate hits 63%. "A new breed of global luxury online shoppers is emerging," Gill says.

Consumers in these age ranges already shop heavily on the web—at least 54% of those 18 to 30 do, along with 68% of those 31 to 44, Forrester says—so as they start to buy higher-end goods, looking to the web is a natural choice.

Stuart Weitzman is working to attract these shoppers via Facebook. As it moves into new international markets, including with stores in such countries as the United Arab Emirates and South Korea, it uses the social network's Promoted Post ad unit that enables a marketer to pay to ensure a post receives a predetermined number of impressions from its fans and other consumers.

Stuart Weitzman, whose shoes are typically priced for $250 to $500 online, uses the Crescendo tool from vendor SocialFlow to scan the content in consumers' posts across Facebook and generate keywords to use to target ad placements based on what's trending. For instance, if a lot of Mexican shoppers express interest in a fashion post about what Eva Longoria wore on the red carpet, the tool might suggest targeting consumers based on the keywords "Eva Longoria" along with a specific location, such as Mexico City, where Stuart Weitzman recently opened a bricks-and-mortar store.

"We believe that this tactic has been successful for Stuart Weitzman because the content is localized," Popatia says.

In Taiwan, a single Promoted Post generated more than 10,000 Likes for Stuart Weitzman and a 5.9% click-through rate. In Mexico, the retailer's Promoted Posts reached nearly 860,000 Facebook users and produced a 5.5% click-through rate. Most clicks were acquired for 5 cents a click or less, says Frank Speiser, SocialFlow co-founder and president.

Some luxury brands, including Burberry Ltd. and Tory Burch, have made strong use of social media, including blogs and Twitter. Burberry, for instance, has nearly 16 million Facebook Likes and more than 2 million followers. It ranks No. 6 in terms of Twitter followers in Internet Retailer's 2013 Social Media 300, which ranks retailers by the percentage of traffic to their web sites from social networks. Tory Burch, meanwhile, has a regularly updated blog that does double duty as a portal to the brand's presences on Facebook, Twitter, Instagram, Pinterest and Tumblr. Neiman Marcus Group Inc., meanwhile, this summer combined a sense of exclusivity with social media to launch a product, a red "Elle" handbag. The retailer offered the $595 product—a Rebecca Minkoff item promoted as an exclusive via Neiman's Cusp brand—for pre-sale through Aug. 12 on the Pinterest social network. Neiman Marcus has more than 65,000 Pinterest followers. On Pinterest, consumers "pin" products and images they like.

The campaign gained Neiman Marcus 3,000 new Pinterest followers in less than two weeks, the chain says. It wouldn't disclose »
» sales figures, but says that during the handbag campaign on Pinterest, repinning of content directly from the main Neiman Marcus e-commerce site increased 35%. Overall pinning increased 20%.

"Although we have a relatively small following compared with our other accounts, we see Pinterest becoming a very important source of referral traffic," says Jean Scheidnes, the chain's social media managing editor. Approximately 0.13% of the chain's web traffic last year came from Pinterest, according to Social Media 300 data.

"Images are the most natural media for fashion, which is a visually stimulating business where we have endless image assets to leverage," Scheidnes says. "The Pinterest boards that our fans create put our products into an aesthetic context that is so much more compelling than a product shot, by itself, could ever be."

A personal, in-depth feel to web marketing also can bring gains. Indeed, "curate" and "curation" serve as vital buzzwords in luxury e-commerce. Denmark-based Waremakers Ltd., which launched earlier this year and sells such products as a 4,233 euro (US$5,612) Conway Stewart fountain pen and 595 euro (US$789) Travelteq leather laptop bag, provides an example of that trend.

The bag's product page has a link entitled "What's the Story?" through which shoppers can read nearly 350 words about how design and production required travel to a workshop in Tuscany, Italy, and how the product has a "handy slot for cigars should you find yourself returning from Cuba with a newfound addiction for Montecristos."

"The content has to give something to the customer: Captivating stories, solutions to problems or inspiration for the future," says CEO Anders Ojgaard, who was previously founder, CEO and editor of the Danish design and culture magazine Magasinet KBH. "If you don't offer this, you simply end up as yet another anonymous wallpaper of product shots."

The retailer also distributes its content through social media, connecting consumers with often unfamiliar brands, Ojgaard says. "These stories are often stories of people fighting to get their crafted products to the market and to survive the process," he says. "They are stories of struggle that we can all identify with."

Content takes patience, though. A one-off sale promoted through paid search typically will produce a spike in sales for a particular product—and draw the attention of more price-conscious shoppers—but Ojgaard says he wants deeper gains. "We want to build lasting relationships with customers, and once a customer has shopped with us once, he or she will know that our product descriptions are to be trusted," he says.

Those relationships will likely become more important for luxury brands selling pricey products to consumers who might not step into a store before purchasing. Robust mobile commerce programs, combined with features like shipping alerts that web shoppers are coming to expect, also promise to play major roles in luxury's online growth.

thad@verticalwebmedia.com

@ThadRueterIR

Topics:

Anders Ojgaard, bloggers, Burberry, Crescendo, Facebook, fashion, free shipping, Gucci, Jean Schneidnes, luxury e-commerce, luxury shoppers, Martin Gill, Neiman Marcus, Pinterest, Rebecca Minkoff, Salima Popatia, social media, Stuart Weitzman, tablets, Tory Burch, Twitter, Uri Minkoff, Waremakers, web advertising

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