An advertising watchdog’s report found dozens of claims that it says were false and deceptive. Wal-Mart blames suppliers.
Luxury brands show how to sell high-ticket items online and build trust.
For years, many luxury brand manufacturers sat on the sidelines and watched e-commerce develop, wary or unwilling to sell online. They often launched web sites that poured on the style and communicated the exclusivity of their products with gorgeous imagery, then directed consumers to the high-touch boutiques that sold their products.
Take Lilly Pulitzer. The iconic apparel brand known for its bright prints and colorful floral dresses launched a brand-focused site in 2000, but didn't start selling on it until 2008. Instead, the manufacturer sold its line through its own Lilly Pulitzer stores, high-end department stores like Bloomingdale's and through independently owned franchised boutiques that the company calls "signature stores," where Lilly Pulitzer products make up 90% of the inventory.
It was a handful of signature store owners who began selling Lilly Pulitzer products online that proved there was demand for an e-retail presence, says Rachael Crews, senior manager of e-commerce at Lilly Pulitzer. At first the company was content to let franchisees handle online sales, but the company changed its mind after getting a steady stream of e-mails and calls from consumers who wanted to buy directly from Lilly Pulitzer.
"Our customers were really looking to purchase from us," Crews says. "They were spending a lot of time on our site browsing our collections, and we were constantly getting calls to become a transactional site. At the time, that was the direction a lot of sites were going. We were probably a little late to the game." Now, Crews says, LillyPulitzer.com is the company's fastest-growing sales channel.
Consumers now expect even high-end brands will be online, and companies that don't offer their products on the web risk frustrating their loyal customers, says Ali Levy, senior manager and retail strategist at Kurt Salmon, a retail-focused consultancy. "It's something they must be doing to meet the evolving needs of their customers," she says. "They're also looking to benefit from the insane growth trajectory of online."
Indeed, the web now accounts for a growing, albeit still small, percentage of luxury goods sales: 2.5% of total luxury sales revenue in 2010, or $5.91 billion, up from 1.7% in 2008 and 2.3% in 2009, according the Global Luxury Goods Worldwide Market Study from consulting firm Bain & Co.
Most luxury brands are at least dipping their toes into e-commerce, even if some hesitate to fully take the plunge. Fashion house Chanel, for example, launched an e-retail site in 2010 that sells its fragrance and skincare items, but excludes apparel. Apparel and accessories manufacturer Alfred Dunhill sells accessories and some menswear, but excludes suits. Calvin Klein sells its ready-to-wear lines online but excludes its couture line.
As these luxury brands invest more in direct-to-consumer web selling they're showing retailers of all kinds of goods what it takes to convince online shoppers to buy high-ticket, high-margin items, even though the consumers can't actually touch the merchandise. They may be arriving unfashionably late to the e-commerce party, but luxury brands bring with them the years of sharply honed brand-building experience and customer service acumen that they're applying to some of the key challenges of online retailing.
Information and image are two of the key weapons that high-end brands like Bugaboo Inc. wield to woo web shoppers. Bugaboo's premium baby strollers, priced from $600 to well north of $1,500, are sold at about 500 bricks-and-mortar locations and through a dozen online-only retailers. That includes Bugaboo.com, the manufacturer's U.S. e-retail site, launched in 2009 and operated by e-commerce service provider Niche Retail. Niche also operates BugabooStrollers.com as an authorized dealer, though Bugaboo has no ownership in that site.
About 50% of Bugaboo's total U.S. sales came through the web last year, says Kari Boiler, president of Bugaboo Americas. When it came to designing its own e-commerce site, with help from Niche Retail and creative agency 72andSunny, Bugaboo aimed to be the best information source for its target customers, soon-to-be moms intent on researching every last detail about products for their bundles of joy. "The whole point for us is to create a brand and retail ecosystem," Boiler says. "Consumers can explore the site, learn when and how they want to learn, and buy when they want to buy."
The site is organized in three main tracks: Learn, Buy and Connect. The Learn track includes interactive photos that explain the design techniques used in the strollers, tells the story of Bugaboo's origin and suggests daytrips parents can take with their kid strapped into a Bugaboo. The Learn track also includes a tool that lets consumers compare its stroller styles side by side. Another section displays limited-edition stroller products from fashion names like Marc Jacobs and Paul Frank. And another details the company's contributions to the Red campaign, a charity that raises funds to combat AIDS in Africa.
The Connect track links visitors to the brand's Twitter and Facebook pages and offers an "Ask an Owner" section that links prospective customers to existing Bugaboo owners who can answer questions about Bugaboo products. The Buy track aims to put consumers into transaction mode and presents all the relevant payment and shipping information up front.
Product detail pages also include videos that show consumers how to fold and unfold the stroller, strap kids in, adjust the seat as kids grow from babies to toddlers, and more. Boiler says the video in particular is meant to assist buyers, regardless of whether they buy the product online or in a store, in understanding how the product works. "You can create amazing assets online to do that," she says. "Our goal with the site isn't to be a direct-to-consumer-only service, but to also be a source that helps retailers sell our products in store."