Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
Research is key for luxury brands planning selling excursions abroad.
Make life one long weekend. That's an appealing idea to many U.S. consumers. Especially if that long weekend consists of living on an island, drifting off to the lull of ocean waves and soaking up the rays of the Caribbean sun. That's why high-end sportswear and accessories retailer Tommy Bahama adopted the "one long weekend" tagline in 1996 with the opening of its first retail store in Naples, Fla. Ever since it has peppered the line, along with island imagery, throughout its e-commerce site and marketing campaigns.
That worked well online over the last five years or so as Tommy Bahama only sold via the web to consumers in the United States and Canada, but not so well when the company decided to take its web business global last July. In Japan, the retailer's research revealed consumers don't connect with the notion of a never-ending weekend, sun-drenched beaches and an island vibe. The concepts didn't make sense, as many Japanese workers don't enjoy a steady two days a week off like most in the States. And the island vibe failed to resonate for one rather obvious reason, says Doug Wood, president and chief operating officer for Tommy Bahama: "They live on an island."
What does work, however, is the universal need to unwind. And so Wood and his team are planning to launch next month a landing page with a rotating home page banner for Japanese visitors less centered on beaches and with the tagline "Need To Get Away?" While Tommy Bahama is just beginning to make such tweaks, knowledge is the first step, Wood says.
Tommy Bahama offers a lesson for many high-end brands that are jumping into international waters—selling luxury goods globally takes legwork and finesse and, most of all, research. The tactics that retailers use to sell items like toys, DVDs and other commonplace items internationally won't necessarily sell a $150 men's button-down shirt or a $400 pair of ladies' pumps. When global consumers are spending a big chunk of change, they want to be courted the same way U.S. consumers do. And that requires a delicate balance of staying true to the brand, while ensuring that the brand's messaging and sales approach works for international shoppers.
For those who do put in the sweat, selling luxury goods globally offers plenty of potential. Luxury e-commerce sales are growing at a rate of 25% a year, according to an October report from consulting firm Bain & Co. And many of those sales come from consumers outside the United States. For instance, one in four purchases of personal luxury goods comes from Chinese consumers. And Chinese shoppers make up half of the luxury purchases in all of Asia, and nearly one-third of those sold by European retailers, according to the report.
Tommy Bahama's own results illustrate the willingness of shoppers in other countries to spend heavily online: average order values for international orders are 50% higher than those coming from the United States.
Go East, luxury brand
But international shoppers have unique needs. For instance, many Chinese shoppers are concerned about a particular type of fraud in which criminals purchase an item from a luxury retailer, then return a fake version of the same item to the retailer. If the con works, the retailer may inadvertently end up selling the fake to another customer.
To reassure Chinese shoppers that the scheme won't work, each item sold by Italy-based luxury online apparel retailer Yoox.com's Chinese site is tagged with a radio frequency identification, or RFID, tag. By attaching a tag to each item, Yoox can track the items it sells and, when a shopper seeks to return an item, it can verify that the item is authentic. Moreover, if a criminal tries to alter the tag, the warehouse can see it has been tampered with once the item arrives.
The retailer, which generated sales of nearly $400 million in 2011, also worked with FedEx to develop a butler service for its Chinese shoppers that allows customers to try on their purchases while a courier waits to see if the shopper wishes to return any items. The service, the retailer says, is aimed at offering increasingly discerning and sophisticated Chinese shoppers a convenient and unique shopping experience.
To make paying convenient, Yoox offers Chinese shoppers the option to pay with cash upon delivery, a popular payment option among Asian consumers. Indeed, apparel web site American Apparel, which offers the cash on delivery option in Japan, says around 40% of web orders in that country are paid for via COD. Yoox also accepts Alipay in China, an online payment system similar to PayPal that is owned by the massive Chinese online marketplace operator Alibaba Group.
Other luxury sites with their eyes toward the East are turning to social media to reach Chinese consumers. For example, fashion retailer Tory Burch, which doesn't yet sell online in China but plans to soon as part of its new global expansion plan, recently launched a presence on Weibo (the Chinese word for microblog), a site in China akin to Twitter. The content is a mix of posts from the retailer's blog and localized content. For instance, it shares photos of Chinese celebrities wearing the brand's products, says Miki Berardelli, the retailer's chief marketing officer.
Tory Burch, which began shipping to Canadian and Australian consumers last June, now ships to more than 13 countries, including Argentina, Denmark, Israel and Switzerland, from its U.S. distribution center and web site. Last fall it launched country-specific retail sites in the United Kingdom, Germany and Japan. Each of the country-specific sites fulfills orders from local distribution centers.