But losses mount for the home furnishings e-retailer that went public in October.
Long considered e-commerce laggards, luxury brands have stepped up their online marketing.
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.