Luxury shoppers are buying online in growing numbers, pushing many of the best-known luxury retailers and brands to scramble to catch up in e-commerce.
Even as overall retail sales of premium goods declined slightly worldwide in 2016, according to investment firm Bain & Co., the 93 leaders in online luxury sales increased their web sales 17.5% to $20.17 billion from $17.16 billion in 2015, according to the recently released Internet Retailer research report, “Luxury E-Commerce: The Digital Transformation of High-End Retailing.”
Established brands and retailers, web-only merchants and powerhouse Chinese e-commerce companies are all investing heavily to win the business of online luxury consumers.
French luxury leader LVMH Moet Hennessy Louis Vuitton SA, for example, has returned to e-commerce by launching a multibrand retail site called 24Sevres.com, a reference to the address of the famed Le Bon Marche department store in Paris that LVMH owns. The Italian fashion house Valentino sPa is working with No. 1 luxury e-retailer Yoox Net-A-Porter on a new e-commerce site, and Ralph Lauren Media LLC is preparing to unveil the new look of Ralph Lauren.com by mid-2018.
“To say the retail industry is at an inflection point would be an understatement,” Patrice Jean Louis Louvet, CEO and president of Ralph Lauren Corp., told investment analysts in August 2017. “Technology has transformed the way consumers shop and connect with retail brands. Retail store closures are near a 20-year high as the fundamental shift to e-commerce continues.”
Two online-only companies are at the center of the growth in luxury e-commerce.
In fact, Yoox Net-A-Porter, an Anglo-Italian company traded publicly on the Milan stock exchange, moved into the top spot in this year’s Internet Retailer rankings of the world’s top luxury e-commerce companies, overtaking U.S.-based department store operator Neiman Marcus.
Yoox Net-A-Porter increased its web sales 12.4% to $1.78 billion in 2016. That growth continued into 2017 as the company reported 15.3% revenue growth in the first half of the year, and an increase in active customers to 3.0 million shoppers from 2.6 million in the first half of 2016. The company sells through its own sites, while also operates 28 e-commerce sites for such brands as Valentino, Dunhill and Armani.
Yoox Net-A-Porter, however, faces growing competition from Farfetch, a U.K. company with a similar business model.
Farfetch raised $110 million in capital in 2016 and added another $397 million in June 2017 in a funding round led by Chinese e-commerce heavyweight JD.com. JD and Farfetch have already started collaborating to bring more Western luxury goods to online shoppers in China, the No. 1 market for premium goods, accounting for about a third of global luxury sales.
Not to be outdone, China’s dominant e-commerce company, Alibaba Group Holding Ltd. in August launched a new invitation-only Luxury Pavilion on its Tmall online marketplace, featuring such prestigious international brands as Burberry, Hugo Boss, La Mer, Maserati and Guerlain.
Meanwhile, web-only startups, often funded by venture capital, are launching around the world, grabbing market share, often with contemporary styling and somewhat lower prices than the established luxury brands. Examples include M. Gemi in the United States, Mon Purse in Australia and Secoo in China.
All of these developments are covered in depth in the 34-page downloadable PDF report, “Luxury E-Commerce: The Digital Transformation of High-End Retailing.”
The report includes the following:
- A ranking of the top 10 global brands by e-commerce sales, including their 2016 online sales growth
- A comparison of luxury e-commerce growth by geography, merchandise category and merchant type
- Charts detailing the major acquisitions related to luxury e-commerce and venture capital investments in online luxury retailers
- The top luxury websites by region, with their 2016 online growth
- A five-page section devoted to China, including data on China’s leading online retailers of prestige goods
- Data on the demographics of luxury web shoppers, including what they buy online and which luxury e-retailers attract the youngest and the most affluent shoppers
- Data on the mobile capabilities of luxury retailers and the percentage of mobile traffic to luxury websites by merchandise category
- Data on the leading luxury retailers in social media and paid search marketing
- An analysis of the features offered by websites of leading high-end retailers and how the luxury sites compare with retail websites as a whole
- Data on how many luxury retailers offer free shipping and free returns, and how that compares to a broader selection of e-retail sites.