How Luxury Brands Can Excel in Ecommerce

Luxury brands bring to mind a special touch — spoiling buyers with a glass of champagne as they browse, personal shoppers selecting outfits that suit the customer's style and coloring, attention to detail that ensures everything in the store, including music, scents, even the hand cream in the bathroom, exudes elegance and exclusivity. This can seem hard to capture in an ecommerce site, which is one reason why many luxury brands were late to the online shopping game.

But that's all changing. People who were raised with the internet are now becoming financially secure and looking at luxury brands, and these shoppers want to buy luxury products online. The luxury goods report shows that online luxury sales are "projected to grow at twice the market rate and capture 18% of all sales revenue by 2023." Brands that want continued growth must enter the ecommerce market.

"E-retail sites are opening the doors to the world's best luxury boutiques — boutiques that are open 24/7, without geographical borders. So this channel is both the next big challenge and a big opportunity for luxury brands."– Florine Eppe Beauloye

Creative approaches can bring a high level of service to online shoppers, and ecommerce lets brands connect to luxury buyers who aren't able to travel to flagship stores but still want the cachet of owning a high-end product. It also allows big spenders to continue shopping, even while skiing in Aspen or sitting on their private island. Brands that see ecommerce as an opportunity and grasp it with both hands have a far better chance of succeeding in the market.

The Luxury Industry Is Evolving

Luxury brands rely on customers who are willing and able to pay for quality and exclusivity, which generally means selling to people who are financially established. Younger generations, especially millennials, are now settled in the workforce and have money to spend. As many people delay starting families or buying homes, they have the resources to splurge on luxury brands. 

A study by Bain & Company found that in 2019, millennials accounted for 35% of luxury goods consumption, and that's expected to rise to 45% by 2025. Although Gen Z customers are only 4% of the market at the moment, they could reach 40% by 2035. More tellingly, all the growth in the luxury market in 2019 came from millennial and Gen Z customers.

This means that luxury brands must cater to the buying habits of millennial and Gen Z customers if they want to see continued growth. Millennials spend 60% of their shopping time online, and even when they go to a brick-and-mortar store, 86% of them have researched online beforehand. Millennials and Gen Z also aren't as interested in big brand names. They're looking for high-quality, authentic products and feel smaller brands give them more social kudos, showing that they knew about the brand before it was trendy. This gives newcomers to the industry the opportunity to make a big splash as long as they have an authentic story and can get their message in front of the right people.

Although some changes in the luxury market come slowly through generational shifts, others can happen suddenly. The impact of COVID-19 is likely to have huge implications for the luxury market, with Bain & Company forecasting that the market will decline by 25-30% in the first quarter of 2020. This is due in large part to the economic downturn and people staying at home. However, many international consumers, especially Chinese customers, buy luxury products when they travel, and people can't travel during the pandemic. Brands that can provide a luxurious experience in an online space have the opportunity to connect with customers both locally and overseas and help keep their sales strong.

5 Ways Luxury Retailers Can Succeed in Ecommerce

Luxury brands offer customers an experience as much as a product. White-glove service in flagship stores is as much a part of the purchase as choosing what to buy. Customers need to find the same high-quality service in an ecommerce store for luxury brands to be successful in this new space.

1. Seamless omnichannel presences.

Omnichannel retail removes the boundaries between different sales outlets and marketing to create a seamless experience for customers. It's an experience that puts the customer first, a hallmark of luxury brands, and creates a unified whole. Omnichannel stores should connect with customers where they are, whether that's email, Facebook or Instagram, and allow customers to easily purchase at any point.

Retailers should remember that online shopping experiences lead to people visiting brick-and-mortar stores. Conversely, people visit brick-and-mortar stores before choosing to purchase online. It's important for brands to not think of their ecommerce store as a separate entity. For customers, it's all part of the same shopping experience. Those who have a bad experience on Main Street won't bother clicking on a link in Google.

Some ways to support the omnichannel experience include using accounts so customers can access their shopping cart and wishlist from any device. Allowing customers to return products to stores, even if they were purchased online, is another way of emphasizing that your company is all one store and makes life easier for customers at the same time. Also consider robust retail inventory software that can show customers if products are available and which nearby stores have what they're looking for.

2. Sustainable practices.

Customers are becoming increasingly concerned with sustainable practices, with one study finding that 66% of global consumers are willing to pay a premium to support ethical companies. This can be a vital way for luxury brands to differentiate themselves from their competitors.

For brands that develop sustainable products using recycled materials or low-energy manufacturing, an ecommerce site is the perfect way to communicate this information to consumers. A mini-documentary showing how products are made can boost your green credentials and help build trust with your customers. Luxury brands also have the benefit of offering high-quality products that are built to last. A quality coat with a classic design can be worn for many winters, which keeps it out of the landfill. Playing up the environmental benefits of paying for good quality is another way for luxury brands to emphasize their environmental contributions.

But it isn't always about recycled materials. Larq advertises that their water bottles purify water without using mercury, a harmful substance used in many other manufacturer's products, or requiring consumers to purchase disposable filters. For environmentally conscious shoppers, the premium on Larq's products is a fair trade for cutting-edge technology and a lower impact on nature.

You can also get creative in how you demonstrate sustainability. Second-hand or consignment stores allow luxury products to be used multiple times. Some brands are playing with Clothing as a Service, a rotating collection of clothing sent to subscribers each season, which can then be reused. This idea could be adapted for long-term luxury car rentals or jewelry rental. Although these services have a lower price point, they do increase a brand's sustainability. As an added bonus, millennials who don't yet have the money to purchase these products will develop brand loyalty by renting them and be ready to buy when their income reaches a higher level.

3. Personalized experiences.

A Euclid study found that 48% of millennials shop in-store at least once a week, so luxury shoppers are used to the personalized treatment they find in high-end stores. To convert these shoppers to ecommerce consumers, luxury brands must find ways to spoil their customers in an online space, which is why personalization is one of ecommerce's big trends.

As contradictory as it sounds, some of this personalization can be automated. A good CRM can identify different types of buyers and segment them out. This allows companies to send emails that recommend products based on past purchases. It can also identify big spenders, which lets you send some extra love with their packages, such as a handwritten note or a sample of a new face cream. Just make sure you're being transparent about how and why you're collecting data and how you'll keep it safe, especially with high-end customers who value their privacy.

Personalization doesn't have to come from segmentation. Some imagination can bring the personal experience to everyone who enters the website. For example, Bliss cosmetics has a quiz that visitors can take to help them define what they need in skincare, and it makes recommendations based on the results. Other ideas from the luxury fashion end of town include video chats with stylists and stylist-curated clothes sent out monthly.

Luxury brands must also emphasize superior customer service that makes it as easy as possible for people to purchase products. IP geolocation is a simple feature that allows international consumers to shop in their own currency. Companies should also have a high amount of control over their supply chain to ensure customers receive products when expected and you can offer more shipping services for rush orders or overseas shipping. Free shipping is often a simple way to make buyers feel special and helps stop cart abandonment, which is often caused by high shipping costs.

4. Create impactful stories.

Your story is your brand, and your brand is all-important to luxury shoppers. So much of the luxury experience comes from the Tiffany-blue box or the long history of the Birkin bag. Creating impactful stories can help you emphasize the exclusiveness and quality of your brand.

But where impactful stories truly benefit brands is in social media. A study by Forbes found that 62% of millennial buyers are more likely to become loyal customers of brands that engage them on social media. Good stories drive engagement, whether you're on Instagram, Twitter, or Facebook. The algorithms behind each social media platform also reward high engagement, so these impactful stories can help new customers discover your brand.

The study also found that 43% of millennials value authenticity over content, so it's important that these stories truly reflect the brand and engage consumers in a way that builds trust. Consider content that shows the behind-the-scenes stories of brand founders or current designers. Use high-quality images, in-depth videos, and striking stories to help show who you are and what your brand means. Younger buyers are more likely to purchase the story behind the brand, not the product, so make sure your story stands out.

Headphone company Skullcandy takes the time to ensure they connect with their customers. Along with pages that describe the company's vision, culture, and team, they put their interest in mental health at the forefront of their marketing. The Mood Boost page changes every month, giving them ongoing stories to present to page visitors as well as monthly mood boost bundles, which can drive new purchases.

5. Adopting a Buy Now, Pay Later approach.

Buy Now, Pay Later, or BNPL, is a system that allows customers to purchase and receive items immediately, and pay in installments. The installments are usually managed by a third party like Klarna or Afterpay. These systems appeal to younger buyers because they allow consumers to buy on credit without using a credit card. This is good both for people who don't have a credit card and those who want strict repayment dates to ensure they're not still paying for a product 12 months down the track. BNPL can also be used to build up a credit score, a bonus for young buyers.

BNPL also brings opportunities to ecommerce sites that utilize the service. One of the big sectors of millennial consumers is HENRYs, or High Earners, Not Rich Yet. These people have high incomes but don't yet have large investments and may not have as much disposable income as those who are already classified as rich. However, the key word in that acronym is "yet." In most cases, these HENRYs will be rich one day.

Giving these customers options to purchase without paying the full amount at once helps build relationships in a way that gains their trust and loyalty. It also ensures that young, fashionable, up-and-coming professionals are seen using your brand. A BNPL option attracts younger customers and helps stop cart abandonment when those customers see the total price; four equal installments are much easier to budget for than a single, large splurge.


The increasing affluence of generations that grew up with the internet means that luxury brands were always going to have to embrace ecommerce to stay relevant. But this need is now urgent as COVID-19 forces customers to stay inside, unable to visit stores or travel to luxury shopping locations. Early adopters of ecommerce technology will reap the benefits during the pandemic and beyond, especially those able to replicate the personalized service and exclusivity of luxury purchases in the digital space. As the luxury industry discusses digital fashion weeks and online trade shows, individual brands must ensure that they can capitalize on the current online shopping boom and continue to grow their brands into the future.